Changpeng Zhao, the CEO of the Binance cryptocurrency exchange, has shared his opinions on the concept of segregated digital currency markets. CZ believes that now is a great time to maintain market liquidity. After speaking with several different governments, he revealed this.
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
The discussions held with various governments show a sharp increase in Changpeng Zhao’s participation in policy discussions. Given the globalization of his cryptocurrency exchange platform, Binance, this is becoming more significant.
According to recent news, in addition to the existing countries in which it operates, the exchange platform has expanded its reach to a few additional countries, including Italy, Spain, and Dubai.
A well-known proponent of digital currencies, Changpeng Zhao, now believes that large digital currency liquidity must be maintained. This is as a result of how the government reacted to his conversations with them. Governments claim that separate markets for digital currencies are required. Additionally, they want control over order books.
CZ thinks it’s a bad idea to follow these governments’ decisions. He brought up this point and supported it with the argument that substantial liquidity is the best Consumer Protection mechanism. He continued by saying that this mechanism lessens the possibility of market liquidations by preventing volatility and manipulation.
Additionally, users can benefit from better prices with lots of liquidity. They can gain from the Consumer Protection mechanism by reducing slippage, tightening the spread, and making a real financial impact.
Based on CZ’s speech, the cryptocurrency market is likely to experience more volatility. This will be possible given that Binance is currently functional in more than 180 countries. Therefore, segmenting the markets in accordance with the terms of the governments will result in swing markets for traders.
Furthermore, CZ thinks that traders using single-order books are more efficient than those using multiple-order books. He made this point by claiming that arbitrage traders who use various exchanges or order books are less efficient than those who use a single order book.
Further still, Binance is creating infrastructure and education based on digital currencies. The platform accomplishes this through alliances with particular nations.
In Kazakhstan, Binance is assisting with the creation of legislative and regulatory frameworks for digital currencies. At a meeting between the president of the nation and the CEO of Binance, the agreement was signed in May 2022.
Additionally, Changpeng and the Turkish Minister of Treasury and Finance held a virtual meeting in July 2022. When the nation hosted Blockchain Economy Istanbul, this happened.
In response to news reports, Binance’s first customer service location was built in Turkey. Two years after starting its operations in the country, this happened in April.