- The company has also announced plans for a recovery fund to assist businesses affected by the recent collapse of the FTX crypto-exchange.
- In many countries, crypto assets are unregulated in comparison to other financial sectors, with few consumer protections.
- Instead, Binance had been attempting to save FTX, fully aware of the implications for the entire industry.
According to the CEO of the world’s largest cryptocurrency exchange, new regulations are required. Binance CEO Changpeng Zhao was speaking at a G20 summit in Bali, Indonesia, reported by BBC.
The company has also announced plans for a recovery fund to assist struggling cryptocurrency businesses.
It comes on the heels of the FTX exchange’s bankruptcy, which shook the industry and wiped billions off the crypto market.
Many small investors are concerned about the failure of the rival exchange, which was founded by Sam Bankman-Fried.
“We’re in a new industry; we’ve seen things go wild in the industry in the last week,” Mr. Zhao, also known as CZ, told Reuters.
“We need some regulations, we need to do it properly, we need to do it in a stable way.”
Mr. Zhao, however, stated that crypto companies had responsibilities as well.
“The industry has a collective responsibility to protect consumers and everyone. So it isn’t just the regulators “He stated.
In many countries, crypto assets are unregulated in comparison to other financial sectors, with few consumer protections.
The UK government has previously announced plans to regulate stable coins, which are designed to have a stable value linked to traditional currencies or assets such as gold.
Mr. Zhao stated that the recovery fund would reduce the risk of “cascading negative effects” following FTX’s bankruptcy for otherwise strong companies that are unable to find enough cash or assets that can be easily converted into cash to cover their immediate needs.
Binance’s announcement that it would sell its holdings of FTX’s cryptocurrency, FTT, and its subsequent withdrawal from a rescue deal for the troubled exchange.
After conducting due diligence checks – were factors in FTX’s collapse, which wiped an estimated $200 billion (£170 billion) from the crypto market in a matter of days.
And it is now feared other crypto businesses could be at risk, as investors withdraw funds.
Meanwhile, as part of their investigation into the crypto asset industry, UK MPs on the Commons Treasury Select Committee were able to question business figures such as Binance.
Binance’s vice-president of government affairs in Europe, Daniel Trinder, denied that the company’s actions contributed to FTX’s demise.
This, he claimed, was due to “failures in governance, risk management, excessive leverage, and, if the reports are correct, inappropriate use of clients’ assets.”
Instead, Binance had been attempting to save FTX, fully aware of the implications for the entire industry.
He told MPs that the exchange “started that due diligence process and realized something was very wrong and we pulled out of it.”
He argued that the incident demonstrated the need for regulation.
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