Binance CEO calls for ‘well-developed legal and regulatory framework’

Binance CEO calls for ‘well-developed legal and regulatory framework’ – The founder and CEO of world largest cryptocurrency exchange, Changpeng Zhao has called for legal and regulatory framework for the cryptocurrency industry, the crypto billionaire made the call in a letter to Binance users while reflecting on Progress and the Road Ahead.

Financial Watch reports that the exchange is facing regulatory pressure across the world especially in China and Europe which have led to suspension of bank transfers in Europe and United kingdom.

In the letter released Wednesday and seen by Financial Watch, Binance CEO noted that “When Binance launched four years ago, the crypto industry was still in its infancy – with few early adopters and no clear standards. Within a short period, the crypto environment has drastically grown and evolved: there are now more crypto offerings, an increasing number of first-time crypto users and a lot more attention and debates on how the crypto industry should move forward”

“Given the recent hyper-focus on regulation when it comes to Binance, I would like to take this opportunity to share our historical background and principles, clarify our stance and commitment, and outline our approach and plans for regulations and the sustainable development of the crypto industry going forward”

Details of the letter can be seen below;

Protect users’ interests first

Before there were clear guidelines for the industry, we have always held Binance to the highest standard to prioritize our users’ best interests — a goal that we share with regulators around the world. Therefore, we have added requirements for using our platform and set industry standards: strict insider trading policies (no active trading of any asset within 30 days), a Secured Asset emergency fund (SAFU) to protect user assets and rigorous listing standards and firewall to separate out the listing team. We also invested in educational resources early on via Tutorials and Binance Academy to help users of all backgrounds make informed decisions on crypto. For higher risk products, we set limits and protections to encourage responsible trading. To date, Binance is the only crypto trading platform with a responsible trading program.

We also protect our users through our work with law enforcement agencies such as the U.S. Internal Revenue Service (IRS),  the UK South East Regional Organized Crime Unit, and many more to crack down on cybercrimes such as money laundering, terrorist financing and scams. In 2021 so far, we have completed assisting 5,600 investigation requests already, which is 100% more than those in 2020. Most recently we supported the takedown of a prolific cybercriminal ring responsible for laundering over $500M worth of damages from dark web operations and high-profile cyber attacks.

I believe that the numerous decisions we made to protect users’ interests is why they chose to be with Binance, which has helped us to grow quickly in the past four years.

Clear regulations are critical for continued growth

Four years later, we are seeing wider adoption of cryptocurrencies globally and the need for clearer regulatory frameworks in different countries. More regulations are, in fact, positive signs that an industry is maturing, because this sets the foundation for a broader population to feel safe to participate in crypto. I believe a well-developed legal and regulatory framework in the long term will be a solid foundation that truly makes crypto essential in everyone’s daily life.

The adoption and development of crypto has many parallels with that of the car. When the car was first invented, there weren’t any traffic laws, traffic lights or even safety belts. Laws and guidelines were developed along the way as the cars were running on the road. These are frameworks and laws we take for granted today that allow this powerful technology to be used widely and safely. Crypto is similar in the sense that it can be accessible for everyone, but frameworks are required to prevent misuse and bad actors. Clarifying and building the first set of standards is critical for the industry’s continued growth. And Binance wants to be a positive contributor.

Looking ahead: making crypto safe and sustainable for all

As I said at the end of 2020, compliance is a journey – especially in new sectors like crypto. The industry still has a lot of uncertainty. We also recognize that with the growth comes more complexity and more responsibility.

As a four-year-old startup, Binance still has a lot of room to grow. Binance has grown very quickly and we haven’t always got everything exactly right, but we are learning and improving every day. We hope to clarify and reiterate our commitment to partner with regulators, and that we are proactively hiring more talent, putting in place more systems and processes to protect our users. Here are some tangible steps we are taking and will take:

Growing our international compliance team: We have grown our international compliance team and advisory board by 500% since last year. Notable appointments include former FATF Executive Secretary Rick McDonell and former Head of the Canadian delegation to the FATF Josée Nadeau as compliance and regulatory advisors, as well as Max Baucus, the former US Senator for Montana and US Ambassador to China, to provide high-level guidance – these are the first of many high-profile additions to our team. We plan to double our team size by the end of the year, with qualified and experienced advisors to support.

Expanding our already robust compliance partnerships: we have implemented new controls and regulation technology with partners such as CipherTrace to instill further protections for our users. We’re proud to say that we have cleared multiple external anti-money laundering (AML) audits — a strong validation of our current AML controls and partnerships. Recently, we have partnered on working groups and seminars with notable anti-crime organizations such as the United Nations Office on Drugs and Crime (UNODC) and Interpol this year, and we look forward to future collaborations.

Localizing our operations and business to comply with local regulations: We are committed to being compliant with appropriate local rules wherever we operate. In four years we grew from a start-up to where we are today. That’s a lot of growth in a short period of time. Our commitment to compliance extends to the manner in which Binance is organized. For instance, Binance.com is not available to US users, while there is a brand partnership with Binance.US, which is a fully independent entity that is a compliant and regulated exchange in the US, to provide US users with a safe, secure, and compliant trading platform. During the four years, we have seen regulators take a more active interest in the industry as-a-whole as the industry goes main-stream. We welcome this development, however, there is still much to do to harmonize the treatment of crypto-currency around the world. We aim to continue our efforts in working with regulators collaboratively to meet their concerns as the industry continues to grow.

We know that we are at the tipping point, along with the broader industry. These are just the initial steps.

Our vision is to increase freedom and inclusion for a better human society. We firmly believe that our industry will benefit society through the creationing of inclusive financial opportunities. We call this the “freedom of money”. That’s why, in our first year as a company, we set up the industry’s first charity foundation Binance Charity, which has contributed $15 million USD to over 20 projects for education, sustainability, and other causes.

But this lofty vision won’t be possible without the support and guidance of regulators and policymakers who understand that innovation has the most long-term sustainable impact when tempered with frameworks to protect all participants.

We humbly welcome more constructive guidance to help us to grow better.

We humbly welcome more capable talents and experienced advisors to join us to build better.

I and everyone at Binance, are ready and look forward to being a partner in developing and following guidelines that will help the industry grow in a sustainable manner. And together, we will help to increase freedom in the society in a sustainable and responsible way.