The CEO of crypto exchange Binance, Changpeng Zhao, has revealed his thoughts on the idea of segregated cryptocurrency markets. According to CZ, this is a great time to maintain liquidity in the market. He revealed this after his talks with governments from different nations.
From our interactions, some countries want a segregated order book (liquidity). This is a BAD IDEA for several reasons.
High liquidity is one of the best Consumer Protection mechanisms. It protects against market manipulation, volatility and reduces liquidations.
— CZ 🔶 Binance (@cz_binance) July 31, 2022
Changpeng Zhao’s involvement in policy discussions has increased dramatically, as seen in discussions held with many governments. This becomes more notable given the global expansion of its cryptocurrency exchange platform, Binance.
Based on the recent news, the exchange platform has expanded its reach to a few more countries (Italy, Spain and Dubai) and the existing countries in which it operates.
CZ sees the need for great liquidity
Changpeng Zhao, a prominent proponent of digital currencies, now sees the need to maintain high liquidity of digital currencies. This is due to the government’s responses to his talks with them. According to governments, there is a need to create segregated digital currency markets. They also want to be in control of the order books.
According to CZ, the decision of these governments is a bad idea. He mentioned it, supporting it with a reason stating that the best mechanism for Consumer Protection is significant liquidity. He added that this mechanism prevents volatility and manipulation and reduces liquidations that could occur in the market.
Additionally, users can enjoy better rates with plenty of liquidity. Also, they can benefit from the consumer protection mechanism through real economic impact, lower slippage and narrower spread.
The Binance factor
Drawing from CZ’s speech, there is a trend for further volatility in the crypto market. This will be possible since Binance currently operates in more than 180 countries. Therefore, dividing the markets based on the terms of the governments will create oscillating markets from the traders.
In addition, CZ believes that there is better efficiency with single-order booksellers than with those of multiple-order books. He expressed this by stating that there is lower efficiency with arbitrage traders using different exchanges or order books than those using a single order book.
Going further, Binance is also developing education and infrastructure based on digital currencies. The platform achieves this through partnerships with certain countries.
Binance helps develop regulatory policies and legislative guidelines for digital currencies in Kazakhstan. The agreement was signed in May 2022 at the meeting between Binance’s CEO and the country’s president.
In addition, in July 2022, a virtual meeting was held between the Turkish Minister of Finance and Finance and Changpeng. This happened while the country was hosting Blockchain Economy Istanbul.
Based on the news, Binance’s first customer service center has been erected in Turkey. This happened in April, two years after the start of its activities in the country.
Featured image from BBC, chart from TradingView.com