The leading crypto exchange globally, Binance, has issued a call for a global regulatory framework for crypto markets. It also released ten fundamental rights for crypto users, stating that they could guide them during regulatory discussions and develop a regulatory framework.
Binance, the world’s largest exchange for trading Bitcoin and other cryptocurrencies, says it’s time for global regulators to establish rules for crypto markets. This week, it released a list of “10 fundamental rights for crypto users” that it wants to guide discussions with regulators, policymakers, and other exchanges.
The company acknowledges that crypto platforms have an obligation to protect users and implement processes to prevent financial crimes, along with the responsibility to work with regulators and policymakers to set standards to keep users safe.
The call for regulation might seem strange for an industry whose popularity exploded in some part precisely because it sought to operate outside the heavy hand of governments and other authorities. But Binance CEO Changpeng Zhao, who goes by “CZ,” says more regulation for the industry is inevitable, and this allows his company to play a role in the discussions. It may also help draw in people who are still hesitant to get into crypto.
“This year, most of the regulators around the world are looking at crypto intently, and many of them are communicating with us,” Zhao said. “So we feel this is the right time” to issue a call for a global framework.
“We feel that it is important for industry players to have a seat at the table,” he said. “And we also feel that some regulations, if they’re made in a vacuum, may not have practical considerations in how they are applied, and they don’t get applied very well.”
Here are 10 Fundamental Rights for crypto users suggested by Binance:
I. Every human being should have access to financial tools, like crypto, that allow for greater economic independence.
II. Industry participants have a responsibility to work with regulators and policymakers to shape new standards for crypto assets. Smart regulation encourages innovation and helps keep users safe.
III. Responsible crypto platforms have an obligation to protect users from bad actors and implement Know Your Customer (KYC) processes to prevent financial crimes.
IV. Privacy is a human right, and personally identifiable information (PII) data should be subject to strict levels of protection.
V. Crypto users have the right to access exchanges that keep their funds secure, in safe custody with comprehensive deposit insurance.
VI. Healthy markets should maintain a robust level of liquidity to ensure a stable and frictionless trading environment.
VII. Regulation and innovation are not mutually exclusive. Crypto users deserve safe access to emerging technologies and practices, including NFTs, stablecoins, staking, yield-farming, and more.
VIII. Closing the knowledge gap is essential when it comes to crypto. Users have the right to accurate information on crypto assets, without fear of falling victim to unfair or deceptive advertising.
IX. Marketplaces that offer derivative instruments should be subject to the appropriate regulations. This ensures all users meet eligibility requirements and that their transactions are fairly settled.
X. Crypto regulation is inevitable.* Users have the right to share their voice on how the industry should evolve with their blockchain platform of choice.
Regulatory scrutiny of cryptocurrencies has intensified as they’ve grown more mainstream. Big businesses, professional investors, and even the government of El Salvador are all buying in, even if critics struggle to see the value of digital currencies created by non-governments. As a result, they’re broadening crypto’s base beyond its initial core of fanatics and sent Bitcoin last week to a record high of nearly $68,991, more than doubling in 2021.
Binance’s call for regulation reminds some on Wall Street of the playbook that companies have followed in other disruptive industries after becoming big winners.
“They’re doing what Uber and Lyft did,” said Gil Luria, technology strategist at D.A. Davidson. “Build a business ahead of regulations. When it gets to a certain scale, acknowledge that regulation will be helpful and then help shape it.”
Zhao said that Binance welcomes regulations “for many reasons. One of those little reasons is a selfish reason: that in a regulated industry, the few larger players will remain. The smaller players do get cut off, which is unfortunate for those guys.”
The move could also prove wise if Binance’s U.S. business ultimately tries to sell stock on a U.S. exchange, something Zhao hopes will happen in the next few years. A competitor, Coinbase, has already fetched a nearly $74 billion market value on Wall Street following its initial public offering this spring.
Such opportunities for wealth have drawn more new investors into crypto, as well as the eyes of regulators.
“Right now, we just don’t have enough investor protection in crypto,” Gary Gensler, chair of the Securities and Exchange Commission, said in a speech this summer while calling it the “Wild West.”
Zhao said the only cryptocurrencies he owns are Bitcoin and Binance coin, said some parts of the cryptocurrency world look more like securities. In contrast, others look more like commodities or currencies. And the ecosystem is growing by the day as people can create new tokens with just a few clicks of a mouse and keyboard.
He likened it to the early days of the internet when people were trying to figure out what kind of media it was.
“People may have a tendency to view crypto as a single asset, which I think is a little bit misleading,” he said. “Crypto is a fundamental technology that can improve on many of the traditional asset types.” Binance has recently dealt with several regulatory headaches, with regulatory authorities globally putting intense scrutiny on the world’s largest cryptocurrency exchange. There have also been reports of insider trading and market manipulation.