Binance executive recommends cryptocurrency creators move. Why?
If the creators of a startup in the crypto-sphere have serious plans for the future of their project, then they should definitely consider a possible move to another country. According to Binance exchange CEO Changpen Zhao, this is a necessary part of the plan. He says that pressure from US regulators on the industry is becoming more pronounced, and it is hard enough to work on your own project in such an environment. So the first thing to do is to choose a country that is loyal to crypto, says the experienced entrepreneur. Read more about his point of view.
Changpen Zhao does have reason to be biased against US regulators. The day before, Paxos, which together with cryptocurrency exchange Binance issues BUSD, was forced to refuse further issuance of the token. The reason for this was the activity of the U.S. Securities and Exchange Commission (SEC) and the New York Department of Financial Services (NYDFS).
Representatives of the departments saw BUSD as an unregistered security, which is strange enough in itself. After all, the token has a value of $1, so no investor would buy a Stablecoin in anticipation of a possible profit. Accordingly, any promises of income are out of the question here.
Binance chief executive Changpen Zhao
Despite this, Paxos has tentatively agreed to the regulators’ demands. The company will discontinue BUSD and except that it will continue to redeem crypto-assets from users in exchange for fiat, burning tokens in parallel. Accordingly, the overall supply of the latter will decrease over time.
Of course, this has created problems for Binance as well, as BUSD accounted for about 35 percent of trading volume in steblecoin pairs. The company will now be forced to look for a new service provider in another jurisdiction. And Changpen has also admitted the possibility of launching a stablcoin tied to another fiat currency - so we could be looking forward to the release of Binance Euro, for example.
Overall, the situation has clearly upset Zhao. That’s why he urged the heads of various blockchain projects to think about possibly moving out of the US to more friendly regions.
How should a cryptocurrency project be developed?
Zhao voiced his thoughts during another conference at Twitter Spaces. Here’s his quote, cited by The Block.
If you are serious about your project, moving to a new country might not be a bad solution.
Changpen recommended considering the prospect of moving to Dubai, Bahrain or France – these jurisdictions have a good framework for regulating the crypto market, in addition to a very liberal attitude towards digital assets there.
Binance chief executive Changpen Zhao
Last week, the Securities and Exchange Commission (SEC) required the Kraken trading platform to suspend its cryptocurrency-stacking services to US customers, as well as pay a $30 million fine to avoid a lawsuit. As we have noted, Paxos, which is the issuer of the Binance USD (BUSD) steblycoin, has also been sanctioned.
Regulators have covered up their actions with “investor concern”, but Zhao isn’t sure that’s their main motive. The entrepreneur continues.
Most regulators at least claim that they welcome communication with people. However, I’m not sure how willing they really are to go along – especially to entrepreneurs and new projects without a reputation.
Previously, members of the blockchain community have actively accused the US Securities and Exchange Commission in general, and its head Gary Gensler in particular, of a lack of communication. Simply put, US cryptocurrencies are not aware of the boundaries for their own activities, because the regulator has not defined them. And instead of working on a legal framework to help the local blockchain industry, the Commission periodically accuses companies of violating the rules and levies hefty fines on them.
Naturally, this is far from an ideal environment for companies to operate in, so creators of various blockchain platforms will seek to relocate to other jurisdictions. And the aforementioned $30 million fine will greatly facilitate that.
SEC Chairman Gary Gensler
We will soon be able to see the SEC’s position. According to sources, the SEC plans to propose new rule changes this week that could affect what services cryptocurrencies will be able to offer their clients. Overall, the regulator is working on a draft proposal that could make it more difficult for cryptocurrency companies to hold digital assets on behalf of their customers as “qualified custodians”, Cointelegraph reports.
As a reminder, a custodian is an institution that accepts certain assets from a client for safekeeping. For example, a bank can be a custodian if a user provides it with their own securities or something else.
Such changes could affect many hedge funds, investment firms and pension funds that partner with cryptocurrencies. Tonight, the five-member US Securities and Exchange Commission will tentatively vote on whether to move the proposal to the next stage. A minimum of three votes out of five is needed for that to happen.
Securities and Exchange Commission building
The information has not yet been officially confirmed, but experts believe that the Commission’s innovation will force cryptocurrency companies to move capital outside the US jurisdiction. Overall, the news is quite negative, both for the industry itself and for the prospects of innovation in the United States.
We believe that such a recommendation is really relevant right now. The uncertainty on the part of regulators not only creates problems, but also forces the company to think about possible penalties instead of concentrating on developing its own product. Of course, no one is likely to want to work in such an environment, so we could really be in for a migration of blockchain developers in the near future. And Zhao's proposed options are well suited to the role of final destination.
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