On February 1, CZ stated that stablecoin regulation might assist boost adoption and praised Hong Kong's "determined approach."
According to a Feb. 1 Twitter thread, Binance CEO Changpeng Zhao (CZ) stated that stablecoin regulation might assist speed its adoption.
CZ stated that stablecoins are the subject of intense regulatory scrutiny, and that their regulation will “provide much-needed clarity to issuers, users, and service providers.”
Following the failure of Terra's algorithmic stablecoin UST, stablecoins have come under heightened attention in the last year. Financial authorities have emphasized the risks that the asset class poses to the larger financial system and have strengthened their regulation efforts in this area.
CZ observed that the benefits and use cases of stablecoins are already being seen in “cross-border payments, hedging against inflation, and even aid disbursement.”
CZ praises Hong Kongs “decided approach”
The Binance CEO lauded Hong Kong's “determined stance to stablecoins.”
Hong Kong's approach, according to CZ, will provide “a more defined scope for regulated operations, specifically governance, issuance, stabilization arrangements, and wallets - including access and holdings management.” He went on to say:
“[The] Adoption of a risk-based approach to decide which stablecoins are in scope, aiming to mitigate risk to monetary & financial systems – thus starting with fiat-backed.”
CZ stated that he “completely supports” the conditions for 1:1 backing and redemption at par, while promoting BinanceUSD, his exchange's stablecoin (BUSD).
The Hong Kong Monetary Authority (HKMA) recently unveiled regulation guidelines requiring stablecoin issuers to get a license and preventing the growth of algorithmic stablecoins. HKMA stated:
“Stablecoins that generate their value based on arbitrage or algorithm will not be approved. Within a reasonable time, stablecoin holders should be able to exchange their stablecoins for the linked fiat money at par.”
Over the last year, the Asian country, along with the United States, the European Union, Singapore, and Japan, has implemented a variety of regulatory steps to avoid another Terra-like collapse.
Meanwhile, CZ stated that he is looking forward to the Monetary Authority of Singapore's (MAS) and the Financial Stability Board's (FSB) ideas (FSB).
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