A unique app for overcoming difficulties in cryptocurrency

One of the leading cryptocurrency exchanges, Binance Holdings, and its CEO Changpeng Zhao have opted for a compromise with U.S. authorities instead of $23 billion dollars and no extradition agreement with the UAE. We don't know all the details on the deal, especially the timing of the execution, but it looks like it will allow Binance to continue as the largest cryptocurrency exchange in the world, and Zhao will retain his spot in the top 100 of the Bloomberg Billionaires Index.

This deal, however, could have a negative impact on Binance's reputation among many of its customers, especially outside of the United States. Those looking for US-compliant cryptocurrency exchanges have already turned their attention to alternative platforms such as Coinbase Global.

The bigger problem is the relationship between the traditional and cryptocurrency financial systems. General public attention is focused on the cryptocurrency frontier, where people exchange fiat money for cryptocurrency, trade crypto-assets to earn fiat currency, raise fiat money for crypto-projects, or use cryptocurrency to buy ordinary goods and services. This is driven by public interest in the conflicts, crimes and penalties, and gains and losses in the cryptosphere.

This perspective is far from reality, however, as it ignores the much more significant history of crypto protocols that do not require interaction with the traditional financial or legal system. Hot trends in the crypto industry include projects in the meta universe, Web 3.0, Layer 2 and Layer 3, and not to forget DeFi despite the 2022 setbacks. While all of these concepts have clear technical definitions, they are not used to categorize and track real projects, but rather are marketing terms to create hype. But progress has been made on all of these fronts, and more.

Binance has grown on the frontier, operating in an uncertain and uncoordinated regulatory environment across countries, satisfying customers and angering regulators. Apparently, the exchange has now decided to move into civilized territory on the legal side of the border. U.S. regulators appear ready to accept Binance as a legal immigrant.

Together with other agreements reached this year and expected developments such as the SEC's approval of a Bitcoin exchange-traded fund (ETF) in place, this indicates a negotiated truce between regulators and people who want to move fiat currencies in and out of cryptocurrency.

Many proponents of the purity of cryptocurrencies' artificially created spectrum are deluded. We believe that the future of cryptocurrency is not tied to the traditional financial system, the protocols that will turn society upside down will not be funded by fiat money, nor will their value be easily converted into fiat money. Many participants in the cryptosphere want to reduce the coercive power of the state and the large financial sector rather than cooperate with them, much less molest them on their terms.

There are plenty of people in the cryptosphere who welcome peace on the frontier with clear rules. One reason is that it will help reduce fraud and counter crime from ransomware to terrorism. Another reason is that it will reduce the cost of processing fiat capital to fund crypto projects and increase the value of fiat currency that can be extracted from successful projects. But perhaps the biggest reason is that it will allow honest people to use "safe-harbour" provisions to operate in the cryptosphere without fear of prosecution.

The regulatory environment is also divided between those who want to bring cryptocurrency into the existing legal regime and those who prefer to separate cryptocurrency from fiat money as much as possible. Zhao's deal with U.S. regulators appears to be a victory for the first group. If the deal suits both sides, we can expect other pioneers of the cryptocurrency frontier to join this truce as well.

The future of cryptocurrency will be determined by technology, not by the billionaires and lawyers negotiating land on the frontier. If the cryptosphere offers a "cool" program that convinces hundreds of millions of people to learn how to use real cryptocurrency, not just keep crypto investments in a portfolio or speculate on NFTs, then it can grow on its own without having to ask permission from regulators or attract traditional investors. Without such a potentially attractive program, cryptocurrency will remain a useful technical tool for a narrow range of projects and true supporters with little economic value to the interests of advocates and most investors.