Changpeng Zhao Believes the Exit of American Users from Platform Could Improve Liquidity
- Binance recently announced that they would no longer be allowing American customers to use their platform.
- The CEO recently remarked on the positive regulatory atmosphere of Japan, as opposed to the United States.
Binance has had an interesting relationship with their community lately. The restriction against United States customers is coming and, even though there’s a subsidiary on the way to help, the loss sustained by the largest cryptocurrency exchange in the world is likely to have an impact on order books. Some experts believe that liquidity will quickly drop, but Changpeng Zhao has confidence that this change will actually be a good thing.
Zhao, the CEO and founder of Binance, spoke with Crypto Briefing, explaining that the exit of American consumers could be help with the liquidity of Binance instead.
“In the short-term, it will affect liquidity a little bit. But in the long-term, it might actually improve it.”
Considering the regulatory atmosphere in the United States, it is difficult to maintain a cryptocurrency exchange that is entirely compliant. The majority of cryptocurrency assets are unregistered securities right now, and President Donald Trump has been blunt about his dislike of this industry. With the lack of clarity of various regulations, it is hard for operators of these exchanges to create long-term development or investment plant.
The unique attribute of US regulations is the fact that they are not condensed to the physical location of the US citizens. Instead, anyone that is a US citizen, regardless of where they live, are impacted by the regulations, which is a major setback for exchanges and token offerings. For instance, the CFTC is presently investigating the BitMEX exchange, due to allegations that the platform was permitting United States citizens to use it, despite being banned.
Even with plenty to lose by leaving the United States, Zhao believes that the benefits that could be gained are worth the sacrifice. Binance will have the option to roll out other services for customers that would not actually be available by keeping United States customers involved, like margin-trading or derivatives. He stated, “We can do more stuff without worrying about the U.S. regulators.” The margin trading facility of Binance was only launched last month, and they are still working on the launch of new futures contracts, without American regulators in the mix.
Zhao believes that Japanese regulators have fairly clear framework surrounding their regulations, saying,
“[T]he problem with Japan, especially for exchanges, is they’re too strict.”
He added that the FCA’s guidance that was recently released is “very reasonable,” with the exception of the restrictions that they’ve imposed on derivatives.
Binance has sought to find regions in the world that are more crypto-friendly than others, going from China to Japan, and to Malta, most recently. However, no regulatory environment is perfect, and Binance will be searching for a long time to find one.