Changpeng Zhao, CEO of Binance, recently shared his perspective on the delicate harmony between the realms of cryptocurrency and traditional finance. Speaking at the Fintech Forward 2023 conference, held in Bahrain earlier this month, Zhao emphasized the critical role of trust-building within the crypto industry, particularly in light of ongoing regulatory scrutiny.
Zhao on Growth and Partnerships
“In order to earn trust, it’s like peeling the layers of an onion… there are numerous facets to build,” Zhao remarked. He underscored the significance of regulatory compliance as a pivotal element, not only for adhering to legal obligations but also for fostering collaboration with partners from the traditional financial sector. Zhao believes this collaboration is instrumental in bridging the gap between the crypto industry and traditional financial institutions.
“Regulatory compliance paves the way for other partners to collaborate with you, particularly from the traditional financial sector. This allows us to unite these two industries. The process of building trust takes time; it can be quickly shattered but can only be slowly rebuilt over time,” he added.
Binance’s Regulatory Challenges
Zhao’s insights come amid a backdrop of formidable regulatory challenges faced by Binance in multiple jurisdictions, most notably in the United States and the United Kingdom.
Recently, the U.S. Securities and Exchange Commission (SEC) leveled charges against Binance and its founder, alleging that they surreptitiously exerted control over customers’ assets, enabling the manipulation and diversion of these funds.
Furthermore, the Financial Conduct Authority (FCA) in the United Kingdom criticized Binance for operating without proper authorization, echoing similar concerns raised in Japan and the European Union.
Despite these regulatory hurdles, the cryptocurrency industry continues its expansion, with traditional financial heavyweights such as BlackRock and Ark Invest increasingly expressing interest in cryptocurrency assets and Bitcoin spot exchange-traded funds (ETFs). However, Binance has seen the departure of key partners, including Mastercard, Visa, and Checkout.com in recent months, highlighting the evolving dynamics of relationships between the crypto industry and traditional financial institutions.
