Binance Official Says ICO Bubble Bursting Would Be Good For Industry

Binance Bubble Break

In an interview with Bloomberg, the head of Binance Labs, Ella Zhang said she thinks that the ICO bubble bursting would be beneficial to the industry.

Zhang, who had joined Binance less than two months ago, said that while the bull market remains positive thanks mainly to a stable inflow of users, only the ICO bubble bursting would open up the crypto industry to the truly valuable projects. She did not say when she thought such a bubble burst would burst, however.

She said:

“We’d like the bubble to break. We still see a lot of hype in the market, valuations are high and unreasonable. We really think if the bubble bursts, it’s a good thing for the industry.”

Zhang also said in the interview that she is helping Binance deal with scams that come out as a result of the ICO hype, with their Cryptocurrency Governance Initiatives, or CGI. She stated the aim of the initiative is to “fight scams and sh*t coins and to boost crypto and blockchain technology.”

With this new initiative, Binance will support funds and token teams it is working with, but they must promise that they will not participate in “pump and dump” schemes and that their products must be built according to their white papers. Binance will stop investing in funds and delist tokens from teams that will not honor their commitments with Binance.

Over the next five years, Binance Labs is planning to invest up to $1 billion of profits in several projects, with an average investment of between $1 million up to $10 million. There are currently 20 other cryptocurrency funds which Binance plans to partner with as part of their new venture capital fund. All the projects will be obligated to join the CGI. The fund has reportedly made several investments in both companies’ tokens and equity so far.

Zhang, formerly an investment director at Kleiner Perkins Caufield & Byers, believes there can be a conflict between investing in tokens and equity, as they are valued very differently. She said:

“If we see founders contribute to both sides, we’ll hold both sides. Sometimes it’s hard to see which one is more valuable, but our position is to support the founders and create value for the project as a whole.”

Ella Zhang is not the first expert to predict a possible bubble burst. Last April, Nobel Peace Prize for Economics winner Robert Shiller stated that while Bitcoin might be a bubble, that does not mean that it will be gone forever once it bursts. According to the economist, there is a large part of the cryptocurrency “bubble” that is political in nature, as people who do not trust their governments may be tempted to invest in crypto.

Related Cryptocurrency News