The CEO of Binance crypto exchange, Changpeng Zhao, has revealed his thoughts about the idea of segregated digital currency markets. According to CZ, this is an excellent time to keep up the liquidity in the market. He revealed this after his conversations with governments from different nations.
From our interactions, some countries want a segregated orderbook (liquidity). This is a BAD IDEA for a number of reasons.
Large 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 engagement in policy conversations has dramatically increased, evident in the discussions held with several governments. This is becoming more notable given the global expansion of his crypto exchange platform, Binance.
Based on recent news, the exchange platform has extended its reach to a few more nations (Italy, Spain, and Dubai) and the existing countries in which it operates.
CZ Sees A Need For Large Liquidity
Changpeng Zhao, a prominent advocate of digital currencies, now sees a need to sustain large digital currency liquidity. This is due to the government’s responses to his talks with them. According to the governments, there is a need to create segregated digital currency markets. Also, they wish to have control over order books.
According to CZ, going by the decision of these governments is a bad idea. He mentioned this, backing it up with a reason stating that the best Consumer Protection mechanism is significant liquidity. He added that this mechanism prevents volatility and manipulation and reduces liquidations that could occur in the market.
Moreover, users can enjoy better prices with ample liquidity. Also, they can benefit from the Consumer Protection mechanism through real financial impact, lower slippage, and tighter spread.
The Binance Factor
Drawing from CZ’s speech, there is a tendency for further volatility in the crypto market. This will be possible given that Binance is currently functional in more than 180 countries. As such, dividing the markets based on the governments’ terms will create swing markets by traders.
Moreover, CZ believes there is better efficiency with single-order book traders than with those of multiple-order books. He expressed this, stating there is a 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 is assisting in developing digital currency regulatory policies and legislative guidelines in Kazakhstan. The agreement was signed in May 2022 at the meeting between Binance’s CEO and the country’s president.
Furthermore, in July 2022, a virtual meeting was held between the Turkish Minister of Treasury and Finance and Changpeng. This occurred at the time when the country hosted Blockchain Economy Istanbul.
Drawing from the news, the first customer service center of Binance was erected in Turkey. This occurred in April, two years after commencing its operations in the nation.
Featured image from BBC, chart from TradingView.com