Binance CEO CZ has argued that separating wallets on cryptocurrency exchanges is a bad idea for the market. According to him, many countries are ready to implement these measures.
However, he shared his opinion on the matter and indicated that he disagreed with a number of issues that could affect consumers.
In Brazil, for example, Brazilian brokerages lobbied MPs to pass a bill with portfolio segregation. It’s unclear, however, if CZ spoke directly about the South American country in his explanation, as he cited “some countries.”
Binance CEO says it’s a bad idea to separate wallets by cryptocurrency exchanges
Binance cryptocurrency consumers around the world saw the exchange’s CEO, CZ, speak this Sunday (31) about a topic unknown to many, namely wallet segregation.
Emphasizing that exchanges should not split their liquidity, which could cause problems with crypto whales, CZ said having a single wallet is important for consumer protection and better market liquidity.
“From our interactions, some countries want a separate backlog (liquidity). This is a bad idea for several reasons. High liquidity is one of the best mechanics of Consumer Defense. It protects against market manipulation, volatility and reduces liquidations.
From our interactions, some countries want a separate backlog (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
He further stated that arbitrage traders are not as effective in regulating the price as an order book, which should be only one in the opinion of the entrepreneur.
Also, since the brokerage’s clients manage the order books for their trades, the more liquid the better.
According to CZ, Binance currently has the highest liquidity in the market and therefore the highest consumer protection in this regard, which makes it a bad idea to split (separate) your trades. In practice, this means that the broker’s clients from anywhere in the world have access to a single order book.
Bill in Brazil will be back on the agenda next Monday and Brazilian brokers push for segregation
In Brazil, Bill 4.401/2021, which once approved in the Federal Senate provided for the separation of portfolios, will be back on the agenda of the plenary of the Chamber of Deputies next Monday (1/08) .
However, not all MPs agree with segregation in the bill. Thus, rapporteur Expedito Netto (PSD-RO) withdrew this PL forecast from the vote, although Brazilian brokerages expect the item to return to the agenda.
It is not clear whether in Brazil the legislation will provide for segregation or not, but for the CEO of BinanceIt’s a bad idea.