Crypto executives say the “tide is turning” on regulation

Changpeng Zhao, Founder and CEO of Binance, will speak at the Blockchain Week Summit in Paris, France, on April 13, 2022.

Benjamin Girette | Bloomberg | Getty Images

PARIS – The cryptocurrency world may have turned a corner when it comes to regulation.

The executives of several large crypto companies said CNBC regulators have begun to take a more positive approach to digital currencies after several repressions aimed at space.

While China has banned crypto directly, countries such as the US and UK have announced measures to bring regulatory oversight to the emerging market.

“The tidal wave is definitely turning,” Changpeng “CZ” Zhao, CEO of Binance, the world’s largest cryptocurrency exchange, told CNBC on the sidelines of the Paris Blockchain Week Summit.

Last year, British regulators prevented Binance from carrying out any regulated activity in the country, while Binance in Singapore restricted its services after the central bank warned that it may be in breach of local law.

In a speech that started the event on Wednesday, Zhao said regulatory discussions around crypto have shifted from “negative” to “positive.”

Before Zhao was introduced, MC referred for the event to the crypto-slang term “wagmi”, which stands for “we must all do it.”

“To be honest, I feel like we somehow managed it,” he said, adding that crypto serves as a lifeline for some in Ukraine in the midst of Russia’s invasion.

But the crypto world still has some way to go before it reaches widespread acceptance. And the fate of the industry depends to a large extent on the approaches that will be taken by various global regulators.

Governments are taking action

“The regulatory landscape around the world is rapidly picking up speed,” Nicolas Cary, co-founder of crypto wallet maker, told CNBC.

The British government announced last week that it would bring stablecoins – digital assets that track the prices of existing currencies such as the US dollar – into the local payment regime.

British Finance Minister Rishi Sunak has also asked the Royal Mint, which is responsible for producing the country’s coins, to create a non-fungible token, or NFT, the crypto – world’s response to rare collectibles.

“Britain could be a dark horse in this whole situation,” Cary told CNBC.

“Post-Brexit, in a way, they have a political decision to make and a strategic decision to make,” he added. “Are they rebuilding Brussels in London, or are they becoming Western Singapore, inviting all this innovation, all this technology and all this generation of wealth and really owning the future of the internet?”

Governments want to foster innovation around the financial markets and the next possible generation of the Internet, known as “Web3,” crypto executives told CNBC.

But they are also cautious about the dark side of the industry, including money laundering and other illegal transactions, and the impact of energy-intensive bitcoin mining on the environment.

In the United States, President Joe Biden recently signed a decree calling for government-wide coordination of digital assets. A key concern for Western regulators, industry insiders say, is the use of digital assets to evade Russian sanctions.

“I think they have started to take it seriously [but] “I do not think they get a warm and vague feeling about it,” Arthur Breitman, a co-founder of Tezos, a blockchain protocol competing with Ethereum, told CNBC.

“Obviously, they want a conservative bias,” Breitman said. However, only a “small fraction” of cryptocurrencies are related to criminal activity, he added.

Illegal activity accounted for less than 0.2% of digital currency transactions in 2021, according to data from blockchain analytics firm Chainalysis.

Charm offensive

France is “very progressive and very accommodating to cryptocurrencies,” Binances Zhao told CNBC. “They are far more advanced in their understanding.”

Binance turned on the charm in Paris this week and announced a “Web3 and crypto” start-up accelerator program in partnership with business incubator Station F.

It comes as the company, which previously boasted of having some official headquarters, is now looking for a global headquarters.

“We will definitely have our regional headquarters for Europe in Paris,” Zhao said. “We will first establish a number of regional headquarters before we become global.”

Binance now has licenses in Bahrain and Dubai and preliminary approval in Abu Dhabi. In Europe, it is under the supervision of Lithuanian authorities to combat money laundering and is seeking registration with Sweden’s watchdog for financial services.

USA backwards?

Not all regulators are contributing to the rapid growth of crypto, according to Brad Garlinghouse, CEO of blockchain firm Ripple.

The U.S. Securities and Exchange Commission has taken Ripple, Garlinghouse and co-founder Chris Larsen to court over allegations that they illegally sold over $ 1 billion of the XRP cryptocurrency.

The SEC argues that XRP should be considered a security, a claim that Ripple disputes.

“When I give advice to entrepreneurs who are considering building a crypto or blockchain company, I tell them they’re not being incorporated into the United States,” Garlinghouse said. “The lack of clarity and lack of security means you are in danger of the exact kind of lawsuit that the SEC brought against us.”

Ripple is even considering moving its headquarters abroad, with London and Singapore among the potential candidates.

“Ripple will employ north of 300 people this year, and more than half of them will be outside the United States,” Garlinghouse said.

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