Binance CEO Changpeng Zhao (CZ) took to Twitter to share his thoughts on the way forward for crypto regulation.
Zhao made remarks in support of an article published by the IMF’s Deputy Managing Director, Bo Li, and the Fund’s Deputy Chief of Financial Supervision and Regulation, Nobuyasu Sugimoto, regarding the need for regulation to protect the volatile crypto industry.
Zhao supports IMF’s stance on crypto regulation
According to Zhao, the most effective way to protect crypto users from the industry’s vagaries was by enacting “globally consistent, risk-based regulation.”
In his Twitter thread, the Binance CEO questioned the usefulness of authorities issuing outright bans against crypto, claiming such actions will only force users into the shadows, where they will have little protection and no recourse.
CZ shared several highlights from the IMF blog post that he agreed with, including calls for a robust, extensive, and uniform approach to crypto regulation. He also insisted that regulators must adapt to the dynamic nature of the crypto landscape to be effective.
The Binance CEO also agreed with the IMF that digital asset service providers must be licensed, registered, and authorized. Furthermore, he was of the opinion that authorities ought to clearly define the criteria for licensing and authorization of digital assets and the companies trading in them.
Stablecoins require special regulatory attention
The article by Li and Sugimoto comes at a time when the crypto sector is grappling with the aftermath of the FTX collapse and the increased scrutiny that came with it.
The two authors paid particular attention to stablecoins, stating that their growing recognition outside the crypto community and their increasing popularity as stores of value meant they would soon have the potential to compromise global monetary and financial stability.
Because of their growing influence in financial circles, Li and Sugimoto argued that stablecoins need a stringent, bank-style regulatory model to govern them.
Their sentiment was echoed by CZ, who stated that stablecoins now had many use cases where they played the traditional monetary role as stores of value and, as such, needed to be better regulated.
Targeted restrictions will work better than sweeping bans
Li and Sugimoto decried the bans enacted against crypto in several jurisdictions, especially in sub-Saharan Africa. In their opinion, broad bans were excessive, and authorities could succeed better with targeted restrictions, especially where regulatory capacity is available.
The authors used Japan and the United Kingdom, which have successfully limited the use of certain crypto derivatives, and Spain and Singapore, where crypto advertising has been limited, as examples of successful policy outcomes of targeted restrictions.