Crypto news

Star Xu, founder and CEO of the crypto exchange OKX, made an unexpected statement: the tightening of regulations on Binance worldwide is one of the best developments for the entire crypto industry. In his view, the era of regulatory arbitrage, which for years was the main competitive advantage of the largest exchange, is coming to an end.

The discussion was sparked by information that the Greek regulator HCMC may reject Binance's application for a MiCA license. Without it, Binance risks losing the ability to serve clients in the European Union from July 1, 2026. Notably, OKX itself has already obtained a MiCA license through Malta, so Xu is speaking from the position of a direct competitor.

What is the essence of the OKX head's position?

Xu claims that many mistakenly believe that increased regulation of Binance threatens competitors. On the contrary, he holds the opposite view. For over a decade, competition in the crypto sector has largely been determined by regulatory arbitrage. Companies operating with fewer restrictions gained an advantage over those investing in licenses, compliance, and governance.

As regulators bring Binance to uniform standards worldwide, this advantage is gradually disappearing. Competition, Xu believes, should be built not on who operates under the fewest rules, but on products, technology, execution, governance, and trust. His main point is simple: regulating Binance in more jurisdictions is not a threat to the industry, but a positive development. For years, the exchange's strongest competitive advantage was not technology, liquidity, or products, but precisely arbitrage and control over the narrative.

As regulators increasingly focus on governance, control, and real results, rather than marketing and social media influence, these advantages are weakening. The future winners of the crypto market, Xu is convinced, should be determined by better products, responsible treatment of users, and the ability to manage risks, not by the ability to operate outside the rules.

What does Xu accuse Binance of?

Binance's success, according to Xu, was built not only on technology and liquidity but also on the ability to create and promote narratives around crypto assets. The exchange, founded by Changpeng Zhao, built a vast ecosystem of founders, former employees, venture capital funds, and related projects that received listing rights and access to a retail audience. At the same time, many tokens lost more than 95% of their value after launch.

Xu describes this as a "self-sustaining cycle": when one narrative fades, a new one immediately appears, insiders and early participants gain disproportionate benefits, and the majority of losses fall on retail investors. Instead of losses in the previous cycle, users are urged to focus on potential profits in the next one.

Separately, the OKX head criticized Binance's compliance, calling it a transition "from avoiding regulation to paper compliance." He recalled that after a series of enforcement actions and a four-month prison sentence for Binance founder Changpeng Zhao, the company changed its public stance and began presenting itself as "one of the most law-abiding in the industry."

However, according to Xu, what matters is not the number of hired specialists, but whether the programs are aimed at managing real risks or merely creating the appearance of legal compliance. Xu also raised the issue of transferring regulatory risks to separate entities, pointing to Binance's exit from Russia through the sale of its business to CommEX and the exchange's connection with the Aster project.

Analyst's comment: Star Xu's position is not just goodwill from a competitor, but a clear signal to the market. OKX, which has already obtained a MiCA license, is clearly aiming to take Binance's place in Europe if it loses its license. However, his criticism of "regulatory arbitrage" and "narrative control" is an accurate description of a problem facing the entire industry, not just one exchange. The market is indeed moving toward maturity, where the rules of the game will be the same for everyone, and this will ultimately benefit honest participants.