The new chief executive of Binance has admitted to "missteps and misguided decisions", as the company pledges to work closely with regulators to boost regulation in the highly volatile cryptocurrency industry.
The world's biggest cryptocurrency exchange sees no need to change its core user-centric "mantra" in the aftermath of a legal case that resulted in erstwhile chief executive Changpeng Zhao stepping down, Richard Teng told The National in an interview.
Mr Teng, the former chief executive of the Financial Services Regulatory Authority at Abu Dhabi Global Market, stressed that taking responsibility for any missteps is "what financial institutions should do".
"Financial institutions do encounter challenges in terms of compliance and should take responsibility for that. And we move on. Now is a new chapter. Our mantra is the same – we focus on financial freedom for everyone," he told The National at the Fortune Global Forum in Abu Dhabi on Monday.
Mr Zhao last week pleaded guilty to criminal charges and resigned from his position as part of a $4.3 billion settlement with the US Department of Justice, as federal prosecutors revealed charges including breaking US anti-money laundering laws, unlawful money transmitting and sanction breaches.
At the moment, aside from "being a resource for only historical areas of the business", he plans "to rest and probably do mentorship for people, invest into this sector and many other sectors that are of interest to him", Mr Teng said.
The cryptocurrency industry has struggled with a spate of challenges, most notably regulators attempting to establish some control over the industry.
Despite this, the sector remains "robust", with new investors and funds flowing through that are being used to build new projects, Mr Teng said.
Binance predicts growing collaboration between crypto players and authorities, contributing to "regulatory certainty", he said.
However, the engagement of authorities on crypto regulations in different jurisdictions is "disparate" – but those who focus would be at the forefront of what is believed to be the future of finance, he said.
"Where policymakers and regulators are willing to spend time, energy and resources to understand the sector, the opportunities and the innovation that the sector brings, as well as how risk can mitigated, [they can be leaders]," Mr Teng said.
"And those are things that are needed for users to have better trust and greater confidence to bring about mass adoption."
Crypto adoption is currently at around 5 per cent, and this would spike to between 20 per cent and 30 per cent "in a short matter of time", Mr Teng said, citing Binance data.
"If you look [at] three years ago, virtually there were no or few jurisdictions regulating crypto, but that trend has started to shift," he said.
"You have different regulators and indeed different traditional finance players with different attitudes towards this. You can't dictate that. Over time, you can only try to change that for the better – knowledge and education – which is what we and other industry players need to do."
Mr Teng also disagreed with the "preconceived notion" that the crypto sector is beset with illicit money and money laundering issues.
While these concerns have been highlighted in several studies, the amount of illicit funds flowing through cryptocurrencies is less than 1 per cent of all crypto funds, Mr Teng said, quoting industry figures.
What is Bitcoin and how did it start?
Blockchain data platform Chainalysis, in its 2023 Crypto Crime Report, noted that illicit activity in cryptocurrency was less than 1 per cent of overall volume.
"I can assure you crypto is a traceable technology. We do a lot of training for law enforcement agencies for them to gain insights into this technology ... a lot of education still needs to take place," Mr Teng said.
The campaign will boost crypto adoption, which is expected to be "much sharper" in the next five years compared with the previous five, he said.
"We do hope to see much greater harmonisation of standards over time," Mr Teng said. "Just like what you see in the banking sector, it's very clear what are the rules and requirements for global banking, global securities firms and asset management firms. And we hope to reach that destination for crypto sooner rather than later."
