After interacting with regulators, Changpeng Zhao, CEO of crypto exchange Binance, has come to the conclusion that some countries want to create a separate order book (liquidity) to effectively protect consumers.
He has said:
“This is a bad idea for a number of reasons.”
According to him, ordinary users will suffer if it is implemented. They will lose tight spreads, low slippage and the best execution prices possible in a highly liquid environment.
The latter is an important form of protecting their rights, as it makes market manipulation more difficult, reduces volatility and reduces the likelihood of liquidations.
Zhao has proposed to conduct a thought experiment and divide liquidity into 180 countries. According to him, in this scenario, it will be much easier for large traders to “rock the market,” which will increase the scope of price fluctuations.