The Cardano founder claimed that crypto entrepreneurs must comply with regulation or use completely decentralized systems in the future.
In a Nov. 22 YouTube video, Cardano founder Charles Hoskinson reflected on the news that Binance CEO Changpeng “CZ” Zhao has stepped down from the exchange. Hoskinson claimed that this event represents “the end of an era.” He argued that entrepreneurs g will need to comply with regulation or else develop completely permissionless protocols that can’t be regulated.
The End of an Era https://t.co/d3AcHWu66C
— Charles Hoskinson (@IOHK_Charles) November 22, 2023
In the video, Hoskinson claimed that CZ was “part of a class of entrepreneurs in the cryptocurrency space that really epitomized the move fast, grow, and innovate side of things.” In the early days of crypto, Bitcoin traders used spreadsheets to make trades and sent funds to buy Bitcoin via PayPal, Hoskinson said. This period represented the “first wave” of innovation in the space. CZ and Binance came in the “second wave” in 2017 and became a “Leviathan in our industry.” “He [CZ] was one of the greatest entrepreneurs of our time,” Hoskinson stated, adding that “trillions of dollars of assets flowed through his exchange.”
However, Hoskinson warned that the world is changing, and entrepreneurs will no longer be able to get by using centralized systems while simultaneously not complying with regulations. This is because “the U.S. has a financial regime that basically has been weaponized,” and this regime will not allow entrepreneurs to open up markets that let “the enemies of America […] Trade and do things.” Hoskinson claimed that the world is becoming “multipolar,” leading many countries to reject this U.S.-led system. In his view, this is leaving crypto “caught in the middle,” resulting in incidents like the Binance plea-deal.
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He suggested that the U.S. government will likely continue its efforts to regulate crypto services, including eventually “hitting” or trying to put restrictions on external wallets. However, he also claimed that entrepreneurs “still have a lot of power” that can be used to foster freedom while also allaying some of the concerns of regulators. Hoskinson suggested that Midnight, a network aimed at facilitating transactions based on algorithmic law, may provide part of the solution to the problem of government regulation of crypto.
On Nov. 21, the U.S. Justice Department announced that CZ and Binance had agreed to a plea deal connected to criminal charges of violating the U.S. Bank Secrecy Act. On the same day, CZ announced that he was stepping down as CEO of the exchange, and he posted a bond of $15 million to a United States District Court to be released from custody. CZ’s sentencing hearing is scheduled for Feb. 23, 2024. Hoskinson referred to CZ as “a friend” and “a good man” in the video.
