The Showdown Over Crypto & Disruptive Technologies

this gentleman runs the world's largest cryptocurrency exchange and so if you're looking for insights into the world of crypto and where they're headed where it's headed excuse me uh no better place to start than with you thanks for doing this thank you thank you for having me here cece let's begin with this what does everybody in this room need to know and understand about crypto that they probably don't yet appreciate um well i think most people in this room probably do understand a crypto to some level but this is the future this is it's a technology it's not a currency not a not a commodity not a that that it can be classified into but it's a technology technology innovations do not stop this is like in in the early 2000s or in the 90s the internet the internet will not stop it may progress at a fast or slow pace but this is the future this is the future technology that will power money financial markets and many many other things what about the evolution of crypto do you find most exciting right now so right now it's all the applications that does not exist in the traditional financial worlds that are taking off um raising money globally for your entrepreneurial projects icos have a bad name but however you however classify it um that's one application that's very popular now um if you're an artist or if you're a content creator being able to monetize your work through the nft um they're very hard right now um so that's another mechanism that they cannot do in fiat currencies um this gamify play to earn this diesel decentralized decentralized social social media um hasn't taken off yet but all of this are things that traditional fiat currencies cannot do this narrative that crypto is going to replace the existing tradition a traditional financial sector is a bit too early um we have not seen that yet um but will it will crypto replace traditional finance or will traditional finance and crypto effectively merge and become the same thing i think uh traditional finance will always be well we'll be big this today probably only one one percent or less of the money is in crypto much less probably much less than that so today traditional finance is big uh it's gonna it's gonna take time for i don't think in the short term there's any replacements but in the long term some some of things may be replaced so this is like you know we look 20 years back the video conference is going to replace uh in person work today still haven't really done that even with covet we kind of shifted a little bit to that direction but it takes decades to to to really replace something but e-commerce has replaced quite a lot of car has impacted a lot of real commerce but you took faster than many people expected they also took 20 years right so there were jokes yeah so there were jokes like you know even even in the early 2000s you can buy a hamburger online but you can't eat it but now you can well we're already 13 years into bitcoin yes yes so i think but still today um the applications in crypto are still uh the the ones that are taking off are the ones that are not available in traditional fiat currencies payments has not really taken off it's one of those like really obvious uh first first use cases but it just hasn't really taken off why most of the payments like if you pay for coffee et cetera it works pretty well today already um so using your credit card or most people don't use cash now you can use a mobile payment system works pretty well but if you want to pay people across the world um then the traditional fiat currencies doesn't work that well um so i think it's those use cases that the traditional financial services don't cover that will take off first since you mentioned replacement i feel like i have to ask you this question do you want to see crypto whether it's bitcoin or whether it's a variety of coins or something that we haven't yet seen replace the us dollar as the world's reserve currency would that be a good thing uh i'm actually not sure it depends on how it's done um i think a direct replacement is probably not good i think we should evolve the world in small incremental steps and not big moves whenever you have a big whenever you have a big move um uh a big abrupt change is usually bad for most people um the current players may not be ready the industry may not be ready i think slow incremental change is probably the best um i think us dollar services purpose is great and um but we can do things that are around it at first and then i think slow gradual change is best because um the impact to industries to society needs to be managed cz this week binance published what i'll call a crypto manifesto it's the 10 fundamental rights for crypto users and they include privacy safe custody robust liquidity and safe access to some of the things that you've already talked about emerging technologies such as nfts and also staking and yield farming i'd like to know who are you most directly addressing with this manifesto regulators or rival exchanges um i think everybody uh is um i think we want to get the message out there we have been talking with regulators around the world quite a lot many of our users may not know that we're doing this and there's different perceptions in different parts of the world both on the user side on the regulator side on the existing financial players and they don't really understand crypto but and we think that this we need to look at all of this holistically you say regulation is inevitable yep is that because you want it or can't stop it um i think we actually want regulation um i am not a completely libertarian uh i'm not an anarchist i don't believe human civilization is advanced enough to live in a world without no with no rules i don't think our civilization is that advanced yet so if we want to live we probably won't need some rules to to to work uh well and those rules are regulations and and also i think crypto adoption right now is probably around five percent globally um population wise those five percent are early adopters the rest of the 95 percent of the 90 something percent most of the user probably will feel safer using a cryptocurrency exchange that's licensed have a local office etc optimistically how long do you think it will take to go from five percent today to 100 adoption where people around the world are using crypto with as much comfort and ease as they use cash or credit cards or more and more these days mobile payments i think it would take a couple decades to be honest to reach out like to reach like you know 90 something percent i think the adoption curve is always slow at the beginning and in the middle you'll pick up and then the last the last few uh part of the generation like you know my parents generation probably will will be harder for them to adopt so again and also i think a lot of the applications today are not done really well so the applications need to improve so i think that would take you know at least one to two decades 10 20 years what i would describe as the clarion call in your world the crypto world is for what people describe as smart regulation what's the difference between smart regulation and dumb regulation ah actually there's a very simple difference the doc i gotta be careful saying this the dumb rig the dumb regulations are typically regulators who have a single metric which is to reduce risk that's not um that's great the best way to reduce risk is not to do is shut down everything um the a smarter metric or a secondary smart metric would be what about economic growth metric so you should reduce risk and while promoting economic growth and you know innovation when the smarter innovators have two matrices they need to measure so if if people have that kind of mindset they typically will be very pro business pro innovation binance as i mentioned earlier is the largest crypto exchange by far the largest several times larger than coinbase or ftx i looked this morning in the past 24 hours binance had done 40 billion dollars of volume is that typical that's typical actually it's um it's actually not that high generally higher today's a bad day in other words a slow day so a couple of days ago i think we hit 170 billion dollars transacted in a single day uh what was that two years ago two years ago or two two years ago i think we were very lucky to get 10 billion uh dollars 10 to 30 billion four years ago we're very lucky to get like 300 million billion so the industry has grown really really rapidly your fees are low by industry standards yeah why um we well we're already profitable um so we can actually charge even lower fees we're actually thinking about that right now so we are an organization i don't i do not believe in maximizing profits i also do not believe in maximizing shareholder value in the short term so i believe in growing the industry providing the best value for our users and then we'll grow and long term yeah we actually maximize the shareholder value that sounds to me a lot like jeff bezos um i i don't know him personally but i would love to be a sex associate in the future what so at 170 billion dollars on some days 80 on others what's the revenue run rate that binance is generating um so this is a very tricky one to calculate roughly we can talk about different numbers uh it's in the billings um clearly yeah yeah but um it fluctuates uh because we our revenue is in a couple different hundred cryptocurrencies and we don't convert them we just hold them so in any currency that you calculate in say mostly most people are more comfortable with us dollars if you do a calculation today it's one number five minutes later it's a different number because the every price is changing and say there's some really interesting dynamics the money we earned like a year ago because we hold them in crypto the crypto price went up so our earning it was calculated a year ago may be different now uh when the crypto when we go through a winter uh whatever money we earn today will be worth much less so we we have that kind of dynamic it's a very interesting uh situation for a fina financially but regardless it's billions it's billions now yeah can we put a number on it um i don't have a direct number well your margins are also very high are they not uh they're pretty decent yeah so um [Laughter] either way you slice it your company is generating billions of dollars in profit every year pretty much yeah well i could take a conservative market cap or a conservative multiple or i could take an aggressive multiple like the one that's put on coinbase right now eight times revenues yep you own substantially all of this business do you not yes but um our uh our fees are much lower than coin basis so oh i'm aware yeah yeah so you feel like coinbase is trading volume and uh multiply that with a multiple hour if you use the revenue multiple hour multiple bit lower if you use the activity multiple will be much higher i think you know what i'm getting at though if we apply these multiples to the kind of business that you've built you're one of the richest people in the world sitting right here uh i i'm not sure about that to be honest and also um i don't really care about uh wealth uh uh money um and also rankings et cetera um i also uh on a i think i believe there's a forbes interview just a couple days ago i said i'm happy to i will come in to donate 99 of my wealth away um before i you know before i leave this world so i'm not i'm not really interested so um i think anytime people pay too much attention to that they usually kind of lose focus whereas we want what we want to do is we just want to build tools for people to access crypto um yeah what are your strategic priorities for this company you want to be that you're not now yeah so um i think right now uh the short term we have to go we have to be pay a lot of attention to this regulatory pivot uh what are we preventing from a technology company is a financial services company um i think that will take you know a few months a few a couple of years longer term though we want binance to be a platform of other platforms so we find ourselves an nft platform marketplace we have a sports plan token marketplace we want to be the infrastructure for other entrepreneurs for other teams either within binance or outside of binance to build their platforms we can help them on a number of uh or in a number of ways uh we have the largest liquidity in the world we can give them liquidity by listing the tokens or coins and we can before that we can help them help them to do the initial sales by through binance launch pad the ieos even before that we want to help them to do design the tokens so we can we can advise them on the token economics we encourage people to take a very long term view so i've been we i and our team has been pushing for 10 year unlocking periods for from the tokens so because today if you see in the industry like typically about three four years uh similar to esops was like no that's too short if you want to issue a token you got to have a 10 year commitment and so we we do all of these things that we want we want to facilitate other projects to grow this raises a question for me one of the most confusing things about the crypto market many people is the proliferation of coins right the speed at which these coins are created the speed at which they acquire a market cap i'll point to himalaya coin a recent example this month alone right this is a coin by the way for those of you who don't know has very a small number of identifiable attributes a promotional video involving an exiled chinese billionaire he's smoking a cigar he's on a yacht he's driving a red sports car and it has the support of steve bannon one of president donald trump's former advisors yet at one point this coin was worth 27 billion dollars how do you who understands this world explain how this happens how these these coins are created out of evidently nothing and and acquire market values and i'm not just talking about himalaya himalaya coin it could be dogecoin which as we know started as kind of a joke and yeah you know which is a satirical take on dogecoin it's sort of a meta thing yeah how does this work um so valuations are very subjective um so i think in in in addition to price and evaluations we need to look at liquidity so uh um so you you could issue a coin you can issue you can issue some coin um if you issue a trillion a trillion of them and you just sell one to one at one dollar to me and now you suddenly have a trillion dollars in theory but if you want to cash out a trillion dollars uh you want to realize that a trillion dollars you need a lot more liquidity than that i'm not going to pay a trillion dollars you know so we should look at some of these coins and apply a liquidity discount yes and so you need to look at how much how much circulating supply is and how much trading volume how much liquidity there is there are a lot of coins which are issued but they have very small large total supply very small circulating supply and the people are not careful they push the price up and promotional videos and other things could help could help it but longer term though the coin has to have value the market will catch up the markets will understand it and this is why um we support for binance when we list coins we only list coins that has decent enough circulating supply so we want to avoid this kind of spikes um and if if you have enough people trading this coin and the circulation supplies percentage-wise is large enough then you will reach some kind of a real market-driven value yeah part of your engagement with regulators has been on a search for a new headquarters where do you think it's what's on the short list um there's what there's a few countries which are very pro crypto um uh over in the world and uh we do have a headquarters set up already entity wise i can't announce it today we are actually communicating that with all the regulators we're communicating with at first and then i think you know in a very short period we'll be we'll be able to publicize that there are a number of reasons which are very pro-crypto i'm not saying this is where we would definitely best our headquarters in but for example if you look at uae you feel like france um this uh and singapore um these regions are all very pro-crypto um so now the we have many advanced civil uh advanced economies that are really wanting to bring this innovation in so yeah speaking of regulation you're under the regulatory microscope in the united states and in the uk there's some confusion between the distinction or in the distinction between finance and your u.s business what is the relationship between those two are does one own the other do you own them both is there a parent organization yeah so uh there are two independent very independent organizations i do sit on the chair i'm the chairman of the board for the binance for bonus us that's probably the only linkage between the two organizations i'm not they minus us use slack for internal communications i don't have slack installed on my phones or any device so i'm actually not in the day-to-day operations um so i do have a chat with a ceo uh once once every week or so um and that's it yeah do they use the same technology they do use this so binance.com provides the product and technology for finance us and there is a there has been many misreportings about you know uh binance us have data in china or binance.com binance.com or binance us never had data in china how do you see these investigations being resolved first of all uh there i'm not sure what the investigations point to there have been a lot of news coverage about pertaining like investigations in the u.s no u.s regulators have ever publicly said anything about it we are communicating with almost every single regulator around the world and we feel that we have a pretty collaborative uh attitude and we've been very uh we've been very helpful so um yeah we want to keep hopefully keep it uh very much keep it that way you mentioned in an interview a couple of months ago that the u.s business had plans to raise some money in a financing round and eventually go public is that still the case yes i think that would come out in about a month or two that that would closing bottom up about and why are you raising money i mean we just established that you're immensely profitable and yeah so um we do want to diversify the cap table a little bit and then um uh having the uh having um bonus us has a route to uh school ipo in the us now there's a playbook coinbase did it um so it's very simple like let's do everything that coinbase did compliance wise et cetera and do it hopefully cheaper and then uh and put it at a lower cost and hopefully attract users and i people that and for that from a high speed ipo perspective it's better to have a few runs of financing before that how much money do you want to raise in this pre-ipo financing round i think for this one is a couple hundred million dollars actually don't exactly don't don't know exactly the number yeah what about finance the parent company do you see that going public ever uh so right now um it's not clear uh we're not ruling anything out um but finance.com is a much larger entity and we need we also need to look at regulations in different parts of the world to see where to ipo um and to be honest in five ten years uh even uh they may we may see a merge between cryptocurrency exchanges and security exchanges um we uh the cryptocurrency exchange may be able to uh support uh tokenized securities or security tokens in those cases it may be possible to just list on cryptocurrency exchange and we have the best we we have a pretty decent liquidity be able to bypass the stock market altogether um it's not a uh maybe there will be a merge at some point uh it's not uh like it's very hard to predict what what the future looks like in five ten years and i think that's the minimum amount of time it will take for us to uh ipo anyway so um the future has a lot of uncertainties but we're open to all possibilities do you see china reversing its ban on cryptocurrency trading uh short answer is no but i want to also make a clarification there china did not ban crypto they just ban crypto exchanges and icos there's a very strong distinction yes there is so and china in fact is actually issuing their own uh cryptocurrencies uh the the the cbdc and um uh and holding bitcoin is perfectly legal in china but running a cryptocurrency exchange in china is deemed as not kosher anymore and that was the case even four years ago so i don't see that changing anytime soon i think uh i think china will try to push the central bank digital currency pretty hard and they will at least try for you know five 10 20 years and see how it works yeah maybe not 20 but at least five at least five years i think cece let's finish with this hillary clinton told this room not long ago just a few minutes ago that she sees cryptocurrencies as a threat in the same league as military intervention bioterrorism it's a threat she sees it as a threat to american sovereignty she sees it as a threat to the status of the u.s dollar as a reserve currency should people see crypto as a threat um i think that's a very personal view anybody can choose their own stance but a better view would be to embrace it so like for example for finance uh we run a centralized exchange and that decentralized exchanges which could threaten our centralized business what do we do we embrace it fully we invest very heavily in that we get multiple teams working on that technology and we want to own it we want to have a stake in it we don't really need to we can't own but we want to own a we want to have the technology we don't have to have the expertise and we want to grow that the best way to protect yourself to protect yourself against something that can potentially disrupt you in any way is to become that is to invest very heavily with that so if you look at kodak right so kodak probably they invented digital cameras but they were so protective of their film cells they probably had senior managers kpis selling film cells like you know a couple decades ago and guess what because they're so protective of those films they lost the digital camera industry what's better to do is to just invest very heavily in the thing that can that can disrupt you um coming back to u.s dollars uh i think u.s has a uh us dollars is a very strong tool for u.s to organize the world uh it's probably much stronger than the military um and there is a potential for uh for cryptocurrencies bitcoin et cetera to disrupt that in some instant in some in some ways but internet has this disruption power to traditional uh uh commerce businesses guess what u.s got that us amazon's based in the us google's in the us facebook twitter etc if u.s had that embrace if the u.s didn't embrace that innovation those companies may not be in the u.s those companies may be elsewhere and so now you got a balance between technology wanting to attract technology innovation embracing that or just say protect our film industry and have that go elsewhere but uh the technology will develop around the world you cannot erase a concept from four million people's heads uh 400 million people's heads so um so so i think a better way is to say okay no there is some there is some potential for disruption power but let's not view that as a threat let's view that as an innovation let's embrace it that's a much better way cece this has been great

Channel: Bloomberg New Economy

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Id: NxfA0jtMwV4

Length: 23min 20sec (1400 seconds)

Published: Thu Nov 18 2021