During a conference in Bali, attended by heads of the G20 nations, Changpeng Zhao, the CEO of the world's largest cryptocurrency exchange, Binance, called for the implementation of new regulations. Zhao stressed the importance of protecting consumers and ensuring the long-term sustainability of the crypto industry. Additionally, Binance has announced plans to establish a recovery fund aimed at assisting struggling crypto businesses.
The recent bankruptcy of FTX, a rival exchange founded by Sam Bankman-Fried, has raised concerns among small investors who fear significant losses. The collapse of FTX has had a significant impact on the crypto market, wiping out billions of dollars. In response to this, Binance's recovery fund aims to support struggling crypto businesses and help stabilize the industry.
CZ Said
"We do need some regulations, we do need to do this properly, we do need to do this in a stable way."
he continued,
"The industry collectively has a role to protect consumers, to protect everybody. So it's not just regulators,"
In many countries, cryptoassets are lightly regulated compared with other financial sectors, with few protections for consumers.
The UK government has previously announced plans to regulate stablecoins, which, as the name suggests, are designed to have a stable value linked to traditional currencies or assets such as gold.
On Nov. 10, Binance published its cold wallet addresses to demonstrate that it has enough capital on hand to withstand a bank run. The exchange also shared its wallets for the six largest crypto assets by market cap. The wallets hold $65B worth of assets combined, including 21.3B BUSD — a stablecoin issued by Paxos in partnership with Binance, and $6B worth of BNB
Binance confirmed
“This is not a complete set of data, which will be shared later in the full audited report,”
Binance added.
"Binances largest holdings include $13.4B in USDT, almost $8B worth of BTC, and $6B worth of ETH. This is not a complete set of data, which will be shared later in the full audited report"
CZ rejected the suggestion that holding large quantities of BUSD could pose a threat to Binance’s solvency, and emphasised that BUSD is issued by Paxos, a regulated blockchain infrastructure firm, and audited by New York state’s Department of Financial Services. According to transparency reports from Paxos, BUSD is fully backed by USD.
Zhou argued that a large portion of an exchange’s balance sheet should be composed of stablecoins during a bear market. CZ added that people should be wary of exchanges that have low stablecoin holdings as industry players begin to produce proof-of-reserves.
“If their assets do not include a large percentage of stablecoins, that is a risky sign,”
he said.
“In a bear market, a lot of people have converted from Bitcoin, Ethereum, BNB into stablecoins… Our proportions are actually very, very healthy.”
Regulatory progress in the crypto industry has been evident through recent developments such as the EU's proposal for markets in crypto-assets (MiCA) and Japan's legislation that aims to regulate stablecoins in order to protect investors. Additionally, the UK has recently completed a consultation on how it should regulate cryptoassets and stablecoins, and the US has released its inaugural framework for regulating cryptocurrencies in September. The US appears to be the region that anticipates the implementation of stricter regulations as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) both push for new regulations.
Binance CEO Changpeng Zhao recently stated said that Europe’s Market in Crypto Assets (MiCA) regulatory framework could become a global standard. Under the proposed MiCA regulation, crypto companies need to apply for only one license to operate across 27 blocs of the European Union.
On June 30, 2022, EU lawmakers agreed to adopt the Market in crypto-assets (MiCA) regulation as a framework to regulate cryptoassets and stablecoins.
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