CZ: Instead of Speculating, Let's Discuss Crypto Implementation and Regulation
Dialogue about the future, tax collection, and the impact of the collapse of the FTX crypto exchange on the B20 forum
Deputy Chairman of the Indonesian Fintech Association (AFTECH) Aldi Haryopratomo met face-to-face and chatted with Binance Founder & CEO Changpeng Zhao (CZ), at the official B20 dialogue forum which was also part of the G20 Summit (KTT) event in Bali, Wednesday (16/11) ).
In her conversation, CZ mentioned many related things crypto industry, from the basic topic regarding use case, the future, to the hot situation that emerged after the recent FTX global crypto exchange bankruptcy filing.
Aldi summarizes some of the important essence of his dialogue with CZ as stated in his personal Medium page.
Internet past is a new technology for the transfer of information, crypto at the moment is a new technology for value transfer
According to CZ, most of them still associate crypto as a speculative product that once can fly high or even collapse. However, [crypto] is a different and new way of transferring value.
"The Internet is just a new technology for transferring information. That's it, just a data service running through the wires or the air. But, thanks to it, we can build whole industries. New economies. Virtual worlds."
Crypto has a lot use case and new business model opportunities
If technology [was] related to information, the new technology that exists today [crypto] is related to money. The impact will be huge. Technology, in creating a better form of money, will produce a better form of industry fintech and finance, which will become pillars of every other sector.
[Crypto] is becoming the most foreign investment form direct. Every leader he spoke to, was willing to invest directly. However, why not let entrepreneurs raise funds using blockchain, like ICO and other models? There are many use case crypto. When Covid-19 Delta hit last year, global fundraising was effective, coins could be transferred instantly. Copyright on NFT digital assets also already exists.
"We can build new business models that will change the way we fundraise, pay, and invest. Now we can micropayments, send money cross-border, NFT, Metaverse. All of that will happen, in fact already, like a global fundraising via ICO."
However, in cases like fundraising for security purposes—even when the technology allows it—is too tightly regulated and supervised. In the United States (US), the government runs duck test to determine whether something is safe or not. For example on security, if it sounds or walks like a duck, it means it's safe.
So, education is needed awareness regarding the utilization of crypto regardless of the speculation broadcast by the mainstream media. That way, the public and regulators can consider the advantages and disadvantages.
Industry players and regulators need to work together to protect consumers
Collectively, CZ assesses that the role of the industry is to protect consumers so that they can protect everyone. Don't just regulate parties that have a role, but also those that are not fully their responsibility.
Most of the regulators I've spoken to say their biggest worry is that people will lose interest in speculating with crypto coins. The collapse of FTX actually validates this fear. it becomes "wake-up call" for regulators and industry players.
Seeing the recent situation, his party is trying to gather industry players to form associations on a global scale. "We're in a new industry. We've seen the last few weeks, a lot of crazy things happen. Need regulation to run this in a stable and correct way."
Unlimited crypto but limited regulation, making it difficult to control
"There's a sort of balancing force between technology and innovation versus the traditional concept of country border. If you think about national borders, it's actually a man-made concept, right? That is, naturally, the state border never existed. It's like a group of people agreeing that this is the boundary that becomes the border."
And now the technologies we have no are post-internet. The internet developed doesn't have a lot of borders.”
In the case of FTX, they operate out of the Bahamas, but take deposits from Singapore, US, Europe, etc. This means that people can move their money outside the borders of their country. Now, [crypto]exchange has collapsed, the government will surely look for ways to protect its citizens from future destruction.
He rated a framework to regulate crypto way on G20 countries is necessary. Industry players need to be held accountable and must face the attempts of regulators to demand clarity.
Collecting crypto taxes is complicated, but necessary. The question is, how?
"In the crypto world, there is very little concept of national borders. If you levy taxes on companies, transactions, headquarters, trends in the relevant countries, it will affect local transactions. All transactions will shift to global platforms where the tax to be collected is very small ."
In other words, the government must provide licenses easily in order to properly collect income taxes. When granting a license, the government may request data. If it doesn't provide a license, the platform will look for other ways, such as operating offshore Better not wear it taxes on user transactions, but on the company.
CZ also teased about the Indonesian government's decision to levy taxes on crypto transactions. According to him, this rule will add new friction that has the potential to encourage people to run their money out of Indonesia. Precisely that is what the Central Bank is afraid of.
However, on the other hand, collecting income tax requires capabilities that most tax authorities do not yet possess. The IRS implements a global tax regime. US citizens pay income tax wherever they live. Governments have built the infrastructure, capabilities and tools to monitor their citizens.
The problem is, many countries don't have that yet. This is a difficult choice for tax regulators.
Money and talent flow to the countries that innovate the most
"When you do a search on Google, click on an ad on Twitter, it's run by a company in the US. Without boundaries. When you click on an ad, that revenue goes to the US or other countries, or it could be, a local company but serving users worldwide. "
Unlike the world Blockchain. In the era post-internet, much more global scale. Everyone in the country needs to develop talent, also known as the Web3 economy. That way, they can serve the world scale. The better a country is, the better the country's [citizens] run it, and the more they can produce.
Just like any other new technology, one country will adopt it more quickly than others. Today it could be Dubai, next year it could be something else. In other words, regulation will eventually catch up to innovation. Indeed so.
The question is, which countries have adapted the fastest to take advantage of this 'tectonically' technological change in how we move money?