- Patrick Hillman is the Chief Strategy Officer of Binance, the world's largest cryptocurrency exchange.
- The CEO explained how weak regulation can lead to increased volatility in the cryptocurrency market.
- Binance has faced a series of investigations into its US activities by the Department of Justice and the SEC.
The cryptocurrency market has made significant progress in recovering from the 2022 crisis, with Bitcoin up nearly 50% year-over-year and the total cryptocurrency market value once again exceeding $1 trillion.
But a senior executive at cryptocurrency exchange Binance says there will be more volatility in 2023. According to chief strategy officer Patrick Hillman, one of the market's biggest concerns is the increasingly strict and ineffective anti-corruption laws in the United States.
"The United States has always been a place of great innovation. [The state] has [also] taken the lead on speech regulation," Hillman told Insider. Unfortunately, I think what we're seeing now hurts [investors] over time.
Earlier this month, the New York City Department of Financial Services asked blockchain platform Paxos to stop issuing the Binance-branded stablecoin BUSD. According to the Wall Street Journal, regulators declared BUSD an unlisted security and ordered the company to stop issuing tokens.
New York's enforcement letter against Paxos comes as the US Securities and Exchange Commission cracks down on stablecoins.
Over the years, stablecoins have been seen by investors as a safe haven for their cryptocurrencies because the tokens are often backed by tangible assets such as cash, bonds or commodities.
But the story changed after the collapse of the algorithmically stable coin TerraUSD last May, which badly cost the investors and retailers billions of dollars.
SEC Chairman Gary Gensler said in September that stablecoins are "similar to and potentially competitive with money market funds and raise important policy questions."
But Hillman warned that the absence of statscoin due to regulation would "remove protection" for cryptocurrency investors.
"When you take it to the consumer, the insurance is gone," he said. "At the same time, we're seeing a campaign to pressure US banks not to use cryptocurrency. [Investors] not only don't have the ability to move their money to a safe [location], they also can't withdraw easily No. of exchanges.
Hillman said lax regulation would create "real market volatility" as a result.
In addition to stablecoins, US regulators may restrict volatile tokens such as FTT FTX as well as Bitcoin and Ethereum. Hillman warned that this could "suffocate" a young space.
If not implemented properly, increased oversight from regulators and regulators may cause industry players to move their business elsewhere. That could cause the United States to fall behind in innovation, he added.
"We really hope it's not going to be a sustainable development [by regulators], but all signs [point to that]," Hillman said. "As a result, it leaves companies that are legitimate and want to be regulated in America... no choice but to go overseas."
Binance has faced several investigations by US regulatory and law enforcement agencies in recent years, including investigations by the Department of Justice, the SEC and the Commodity Futures Trading Commission. Hillman told The Wall Street Journal that Binance will have to pay the fine when it completes the US investigation.
Meanwhile, Reuters reported earlier this month that Binance secretly accessed the bank accounts of its US subsidiary, which appears to be independent. The cryptocurrency giant reportedly transferred $400 million from its account to trading firm Merit Peak, which is headed by Binance CEO Changpeng Zhao.
After the Reuters article was published, "the market organization Merit Peak, which operates on the Binance.US platform, is ceasing all activities on the platform in 2021," Binance.US tweeted.