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Changpeng Zhao, Binance chief executive officer, discussed regulations and crypto ETF in a recent interview with Bloomberg. According to him,
“Most institutions or organizations should be looking at crypto at this stage.”
Institutions get serious
Let’s recall that just last month, Jamie Dimon, JP Morgan Chase chairman, and CEO, had called Bitcoin “worthless”. But, inflows in crypto assets this year are breaking all records. According to the CoinShares report dated 8 November 2021, YTD inflows stand at record levels of $8.9 billion.
Apart from that, CZ also stated,
“Crypto is going to be the future of the FinTech industry. And to be honest, it’s going to be the future of money.”
While there are industry skeptics that believe the crypto bubble will likely burst, institutions who believe otherwise are gearing up. Recently, Mastercard announced a partnership with a series of crypto companies to launch crypto-funded payment cards. And, more fund managers are now looking at exchange-traded funds that focus on crypto.
ETF galore
Bitcoin’s recent rally was largely backed by the first future-based Bitcoin ETF approval in the United States. CZ Binance has also commented that the “development of ETFs is a very positive thing.”
But, it is noteworthy that more applications are being filed in the meantime. BlockFi and with Neuberger Berman filed for a spot Bitcoin ETF. As it is a physically-backed Bitcoin ETF, there are likely to be regulatory hurdles before it is cleared.
BlockFi has filed with the SEC to launch a spot #Bitcoin ETF pic.twitter.com/2F1s0D1N3W
— Dylan LeClair ? (@DylanLeClair_) November 8, 2021
But, with so many offerings, is the market becoming saturated? CZ thinks it’s not the case yet.
State of competition
The Binance CEO stated that currently, there’s no overlap in the sector. He said,
“The crypto industry is only about 5% penetration globally. So out of a billion people, probably only about 400 million people have crypto, it’s already a large number, but it’s only 5% adoption.”
Therefore, he explained that a saturation level might begin as we get to 95% adoption.
Bank of America chief operating officer Tom Montag had also spoken about crypto competition in a recent event. In the context of traditional businesses, he noted that crypto can provide a ‘technological jump’ to banks. Similar to CZ’s outlook, Montag said,
“We look forward to figuring out a way to use it [crypto] best and have it be part of the system.”
Clampdown or acceptance?
But, incorporating crypto in mainstream finance would require close coordination with regulators. In a previous interview, Binance co-founder Yi He had discussed efforts to “work better with regulators.” While the company is making progress with its recent high-profile hiring, CZ reiterated that Europe and the U.S. are large markets. He said,
“So we want to leverage that and help to grow the community in France and also Europe.” (sic)
Meanwhile, in terms of the U.S. regulations, he noted,
“U.S. regulators typically care very heavily about KYC AML, terrorist money laundering, etc. …”
And, Binance has been be currently focusing on working “closely with regulators all around the world,” according to CZ. Well, the looming question is, should other crypto businesses follow the same route?
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