The head of the world’s largest cryptocurrency exchange has told global leaders that new regulations are needed.
Binance CEO Changpeng Zhao was speaking at a conference in Bali, Indonesia, attended by leaders of the G20 group.
The company has also announced plans for a recovery fund to help ailing crypto companies.
It follows the bankruptcy of the FTX exchange that rocked the industry and wiped out billions from the crypto market.
The failure of the competing exchange founded by Sam Bankman-Fried has many small investors fearing they could face huge losses.
“We’re in a new industry, we’ve seen things go crazy in the industry over the past week,” said Mr. Zhao, aka CZ, according to Reuters news agency.
“We need some regulation, we need to do this properly, we need to do this in a stable way.”
But crypto companies also have responsibilities, Mr. Zhao said.
“The industry has a collective responsibility to protect consumers, to protect everyone. So it’s not just the regulators,” he said.
In many countries, cryptoassets are lightly regulated compared to other financial sectors, with little protection for consumers.
The UK government has previously announced plans to regulate stablecoins, which, as the name suggests, are designed to have a stable value pegged to traditional currencies or assets like gold.
Mr Zhao said the recovery fund – for otherwise strong companies unable to find enough cash or assets that can be easily converted into cash to meet their immediate needs – would face the risk of “cascading negative impacts”. of FTX bankruptcy.
Binance’s announcement of divesting its holdings in FTX’s cryptocurrency, FTT, and subsequent abandonment of a bailout deal for the ailing exchange – after conducting due diligence – were factors in the collapse of FTX, worth an estimated $200 billion. USD (GBP 170 billion) wiped out the crypto market in a matter of days.
And there are now fears that other crypto companies could be at risk if investors withdraw funds.
Meanwhile, UK MPs on the Commons Treasury Select Committee have been able to question business numbers, including Binance, as part of their inquiry into the cryptoasset industry.
Daniel Trinder, Binance vice president of government affairs in Europe, denied that the company’s actions contributed to FTX’s collapse.
That, he claimed, was caused by “failures in governance, risk management, excessive leverage and, if we believe the reports, inappropriate use of client assets.”
Instead, Binance had tried to rescue FTX, recognizing the impact on the entire industry.
He told MPs that the exchange “started this due diligence process and realized something was very wrong and we pulled out of it”.
The incident, he argued, showed the need for regulation.
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