Binance CEO Changpeng Zhao has offered his insights on the delicate balance of trust between the world of cryptocurrency and traditional finance. Speaking during the recent Fintech Forward 2023 conference held in Bahrain earlier his month, Zhao shed light on the importance of building trust within the crypto industry, especially in the face of ongoing regulatory scrutiny.
Zhao on Growth and Partnerships
“To earn trust, it’s probably like an onion… there are many layers that you have to build,” Zhao remarked. “I think regulatory compliance is a key thing, it is very important, but also… having the reputation in the industry, having other users validating your services and your trustworthiness is important.”
In Zhao’s view, regulatory compliance acts as a linchpin, not only ensuring adherence to legal requirements but also facilitating collaboration with partners from the traditional financial sector. This collaboration, he believes, is instrumental in bridging the divide between the crypto industry and traditional institutions.
“Regulatory compliance unlocks other partners working with you, especially from traditional financial industries. So then, this way we can bridge the two industries together. That’s very important too. So, the trust is built over a long period of time; it can be broken very quickly but it can only be slowly built over time.” He added.
Binance’s Regulatory Challenges
Zhao’s comments come at a time when Binance is facing significant regulatory challenges in various jurisdictions, particularly the United States and the United Kingdom.
Recently, the U.S. Securities and Exchange Commission (SEC) unleashed brought charges against Binance, and its founder alleging that the duo have been surreptitiously wielding control over customers’ assets, enabling them to mix and divert these funds at will.
Elsewhere, the United Kingdom’s Financial Conduct Authority (FCA) has criticized Binance for operating without approval, and similar concerns have been raised in Japan and the European Union.
That said, despite these regulatory challenges, the cryptocurrency industry continues to grow, with traditional institutions like BlackRock and Ark Invest showing increasing interest in crypto assets and Bitcoin spot exchange-traded funds (ETFs). However, Binance has lost key partners like Mastercard, Visa, and Checkout.com over the past few months, highlighting the evolving landscape of crypto-industry relationships with traditional financial institutions.
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