Mismatch between expectations and reality: CZ at Davos on crypto payments, regulation, and systemic flaws

Co-founder of Binance Changpeng Zhao (CZ) spoke at the 2026 World Economic Forum in Davos with a provocative thesis: the mismatch between expectations of revolutionizing the financial system and the actual state of development of the cryptocurrency sector remains one of the biggest problems underestimated by most market participants. His speech revealed deep structural flaws in both the traditional banking system and modern cryptocurrency regulation models.

Crypto Payments Have Not Achieved Mass Adoption: Structural Mismatch in the Concept Itself

The most shocking conclusion CZ made was acknowledging that over a decade of crypto payment development has not led to the breakthrough that early technology advocates predicted. Bitcoin and similar systems remain far from becoming a mass payment method, and this is not due to lack of time or technical improvements, but due to a fundamental mismatch between the ideal decentralized payment model and the practical needs of billions of people.

CZ drew a parallel with other revolutionary technologies: most experiments at such scale fail, but a few successes have exponential impact. However, in the case of crypto payments, these “few successes” have yet to materialize on a global scale. This discrepancy between technological potential and commercial reality will shape the crypto market in the coming years.

Meme Coins as a Mirror of Speculative Dynamics: Utility and Value Mismatch

Discussing meme coins, CZ raised a sharp issue often overlooked: most of them will not have long-term sustainability due to a principled mismatch between their speculative nature and lack of practical utility. Meme coins depend solely on market sentiment, social trends, and collective investor behavior, making them highly unstable assets.

Rare exceptions like Dogecoin, which has survived more than ten years, confirm the rule: they possess exceptional cultural value that others cannot create. CZ compared this situation to the collapse of the NFT market, where speculative hype quickly fades without fundamental significance. Investors who do not understand this mismatch risk losing everything when market sentiment shifts.

Cryptocurrency Exchanges vs. Traditional Banks: The Paradox of Systemic Stability

The most counterintuitive part of CZ’s speech concerned the discrepancy between the perception of crypto exchanges as unstable institutions and their actual resilience. When discussing concerns about AI-controlled bank panics, CZ made a crucial clarification: the technology itself does not create risk; it only accelerates the detection of existing structural problems.

Binance is a living proof of this thesis. The exchange withstood $14 billion in net withdrawals over a week, with peak daily withdrawals of $7 billion, without any liquidity issues. This starkly contrasts with the traditional banking sector, where a fractional reserve system makes most institutions vulnerable to massive withdrawals. Traditional banks simply cannot withstand such flows without government support.

The paradox CZ pointed out is that faster withdrawals in crypto systems do not create a problem—they reveal it earlier. Slowing withdrawals, as in traditional banking, does not solve the core structural flaws but only delays the truth about institutions’ liquidity.

Global Cryptocurrency Regulation: The Mismatch Between Harmonization of Banking Sector and Fragmentation of Crypto

One of the deepest mismatches CZ highlighted concerns the difference between the harmonization of traditional banking regulation and the chaotic state of crypto regulation. While banking rules are largely aligned globally, each country approaches cryptocurrencies with its own logic—or not at all.

Binance currently holds 22–23 international licenses, but this number reflects exactly what CZ talks about: the disconnect between the number of countries and the number of regulatory systems recognizing crypto. Most jurisdictions still lack comprehensive legislation on cryptocurrencies, while key laws, such as the US market structure bill, are stuck in development.

This fragmentation creates practical chaos for market operators, who must deal with dozens of different regulatory regimes, each requiring separate capital investments and legal expertise. The disconnect between the global nature of crypto assets and the local character of regulation remains one of the most pressing issues.

Regulatory Passporting as a First Step: A Pragmatic Solution for the Mismatch

CZ proposed a concept that could partially address the mismatch between industry needs and the realities of global regulation. A single global crypto regulator is unlikely in the short term due to irreconcilable differences in tax systems, capital controls, and political priorities among different states.

Instead, CZ, who advises several governments on designing their crypto policies, suggests regulatory passporting as a more pragmatic solution. Under this model, a license obtained in one jurisdiction could be recognized in others, greatly simplifying compliance processes across borders. This would avoid the need for new global institutions, which often become just an additional bureaucratic layer.

Conclusion: Systemic Understanding of Mismatches as the Foundation of Progress

CZ’s speech at Davos 2026 revealed not only the current challenges of the crypto industry but also showed that true progress depends on three key things: a realistic understanding of where crypto technology truly has an advantage, the ability to distinguish speculative bubbles from genuine innovation, and a willingness to find pragmatic rather than utopian solutions for regulation. The mismatch between expectations and reality is not a failure of technology but an opportunity for those willing to learn to live with the real world as it is.