CZ Speaking at TechCrunch Sessions: Crypto 2022

Transcript

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Summary

In this video interview, Susie, a representative from Binance, discusses various topics related to the recent news and challenges in the crypto industry. She addresses the decision to suspend deposits on Solana, the potential impact of the FTX collapse on Binance, the dependence of Binance's business on trading volumes, Susie's thoughts on the FTX situation, the possibility of diversifying revenue streams, the influence of her tweets on the market, Binance's trustworthiness and transparency, the vulnerability of different parts of the industry, the prospects of decentralization, Binance's plans in India, the token listing process, the consideration of raising external funds, and the ideal regulatory framework for Binance.

Questions & Answers

Q: Why did Binance decide to suspend deposits of USDC and USDT on Solana?

The decision to suspend deposits on Solana was made by Binance's team, but the exact details are unclear. It is assumed that there may have been issues with the Solana Network, but more information is needed.

Q: How does Binance think the FTX collapse will impact its own business?

Binance believes that the FTX collapse will have a negative impact on the industry, consumers, and Binance itself. Many consumers will suffer financial losses due to funds being stuck on FTX, which will shake confidence and trust in the industry. The decrease in volume from people withdrawing funds will also affect Binance's business. Additionally, regulators worldwide will scrutinize the industry more heavily, making it harder to obtain licenses. However, Binance sees the situation as an opportunity to increase transparency and credibility in the industry.

Q: How dependent is Binance's business on trading volumes for revenue?

Trading volumes account for the majority (around 90%) of Binance's revenue. As a larger player in the industry, Binance closely follows the Bitcoin price, as it is considered an industry index. Despite the potential impact of the FTX collapse, Binance is still profitable and has a solid business foundation.

Q: Did Binance foresee the impact of its tweets on the market and the FTX situation?

Binance did not anticipate the magnitude of the market impact caused by its tweets. The tweets were about selling FTT tokens, which only accounted for a small percentage of the total supply. Binance's influence in the crypto industry is not something Binance believes it has to a significant degree. The FTX situation had been building up over time, and Binance's tweets may have been the trigger, but the lack of trust in FTX and other suspicions played a significant role.

Q: Is Binance planning to diversify its revenue streams?

While diversifying revenue streams is possible for Binance, it is not a priority at the moment. Binance offers various portfolio products, such as CoinMarketCap and Trust Wallet, which can generate revenue if monetized. However, Binance's current focus is on lowering barriers and increasing adoption of crypto tools. If the need arises, Binance can explore monetizing these products.

Q: Is Binance considering monetizing its free products in the short term?

Binance does not foresee the need to monetize its free products in the short term. Binance remains financially healthy and profitable, and there is no immediate pressure to turn on other revenue streams. However, the possibility of monetization may be considered in the future if the situation with FTX continues to unfold.

Q: Did Binance anticipate the collapse of FTX and the loss of consumer trust in centralized exchanges?

Binance did not expect the FTX collapse, but suspicions had been raised about FTX's activities in the industry. Binance can make educated guesses based on mental calculations, but understanding the inner workings of another platform is challenging. The scale and magnitude of the issues faced by FTX, such as the amount of lost money and customer fund movements, were surprising to Binance. Binance does not believe its tweets alone were the sole cause of the collapse; it was the culmination of factors eroding trust in FTX.

Q: What measures is Binance taking to regain and increase trust in the crypto industry?

Binance emphasizes transparency and has implemented measures such as proof of reserves to foster trust. While publishing wallet addresses and complying with audits are vital, transparency is an ongoing effort. Binance aims to provide secure wallet infrastructure, deploy technologies for verification, and establish clear guidelines on handling customer disputes. Trust should be built over time through ethical operations and protecting users. Binance believes users are smart and can make informed decisions based on available information.

Q: What else needs to be done for companies to regain trust in the crypto industry?

In addition to proof of reserves, Binance believes more focus should be placed on secure wallet structures and infrastructure, technology verification methods, handling customer disputes, and educating users about risk management. Binance aims to lead by example and share best practices with the industry to increase transparency and credibility. Continuous improvement and addressing different areas of concern will contribute to regaining trust.

Q: How is Binance's business expansion plan in India progressing?

Binance does not consider India a crypto-friendly environment due to high taxes. The current tax policy of 1.2% per transaction discourages trading and limits the potential market. Binance is working to communicate the economic benefits of lower taxes to the Indian government and industry associations. However, until the tax situation changes, Binance does not see a viable business opportunity in India.

Q: How does Binance decide which tokens to list on its platform?

The listing process for tokens on Binance is selective. Binance considers the number of users a project or coin has as an essential criterion for providing value. Product-market fit, the strength of the teams behind the projects, and other metrics are also evaluated. Binance aims to be highly selective and lists less than 1% of the projects that apply to maintain quality and credibility.

Q: Is Binance open to raising external investor money for its global exchange?

Binance considers raising external investor funds as an option to explore strategic advantages. External investors can bring connections, policy influence, regulatory connections, and potential partnerships. However, Binance is not under immediate financial pressure and has its own cash reserves. The consideration of raising funds from external investors is ongoing, but the timing and necessity are not urgent.

Q: What regulatory framework would be helpful for companies like Binance?

Binance believes an ideal regulatory framework would involve proper classification of crypto assets. It should not classify all crypto assets as a single asset class since different coins have different characteristics (e.g., security, commodity, currency). The framework should allow exchanges to operate with various product offerings, including spot, futures, earning, and payment options. Additionally, clear guidelines on KYC/AML, secure wallet infrastructure, and tax policies are crucial. Binance believes in transparency and wants regulations to enforce and encourage it. Collaboration between banks and crypto exchanges is also essential for the industry's growth.

Takeaways

The recent challenges faced by FTX and the crypto industry as a whole have highlighted the importance of building trust, transparency, and credibility. Binance recognizes the negative impact these events can have on the industry but also sees opportunities for growth and improvement. The importance of diversifying revenue streams and continuously innovating for long-term sustainability is emphasized. Binance aims to be a leader in the industry by setting high standards for transparency, security, and product-market fit. The ideal regulatory framework for companies like Binance involves proper classification of crypto assets, clear guidelines on operations, KYC/AML measures, and collaboration between banks and crypto exchanges. Trust will be earned over time through ethical operations, transparency, and fostering user empowerment.