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Changpeng Zhao (CZ), the CEO of Binance, shared his insights on cryptocurrency regulation, national crypto reserves, and the intersection of AI and blockchain during a fireside chat with Raoul Pal at the Token2049 event in Dubai on April 30. His discussion addressed key challenges and opportunities in the evolving crypto landscape, offering valuable advice for governments and investors alike.

The Challenges of Localized Crypto Infrastructure

CZ highlighted the difficulties countries face when attempting to localize their cryptocurrency infrastructure, including wallets, custody solutions, and order books. According to him, establishing secure custody solutions to manage billions of dollars is resource-intensive and requires significant expertise, which many nations lack.

“For each cold wallet, you need about 15 signers,” CZ explained. “You can’t find 15 signers who are not public, extremely trustworthy, and geographically dispersed. These individuals need to have steady jobs, high incomes, and stable lives. Finding this level of expertise on a large scale is nearly impossible.”

He also emphasized the inefficiency of creating separate order books for each country. “If you divide each country with their own order book, liquidity will suffer,” CZ noted. Localized exchanges with lower trading volumes are more prone to extreme price volatility, especially during market swings, making them less reliable.

Crypto as a Strategic National Reserve

During the discussion, CZ pointed to Bhutan as an example of a forward-thinking nation leveraging its surplus clean energy to mine Bitcoin. Bhutan’s proactive approach demonstrates how cryptocurrencies can contribute to national wealth and sustainability.

CZ advised other countries to consider adding cryptocurrency to their strategic reserves sooner rather than later. “Waiting too long could mean purchasing at much higher prices,” he warned. He recommended starting with modest allocations, using professional custody solutions, and eventually transitioning to secure cold storage as holdings grow.

The Role of AI in Crypto Adoption

Another critical topic CZ addressed was the relationship between artificial intelligence (AI) and cryptocurrency. He urged developers to focus on building AI agents with real utility rather than launching tokens without purpose. “Today, there are so many AI agents with tokens, but most of these tokens lack real utility,” he stated. “I want to see agents that can genuinely help users, with tokens that serve a clear purpose.”

CZ criticized the trend of AI token launchpads that allow anyone to create token-backed AI agents with minimal effort. “99.99% of these tokens are useless,” he said. However, he expressed optimism about the future, predicting that AI will revolutionize the blockchain ecosystem and drive broader crypto adoption.

“The currency for AI is crypto,” CZ said, emphasizing that traditional payment systems are not designed to meet the needs of an AI-driven economy. “AI is not going to swipe a card or get an SMS code. That doesn’t work for AI. It’s going to be crypto.”

Key Takeaways for Beginners and Investors

For those new to cryptocurrencies or at an intermediate level, CZ’s insights offer actionable advice:

  • Countries should prioritize professional custody solutions for managing crypto reserves securely.
  • Investors should be cautious about AI-related tokens and focus on projects with real utility.
  • As AI adoption grows, cryptocurrencies are likely to play a central role in the global digital economy.

CZ’s remarks at Token2049 underscore the importance of strategic planning and innovation in the cryptocurrency space. As both governments and investors navigate this rapidly evolving landscape, these insights provide a roadmap for making informed decisions.

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