During a fireside chat during the Web3 festival in Hong Kong, Binance CEO Changpeng Zhao (CZ) said that cryptocurrency regulators must have a deep understanding of the industry to facilitate proper cryptocurrency regulation. The fireside chat was hosted by Deng Chao, CEO of Hashkey Capital.
According to CZ, “There is a very natural tendency to borrow traditional financial industry regulations and apply them to cryptocurrencies. Crypto is different from banking and traditional financial industries.” He went on to explain that knowing the answers to simple questions like how to classify different assets is important in determining industry regulations because there are many types of cryptoassets. Some assets may look like securities, some like commodities or utility tokens, and some may even have a combination of these characteristics.
Asked for his recommendations for a good regulatory framework, CZ said that unclear regulation is "the worst" and clear regulation is better. He went on to say that it is best to let the industry fully develop before introducing regulations. The particular reason for this is that it is difficult to predict what exactly will be popular in the industry. Regarding crypto industry players and their attitudes towards crypto regulators, CZ suggested that it is necessary to engage with them very actively. He explained that while many cryptocurrency regulators around the world are very receptive, some are still skeptical. However, skepticism should prevent crypto industry players from engaging in dialogue with regulators.
Responding to factors that could trigger mass adoption of cryptocurrencies, CZ said that the fact that many governments are trying to adopt cryptocurrencies may actually be a trigger for the growth of cryptocurrencies. He explained that government efforts to close banks, fiat access and impose more restrictions on traditional financial markets have actually pushed more people towards cryptocurrencies.
CZ emphasized that crypto industry players need to be patient. It's important to understand that the first draft of a regulation can always be too restrictive, so a balance is usually found over a period of time, he said. Hong Kong has recently expressed its support for Web3 by taking major steps to develop the Web3 industry.
