During a fireside chat at the Hong Kong Web3 Festival, Binance CEO Changpeng Zhao (CZ) shared his views on the importance of regulators having a deep understanding of the crypto industry to properly regulate it. According to CZ, applying traditional financial industry regulations to crypto is not ideal since crypto is different from banks and traditional financial industries.
One of the challenges of regulating the crypto industry is deciding on how to classify different assets. CZ explained that there are many types of crypto assets, and some may look like securities, others like commodities, or utility tokens, and some may even have a combination of those characteristics. Therefore, it is important for regulators to know how to classify these assets to decide on appropriate regulations.
CZ also stressed the importance of having regulatory clarity. He stated that unclear regulations are “the worst,” and having clear regulations is better. However, he also suggested that it is best to let the industry develop fully before introducing regulations, as it is difficult to predict what exactly will be popular in the industry.
In terms of engaging with regulators, CZ advised crypto industry players to be actively engaged with them. While many crypto regulators around the world are receptive, some are still skeptical. However, CZ believes that skepticism should not deter industry players from engaging in conversations with regulators.
When asked about what could trigger mass adoption of crypto, CZ pointed out that government efforts to restrict traditional financial markets may push more people towards crypto, ultimately leading to mass adoption. He explained that the more governments try to come for crypto, the more it will grow.
Finally, CZ stressed the need for patience among crypto industry players. He believes that the first draft of regulations is often overly restrictive, but a balance is usually found in due time. Therefore, it is important for industry players to be patient and understand that regulations will continue to evolve over time.
Overall, CZ’s fireside chat highlighted the importance of understanding the crypto industry for proper regulation. As the industry continues to grow and evolve, it is crucial for regulators to keep up and engage with industry players to ensure effective regulation.