Changpeng Zhao, executive director of Binance, discussed ETF regulations and cryptocurrencies in a recent interview with Bloomberg. According to him,
"Most institutions or organizations should review cryptocurrencies at this stage."
In this article, we will discuss:
Institutions get serious
Let's remember that, last month, Jamie Dimon, chairman and CEO of JP Morgan Chase, called Bitcoin “worthless”. But, crypto asset inflows this year are breaking all records. According to the CoinShares report dated November 8, 2021, YTD inflows are at record highs of $8,9 billion.
Besides, CZ also stated:
“Crypto will be the future of the FinTech industry. And to be honest, it will be the future of money. ”
While there are industry skeptics who believe the cryptocurrency bubble is likely to burst, institutions who believe otherwise are bracing themselves. Recently, Mastercard announced a partnership with a number of crypto companies to launch crypto-funded payment cards. And, more fund managers are now looking at exchange traded funds that focus on cryptocurrencies.
The recent Bitcoin recovery was largely supported by the first future-based Bitcoin ETF approval in the United States. CZ Binance also commented that “the development of ETFs is a very positive thing”.
But, it is noteworthy that more apps are being archived in the meantime. BlockFi and with Neuberger Berman has applied for a Bitcoin ETF point. As this is a physically backed Bitcoin ETF, there are likely to be regulatory hurdles before it can be eliminated.
But with so many offers, is the market getting saturated? CZ thinks that's still not the case.
Binance's CEO stated that there is currently no overlap in the industry. He said:
“The crypto industry has only about 5% penetration globally. So out of a billion people, probably only about 400 million people have cryptocurrencies, that's already a huge number, but it's only 5% adoption. ”
So he explained that a saturation level can start when we get to 95% adoption.
Bank of America COO Tom Montag had also talked about cryptocurrency competition at a recent event. In the context of traditional business, he noted that cryptocurrencies could provide a 'technological leap' for banks. Similar to CZ's perspective, Montag said:
“We're excited to find a way to better use it [crypto] and make it part of the system.”
Restriction or acceptance?
But incorporating cryptocurrencies into conventional finance would require close coordination with regulators. In a previous interview, Binance co-founder Yi He had discussed efforts to "work better with regulators." While the company is making progress with its recent high-profile hire, CZ reiterated that Europe and the US are big markets. He said:
“So, we want to leverage that and help develop the community in France and also in Europe.” (sic)
Meanwhile, in terms of US regulations, he noted:
“US regulators are usually very concerned about KYC AML, terrorist money laundering, etc. …"
And Binance is currently focused on working “closely with regulators around the world,” according to CZ. Well, the question arises: should other crypto companies follow suit?