Crypto will be fine, announces industry recovery fund

The chief executive of the largest online exchange for trading cryptocurrencies, Binance, said he is setting up a recovery fund to help people in the industry, saying the sector “will be fine.”

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The CEO of the largest online exchange for trading cryptocurrencies said Wednesday that he is setting up a recovery fund to help people in the industry, saying the sector “will be fine.”

“We want the strong players in the industry to protect the good players in the industry that could be hurt in the short term,” Binance CEO Changpeng Zhao said during an interview with CNBC’s Dan Murphy at Abu Finance Week. Dhabi.

“That’s not to say we can save everyone. If a project is mismanaged on multiple fronts, we won’t be able to help them anyway.”

Zhao said that the cryptocurrency had “shown extreme resilience,” suggesting that he did not expect the recent turbulence in the industry to cause long-term damage. He did not specify an exact figure for the size of the recovery fund.

His comments come just a week after Binance. backed out of a deal to bail out rival exchange FTX, which filed for bankruptcy on Friday.

The price of bitcoins It fell below $17,000 for the first time since 2020 and there are concerns of so-called “crypto contagion” could lead to the downfall of other big names in the industry, such as the CEO of the company denied the claims and said the platform was “conducting business as usual.”

“In the short term there is a lot of pain, but in the long term it is accelerating the efforts we are making to make this industry healthier,” Zhao said.

The CEO said on Monday that Binance had seen a “slight increase in withdrawals” in the past week, but said this was in line with other dives in the market.

“Every time prices drop, we see an increase in withdrawals,” Zhao said. “That’s pretty normal.”

Regulations will help, but they won’t fix everything

Zhao said he wants to form an organization that can “set best practices” across the industry, which is known for its lack of regulation.

“Regulations need to be tailored to this industry,” Zhao said. “Regulation won’t fix all this, it will reduce it. It’s important, but we have to have the right expectations,” she added.

Zhao reflected on how there were elements of traditional finance that could help the cryptocurrency market become more regulated and trustworthy, but the practices would need to be adapted to fit their purpose.

The “transparency” and “audit” aspects of traditional finance could benefit the crypto industry, but there are “subtle but very important” differences that should be made, according to the CEO.

“Too many regulators are more traditionally minded, they need to be crypto minded,” he said.

The comments echo those made by Ripple CEO Brad Garlinghouse, who said that the idea that cryptocurrencies are “unregulated is overblown” but that “transparency builds trust.”

“Crypto has never been all about sunshine and roses and as an industry it needs to mature,” Garlinghouse said on CNBC’s “Squawk Box Europe” on Wednesday.

Economist Nouriel Roubini took a different line in his Abu Dhabi Finance Week interview and described crypto and some of its major players as a “totally corrupt ecosystem”.

The New York University professor said there were “seven Cs of crypto”: “Hidden, corrupt, thieves, criminals, scammers, carnival barkers” and, finally, Changpeng Zhao himself.

— CNBC’s Jenni Reid and Ryan Browne contributed to this report.