Crypto bosses say ‘tide is turning’ on regulation – Reuters News in France and abroad

Changpeng Zhao, founder and CEO of Binance, speaks during the Blockchain Week Summit in Paris, France, April 13, 2022.

Benjamin Girette | Bloomberg | Getty Images

PARIS — The crypto world may have reached a regulatory milestone.

The bosses of several major crypto firms have said CNBC regulators are starting to take a more positive approach to digital currencies, following numerous crackdowns targeting the space.

While China has banned crypto outright, countries like the United States and Britain have announced moves to bring regulatory oversight to the nascent market.

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

Last year, UK regulators banned Binance from undertaking any regulated activity in the country, while in Singapore, Binance limited its services after the central bank warned it could breach local regulations.

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

Prior to Zhao’s presentation, the event’s MC referred to the crypto slang term “wagmi,” which means “we’re all going to get there.”

“To be honest, I think we kind of succeeded,” he said, adding that crypto served as a lifeline for some in Ukraine amid the Russian invasion.

But the crypto world still has a long way to go before it becomes widely accepted. And the fate of the industry largely depends on the approaches that will be adopted by the various global regulators.

Governments take action

“The regulatory landscape around the world is rapidly accelerating,” Nicolas Cary, co-founder of crypto wallet maker Blockchain.com, told CNBC.

The UK government announced last week that it would integrate stablecoins – digital assets that track the prices of existing currencies like the US dollar – into the local payment scheme.

UK 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 answer to rare collectibles.

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

“After Brexit they kind of have a political decision to make and a strategic decision to make,” he added. “Are they rebuilding Brussels in London, or are they becoming the Singapore of the West, are they inviting in all this innovation, all this technology and all this wealth generation and do they really own the future of the website? »

Governments want to foster innovation around financial markets and the possible next generation of the Internet, known as “Web3,” crypto executives have 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 an executive order calling for government-wide coordination on digital assets. According to industry insiders, one of the main concerns of Western regulators is the use of digital assets to circumvent Russian sanctions.

“I think they’re starting to take it seriously [but] I don’t think they get a warm, fuzzy feeling about it,” Arthur Breitman, co-founder of Tezos, a blockchain protocol rivaling Ethereum, told CNBC.

“Naturally, they’re going to have a conservative bias,” Breitman said. However, only a “tiny fraction” of crypto payments are linked 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 welcoming towards cryptocurrencies,” Binance’s Zhao told CNBC. “They are much more advanced in their understanding. »

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

This comes as the company, which previously boasted of having no official headquarters, is now on the hunt 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 going global. »

Binance now has licenses in Bahrain and Dubai, and tentative approval in Abu Dhabi. In Europe, it is overseen by Lithuanian anti-money laundering regulators and is seeking registration with the Swedish Financial Services Supervisory Body.

Is the United States lagging behind?

Not all regulators agree with the rapid growth of crypto, according to Brad Garlinghouse, CEO of blockchain company Ripple.

The United States Securities and Exchange Commission has sued Ripple, Garlinghouse and co-founder Chris Larsen over allegations that they illegally sold over $1 billion worth of XRP cryptocurrency.

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

“When I give advice to entrepreneurs considering starting a crypto or blockchain business, I tell them not to incorporate in the United States,” Garlinghouse said. “The lack of clarity and lack of certainty means you are at risk for the exact type of lawsuits the SEC has brought against us. »

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

“Ripple will be hiring north of 300 people this year, and more than half of those will be outside of the US,” Garlinghouse said.

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Crypto bosses say ‘tide is turning’ on regulation – Reuters News in France and abroad

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