Crypto news

OKX founder and CEO Star Xu has expressed a position that many find unexpected: the global regulatory pressure on Binance is one of the best things to happen to the crypto market. In his view, the era of regulatory arbitrage, which for years gave the largest exchange an undeniable advantage, is coming to an end.

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

Paradigm Shift: From Arbitrage to Quality

Xu argues that many mistakenly view the tightening of regulations on Binance as a threat to competitors. On the contrary, it is a positive signal. For over a decade, competition in the crypto sector was defined by regulatory arbitrage: companies with fewer restrictions gained an advantage over those investing in licenses, compliance, and risk management.

Now, as regulators bring Binance to uniform standards worldwide, this advantage is disappearing. Xu emphasizes that competition should be built on products, technology, execution, governance, and trust, not on the ability to operate outside the rules.

The main point of his message is simple: the exchange's strongest competitive advantage was not technology, liquidity, or products, but rather arbitrage and control over the narrative. As regulators increasingly focus on real results rather than marketing and social media influence, these advantages weaken.

Criticism of the Binance Model

Xu elaborated on how Binance's success was built. In his opinion, the exchange created a vast ecosystem of founders, former employees, venture capital funds, and related projects that received listings and access to a retail audience. Meanwhile, many tokens lost over 95% of their value after launch.

He describes this as a "self-sustaining cycle": when one narrative fades, a new one immediately emerges, insiders and early participants reap disproportionate benefits, and losses fall on retail investors. Instead of focusing on losses from the past cycle, users are encouraged to concentrate on potential profits in the next one.

Separately, the OKX head criticized Binance's compliance, calling it a transition "from rejecting regulation to paper regulation." He recalled that after a series of enforcement actions and a four-month prison sentence for 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.

He also raised the issue of shifting 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 to the Aster project, whose operational model is considered similar to Hyperliquid—a platform previously criticized by Changpeng Zhao.

My analysis: Star Xu's position is not just criticism of a competitor, but a clear signal to the market. Regulatory alignment is indeed changing the rules of the game: now, those who build a sustainable and transparent business will win, not those who know how to circumvent laws. For investors, this means it's time to evaluate exchanges not by loud statements, but by the real quality of products and risk management. The "Wild West" era in cryptocurrencies is coming to an end, and this is undoubtedly a positive trend for the long-term health of the industry.