Binance CEO calls the USDT stablecoin “a black box”

What’s new? Changpeng Zhao, CEO of cryptocurrency exchange Binance, gave an interview to Protocol in which he spoke about innovations on his platform, assessed the efforts of governments to impose market regulation measures, and responded to accusations of ties to the Chinese government. During the interview, Zhao also expressed his doubts about the strength of the centralized stablecoin Tether (USDT) peg to the US dollar.

The full version of the interview

About USDC and USDT stablecoins. Zhao explained that the exchange did not delist the USD Coin (USDC) stablecoin from the issuer Circle. People can still deposit and withdraw the asset from Binance. However, when deposited, USDC is converted into Binance’s native stablecoin, BUSD, to consolidate liquidity. Asked why a similar move has not been made with Tether’s USDT, Zhao called the asset “a black box” and stressed that he is not sure about the reliability of USDT’s peg to the dollar. In addition, Binance has no channel to convert USDT to dollars.

Binance began converting USDC, USDP, and TUSD stablecoins to BUSD on September 29. In this, the USDT stablecoin is the largest in the digital asset market and ranks third in the overall cryptocurrency ranking with a capitalization of $67,97 billion as of October 3, according to aggregator CoinGecko.

About increased regulation. Zhao is positive about the increased regulation because it brings more clarity to the industry: participants know what to do and consumers know what to expect. However, not all regulations are good. For example, China’s ban on cryptocurrencies has not benefited the country or the industry. In the United States, however, things are going well, including the interaction between banks and crypto exchanges.

Earlier, Zhao praised the White House’s crypto regulation concept and said that the European Union's Markets in Crypto-Assets Regulation would become a “global regulatory standard copied around the world.”

About Binance.US. It is a separate legal entity that uses the Binance product, technology, and brand. Changpeng Zhao sits on the board of directors of the exchange’s US arm, but otherwise, the company is relatively independent.

In August, Binance.US delisted the AMP token in accordance with the decision by the US Securities and Exchange Commission (SEC) — the regulator recognized the asset as a security.

About the Chinese trail. Zhao considers himself a Canadian, insensitive to issues of ethnicity, race, color, and other such things. He stressed that Binance is not a Chinese company and is in no way affiliated with the Chinese Communist Party.

Zhao had previously denied any ties between the exchange and China. According to him, the speculation stems from the fact that he and several other employees of the platform are Chinese by nationality.

About the market downturn. There are too many misconceptions about cryptocurrencies. When Netflix’s stock price drops 70-75%, people do not say the stock market is bad. They are saying Netflix is bad. In the case of cryptocurrencies, when one project collapses, people think the whole ecosystem is bad. According to Zhao, this will fix itself as the industry evolves.

About getting to know cryptocurrencies. In 2013, Zhao played poker with Bobby Lee, who later became the CEO of BTC China. The day after the game, Lee advised him to convert 10% of his assets into bitcoin. Zhao then sold his apartment in Shanghai and invested about $1 million in the cryptocurrency. Then the price of bitcoin fell for about a year and a half.