PARIS: Cryptocurrencies are here to stay and their dramatic recent crash is just part of an economic cycle, Changpeng Zhao, one of crypto’s most influential figures, told AFP in an interview on Thursday.
The China-born Canadian entrepreneur heads Binance, the biggest exchange in the market that boasted $32 trillion in transactions last year and 120 million customers.
“It does cause worries,” Zhao said of a slump that has wiped $2 trillion from the value of crypto assets in the past seven months. “But we expect this, it’s not unusual, the markets go up and down, stock markets go up and down.”
The unflappable mogul, who talked to AFP at the VivaTech conference in Paris, largely steers clear of the flashy displays of wealth associated with many crypto entrepreneurs.
Casually dressed in a company polo shirt, the 44-year-old, who describes himself as a “normal guy”, calmly explained how the firm had weathered a storm that saw others collapse.
“I think we’ve just been very frugal in our spending,” he said.
“We didn’t spend heavily on advertising, we didn’t name stadiums, we didn’t sponsor Super Bowl.”
He quickly added that he did not believe such outlays were necessarily bad, seemingly keen not to directly criticise competitors.
Zhao had earlier tweeted a similar jibe that many took to be directed at Coinbase, a US exchange that spent heavily on flashy ads but is now laying off hundreds of workers.
By way of contrast, Zhao announced this week that Binance was hiring 2,000 new workers.
Binance operates in a largely unregulated corner of the economy that is accused of being a haven for money-laundering, scams, sanctions busting and even terrorist funding.
Zhao called the money-laundering links a “complete myth”.
“We work with law enforcement everywhere in the world,” he said, highlighting that his firm employs ex-law enforcement officers.
“With large data you can really figure out who owns which address with a fairly high degree of certainty,” he said of blockchain, the digital ledger that underpins crypto.
“Because of that, most criminals do not use blockchain for criminal activity. It’s just a very bad tool.”
Nevertheless, he treaded carefully when asked if he supported further regulation.
“The regulators don’t know what to regulate,” he said.
“We have to wait for the industry to develop a little bit and then figure out the regulations.”
He said it could take decades, pointing out that even now banks continued to face new regulations.
Critics see crypto as a glorified ponzi scheme and believe the industry will not last for decades, but enthusiasts like Zhao are keen to compare it with the tech industry of the early 2000s.
He said many companies went to the wall in the 2000s but the sector emerged stronger, helmed by titans like Google and Amazon.
But there is a crucial difference — those internet pioneers had an obvious utility. Few can clearly state the utility of crypto.
Zhao lists what he sees as the “killer apps”, which amount to facilitating fundraising for start-ups and generating income for artists.
“It allows artists and content creators to access a global audience, you cannot do that with traditional art galleries, the infrastructure is just not there,” he said.
He also repeated the idea that cryptocurrencies would allow those without bank accounts to have some means of storing their wealth and transferring money across borders.
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