Changpeng Zhao, the chief executive of top crypto exchange Binance, says dividing up crypto markets by country will likely spell volatility for digital assets.
Zhao suggests countries asking for “segregated order books,” meaning separate liquidity within their borders, risk boosting the volatility of crypto markets.
“Large liquidity is one of the best consumer protection mechanisms. It protects against market manipulation, volatility, and reduces liquidations.
Imagine if we divided the liquidity by 180 countries. It will make it 180x easier for large traders to swing the markets, and significantly increase the volatility.
There will be arbitrage traders trying to bring the prices to balance, but they are not nearly as efficient as one orderbook. And they make money in between (which is paid by the consumers).”
The CEO also notes that large liquidity provides better prices, tighter spread and lower slippage for customers.
“Another misunderstanding people sometimes have: on an exchange, users don’t choose a counterparty. They just trade with the order book. You can think of the order book as a broker.”
Binance is registered in the Cayman Islands but currently doesn’t have an official headquarters. Zhao told Fortune earlier this year that the exchange was looking to establish an actual headquarters “very soon.”
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