CZ, Binance's CEO, applauded the IMF's 5-point crypto legislation plan for the growing financial sector.
The exchange CEO stressed that the IMF requires crypto asset service providers to get licences, registrations, and authorizations.
In recent months, there have been many conversations concerning the need for worldwide regulations for the crypto industry. However, in light of the cryptocurrency slaughter and the rising number of bankruptcy cases involving cryptocurrency businesses, several people, including Binance CEO Changpeng "CZ" Zhao, have called for more stringent crypto regulations.
Speaking on the International Monetary Fund's (IMF) newly announced 5-point crypto regulation scheme, CZ asserts that it will be very advantageous and "excellent" for cryptocurrency and its associated industries. Risk-based regulation that is put into place globally, in CZ's opinion, is the most efficient means of user protection. And he was cited as adding, "Outright prohibitions will only lead to users operating in the shadows, at their own risk, and without any safety net," while discussing the possible threats of crypto facing outright bans in some areas.
The CEO of the exchange emphasised that the IMF demands that providers of crypto asset services first obtain valid licences, registrations, and authorizations. Businesses that provide services like storage, transfer, exchange, settlement, and custody and are governed by laws similar to those that apply to service providers in the traditional financial industry fall under this category. It requires that the assets belonging to customers be maintained apart from those belonging to the business, and that the accountable authority be made very obvious.
In order to accommodate its cross-border character, the cryptocurrency industry, according to CZ, demands crypto legislation that is strong, comprehensive, and globally uniform. He emphasises once more the need for a worldwide strategy to change with the sector's evolving environment in order for it to be effective.
Second, there should be more regulation of the businesses that carry out various duties inside the cryptosphere. Such companies must to be subject to stringent transparency regulations so that all interdependencies and operations may be clearly identified. The appropriate authorities should investigate any conflicts of interest and, if required, forbid them.
Thirdly, stablecoin issuers should be held to high prudential standards because more and more investors are turning to them as a means of asset storage. If these holdings are not properly scrutinised and regulated, they could endanger the stability of the financial and monetary systems. A level of regulation akin to that which is common in the banking industry may be necessary in the event of big stablecoins.
As a last point of discussion, CZ emphasises that when politicians and regulators widen the range of legal activities, user protection and market integrity are improved. Many other industries, including traditional finance, health care, pharmaceuticals, the internet, and content, among others, have seen this pattern in action.