Binance Chief Executive Officer, Changpeng Zhao, popularly known on social media as ‘CZ’ has given his insight into the request for a segregated order book as requested by several countries.
The trading platform operates in various jurisdictions around the world, and in its efforts to maintain a blossoming relationship with watchdogs, CZ has been having a series of meetings with regulators in different countries. One unique thing that seems to stand out in the conversations is the demand that Binance should create a country-specific order book (liquidity) across the board.
In response to this, CZ said in a Twitter thread that the request for a segregated order book is a bad idea for a number of reasons including the fact that “large liquidity is one of the best Consumer Protection mechanisms. It protects against market manipulation, volatility, and reduces liquidations.”
CZ outlined how reducing the liquidity by dividing it by 180 countries will make it “180x easier for large traders to swing the markets, and significantly increase the volatility.”
This sort of price manipulation will be very prevalent, a trend that is bound to reduce the integrity of the market. While the volatility can somewhat be balanced with arbitrage traders, CZ said this is not as efficient as the order books from exchanges. Changpeng Zhao also revealed that in all,
“Large liquidity also offers better prices for users. Tighter spread. Lower slippage. This is also a very important form of Consumer Protection. Real financial impact for users.”
Binance and Rebranded Relationship With Regulators
Under CZ’s reign, the Binance exchange has grown to become the largest digital currency trading platform with the largest order book amongst its peers. Its position in the industry has earned it a lot of reprove from regulators but over the past year, the table has turned for the exchange.
This year, Binance has tapped a series of licenses including that from Spain, Bahrain, France, and Italy amongst others. Besides these, CZ has had productive discussions with government officials in Turkey and Kazakhstan, further engrafting its feet as one of the major players looking to shape the outlook and regulatory approach in the ecosystem.
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