‘Cryptocurrencies are here to stay’, Binance chief says

Evolution of digital assets is expected to continue as millions of people around the globe further develop blockchain and Web3 technology

Zhao Changpeng, founder and chief executive of Binance. Reuters

Cryptocurrencies are here to stay and there is no going back despite short-term price fluctuations, according to the chief executive of Binance, who dismissed the notion that the world’s biggest digital asset exchange had avoided regulators to become more profitable.

The evolution of cryptocurrencies will move forward with the ascent of blockchain technology and Web3 because there are millions of people around the world who are developing the industry, Changpeng Zhao told the Future Investment Initiative in Riyadh on Tuesday.

It will become normal – as the internet is today – for people to say to others in different countries, “Hey, I’m going to send you $20”, and receiving payments from around the world or making payments as little as 10 cents to read an article online, Mr Zhao said.

It is hard to say how many years it will take for cryptocurrencies to reach that level of acceptance. But with the evolution of technology, new use cases are emerging that will boost its acceptance.

Digital currencies have rapidly become popular over the past few years, especially in Asian and Middle East markets.

The Mena region is the fastest-growing cryptocurrency market in the world, accounting for 9.2 per cent of global digital currency transactions from July 2021 to June 2022, according to a report by blockchain data platform Chainalysis.

Individual investors in the Mena region received $566 billion in cryptocurrencies during the period — an annual increase of 48 per cent, Chainalysis said in its 2022 Global Crypto Adoption Index, which was dominated by emerging markets.

Bitcoin, the world’s largest digital currency, plunged from a record high of about $68,000 last year to trade at about $20,500.94 on Wednesday afternoon, while the cryptocurrency sector’s market capitalisation has fallen below $1 trillion.

The sector's rollercoaster ride is far from over, dragged down by this year’s equity bear market, global economic uncertainty, higher interest rates and a sharp rise in the cost of living around the world, according to analysts.

A number of exchanges have folded during the so-called "crypto winter" but Binance continues to grow.

Asked if the success of the exchange over the past five years was due to it avoiding regulators in the US and the UK, Mr Zhao said “that is a totally wrong view on many, many different levels”.

“You become successful by providing a product that people like to use and become successful by protecting consumers, protecting your users and not by dodging regulators or anybody else," he said.

“We actually embrace regulation. We want regulatory clarity, so we work with governments all over the world to enhance, or to adopt regulations, or to [even] draft regulatory frameworks for our industry.”

“So, we work very collaboratively with multiple governments, including the United States. We have a huge part of us, a US entity that specifically serves the US market that has 44 US state licences, so we are not avoiding regulation at all.”

In September, Binance won approval to join the minimal viable product (MVP) programme from Dubai’s Virtual Asset Regulatory Authority (Vara).

The move allows the company to offer a range of virtual asset-related services approved by Vara to qualified retail and institutional investors in the emirate.

The MVP phase is exclusive to select international players, which will be allowed to carry out commercial operations under Vara's guidelines and risk-mitigation measures, Binance said at the time.

Binance was granted a provisional licence in March. The transition to an MVP licence means the company can open a client money account with a domestic bank and provide a range of services.

Founded in China in 2017, Binance has been strengthening its ties in the Middle East and Europe in recent quarters, after receiving in-principle approval from the Abu Dhabi Global Market in April to operate as a broker-dealer in virtual assets in the capital.

The company also secured regulatory approval from the Central Bank of Bahrain in March to operate as a cryptocurrency asset service provider in the kingdom.

Meanwhile, Mr Zhao said he would probably stick with Elon Musk’s proposed $44 billion buyout of Twitter amid potential concerns from Washington about foreign investors backing the bid.

“I think so,” he was quoted as saying by Bloomberg, when asked if he would stand by his financial commitment to Mr Musk.

Officials from US President Joe Biden’s administration are discussing whether the US should subject some of Mr Musk’s ventures to national security reviews, including the deal for Twitter and SpaceX’s Starlink satellite network, Bloomberg reported.

The billionaire chief executive of Tesla has notified investors who committed to provide funding for his proposed acquisition of Twitter that he plans to close his buy-out of the social media platform by Friday, Reuters reported.

Equity investors such as Sequoia Capital, Binance and the Qatar Investment Authority have received the requisite paperwork for the financing commitment from Mr Musk's lawyers.

The move is the clearest sign yet that Mr Musk plans to comply with a Delaware court judge's deadline to complete the transaction by Friday.