On the evening of December 12, Binance CEO Richard Teng and co-founder He Yi held a joint Chinese AMA. This was also Richard Teng’s first Chinese AMA event.
In this online event, Richard and He Yi shared their views on Binance’s views on the settlement with the United States, progress in compliance, future investment layout, and views on the cryptocurrency market. This AMA covered many areas and discussed all aspects of the crypto world. (You can visit the blockchain video account to watch the live broadcast replay.)
Richard emphasized that the trend of more and more countries regulating cryptocurrencies and the active layout of institutional investors in the industry will bring more confidence and funds to the cryptocurrency market.
He Yi said that he is optimistic that the next high point will appear next year or the year after. He also emphasized his support for long-termism, saying that Binance plans to support Web3 entrepreneurs by incubating more projects to create more long-term sustainable value.
As one of the world's largest cryptocurrency exchanges, Binance will continue to be committed to providing users with high-quality products and services and promoting the development of the entire cryptocurrency ecosystem.
Three promises from the new CEO
Richard: I have three major commitments: Always user-centric, we will continue to create first-class products and services that users love, and always put user experience and user protection first. The second is to work closely with global regulators. The third is to work with global partners to promote the growth and adoption of Web3.
“I only made 2 million.”
When talking about the growth of the Binance community, He Yi was quite emotional about an industry news. This clip also attracted the attention of the audience and was forwarded to multiple communities. "Hello everyone, I am He Yi. It has been almost ten years since I joined Binance after the Spring Festival in 2014. In the past ten years, what impressed me most is the growth of the Binance community. Last night, I saw a kid on WeChat. Two or three years ago, when he was still in college, he told me on WeChat, "I was confused after graduating from college and didn't know what to do." I suggested to him that he could do Binance rebates. Yesterday, he asked me if I could follow him on Twitter, and he told me that he was doing rebates. I looked at his income, and he only made 2 million RMB, but for a college graduate, this is already very good. I am also very honored that our community has so many new forces and crypto OGs to work with us to build this industry together. I believe that the future direction of this industry is not determined by the vision drawn by a few people. The future direction of the industry is where our industry practitioners will walk that path together.
Why did management choose Richard as the new CEO?
Richard: My experience is mainly in traditional finance and regulation, and I have about 30 years of work experience. In 2017, I started to get involved in the cryptocurrency industry. At that time, I was the CEO of Abu Dhabi. I firmly believe that the cryptocurrency industry is a major trend in the future and will have a great impact on the entire financial field. When I was working in Abu Dhabi, we were one of the first regulators in the world to start regulating cryptocurrencies. So at that time, I already had a very deep understanding of cryptocurrency. It may be that my rich work experience and understanding of the cryptocurrency industry have won everyone's support. But I want to emphasize that the strength of the Binance team is not only my credit. We have a very strong core management team, including core members such as He Yi, other founders, and partners who have made great contributions to Binance. In the past two years, we have made a lot of investments and hired many professionals. So our team is very strong in the Web3 field and professional talents.
He Yi: Our industry actually only focuses on two things: one is products, and the other is services. I have always been committed to providing the best services to users. But as the industry develops, we also need professionals who can communicate in the same language as regulators. So I think that being more stable and smooth in terms of regulation is a challenge that we, the leading exchanges, have to face. Another point, I think from my personal perspective, I have spent a lot of time in recent years studying how to make a company last forever and how organizations can operate more efficiently. I think the most important point is a clear division of labor and clear goals. Just like the concept of entropy mentioned by Elon Musk in his new book, it is actually uncertainty in an organization. How to reduce uncertainty? That is, don't have people with unclear roles in the team. For Binance, the best division of labor is that I am responsible for serving users, and Richard is more suitable to be the CEO.
Is Binance opening price too high?
He Yi: To be honest, we still have room for improvement in every aspect. Specifically, we have a dedicated team responsible for iteration in product development, such as the issue of Web3 wallets that everyone often mentions. We did not invest enough in some areas before, but we will continue to optimize and improve according to user needs.
For me, it is important to pay attention to user needs and complaints and continue to improve. Whether it is complaints about Binance or problems with certain projects, such as the secondary market prices of some projects are too high, we also realize that this is a problem and are actively looking for solutions. I hope everyone will keep paying attention and we will work hard to live up to your expectations.
Does the wallet support inscriptions?
He Yi: Although Binance has developed smoothly over the years, we have actually been facing challenges head on. In 2018, Binance did not have contract and P2P trading functions, while our competitors already had these functions. Now, our contract trading has become one of the largest in the market, and the P2P market has also been established. So, although we started late, we hope to seize the opportunity.
He Yi: Web3 wallets should provide users with an easy-to-use scenario other than exchanges. Our peers are doing inscriptions very actively, and the same is true for the previous wool-pulling activities. But I don’t think Binance needs to completely copy this model. We need to look not only at the present, but also at the future.
What we are really concerned about is whether there are serious projects in this industry that can build great business models or truly bring changes to the world?
I think one of the benefits of inscriptions is anti-VC, that is, fair minting. But after fair minting, there are so many inscriptions around the world that are doing large-scale minting, and each one needs someone to take over. But not all inscriptions have people to take over. The current status is still a bit vague, and it is still unknown whether it can move towards the Bitcoin ecosystem in the next step. We are still observing and learning.
There are always new things in the industry, but the bad thing is that there are always a lot of uncertainties. From the perspective of wallets, Trust Wallet is still the largest in terms of user scale and daily active users internationally. But whether it is in terms of swiping or inscriptions, Binance has not yet optimized the user experience and scenarios.
In the future, we will further iterate and make up for what CEX lacks in the wallet field. I am not sure whether my understanding of wallets is the same as yours, but at least I know that our wallets are not good enough in terms of user experience and do not support effective cashing and inscription operations. But I believe that these problems will be solved one by one in the future.
He Yi: Regarding the question of which chains will be supported first, our general principle is to support chains that have enough users as much as possible. In essence, trading platforms should not favor any one chain.
Does the regulatory fine endanger Binance’s financial situation?
Richard: Our business foundation is very solid and our financial position is very healthy. Our capital structure is debt-free and very modest in terms of expenses. Despite our low transaction fees, our revenue and profitability are still very strong. Paying regulatory fines is not a problem, and users can rest assured that their assets are always supported and protected on a one-to-one basis. Users can withdraw their assets from our platform at any time. I would like to emphasize that after a very detailed investigation of our operations, the US regulators did not make any accusations or find any anomalies in user funds. This is very important. After the settlement with the United States, users' confidence in us has continued to increase. There may have been some capital outflows in the past few days, but now funds are flowing back to Binance very strongly.
He Yi: Whether all businesses in the cryptocurrency industry are healthy and whether funds are safe are actually addition, subtraction, multiplication and division within 100. You can calculate the spot trading volume and contract trading volume, and then calculate the handling fee. In terms of expenses, Binance has never had any large expenses except for labor costs and server costs. If the law enforcement agency wants to impose a fine, it is impossible for it to impose a fine that it cannot afford, right?
Will the platform gamble against users?
He Yi: As a trading platform, the most important thing is not to participate in transactions. The platform and the Trader can make more money for a while, but this kind of income is not sustainable. Because no one can control this market, this market is always unpredictable. We have actually seen the lessons of the past from FTX. Binance has been in this industry for ten years, and it is impossible for it to go to the opposite side of the user. When you have enough users, it is enough to charge service fees, and there is no need to take additional risks. This is also our operating logic. How to interpret the reconciliation with the United States?
Richard: After reaching a settlement with the US regulators, it is a very favorable development for us. In the early days, we always put users first, and there may be some shortcomings in compliance. We also take responsibility for these previous mistakes. This large-scale fine does not happen only to us, and these mistakes do not happen only to us. As long as you look at the top ten financial companies in the world, you will find that many financial institutions have been fined huge amounts, up to $90 billion or even up to $40 billion. From a compliance perspective, I have been communicating with many institutional investors, users, VIP customers, partners, and potential partners in the past two or three weeks. In fact, everyone has a very positive attitude towards our settlement. In the past year, some partners may have been conservative, but now many people are very active in working with us. Compliance is a global trend, not just regulations that we need to comply with. As the largest exchange, we are often the focus of regulators, but now we have overcome the difficulties and have put an end to the problems in the past.
"Welcome to report US users"
He Yi: The fine imposed on Binance has allowed us to enjoy the treatment of a top American financial structure.
When it comes to compliance, most people would be worried. But in reality, we need to conduct a comprehensive analysis of the settlement with the United States.
After the settlement, we cannot accept US users. But in fact, we have already removed US users from Binance two years ago. If you find that there are US users still trading on our platform, please notify us immediately. We welcome reports.
I think this is an inevitable development for the entire industry, and it’s not just happening to Binance, other larger exchanges that want to get in line with regulators are also going through this process. That is, it will only be difficult if Binance chooses the compliance route and everyone else chooses non-compliance. At present, it seems that everyone in the industry is facing difficulties together, but overall, the industry is expanding, the market is also growing, and it is moving in a positive direction.
Last but not least, I think income is not the only pursuit. This may sound a little unreal, but for me, for CZ, and even for Binance, income is by no means the only pursuit. What we really pursue is to be able to work with everyone to promote the blockchain revolution, change productivity and production relations, and create a brand new world. I think it is short-sighted to simply pursue income. We adhere to long-termism, which will make us stronger.
How do the U.S. “compliance officers” stationed at Binance work?
Richard: Let me clarify that the so-called "compliance officer" is not a U.S. government employee, but a very independent regulator. He is similar to an accountant and focuses on anti-money laundering compliance. This independent regulator can help explain to everyone our commitment to compliance and anti-money laundering.
He Yi: I want to correct one thing. It is not that the government sent compliance officers to become employees of Binance. In fact, it is written in the settlement terms that we need to hire an independent third-party lawyer or consulting company. Their task is to monitor whether we fulfill our commitments in accordance with the previous agreement. For example, whether US users have been cleared and whether anti-money laundering measures are appropriate. This does not mean that they have taken over the operation of Binance. These are some contents that may be misunderstood in the dissemination of information.
How will Binance Labs invest next?
He Yi: Binance Labs has recently made some adjustments to its strategy. We have decided to support blockchain start-ups on a large scale, which may be ten times the previous scale.
We have noticed that many projects received early venture capital funding, and then pushed the projects to the secondary market, and were eventually purchased by retail investors. In this process, the real early supporters did not share the corresponding returns.
We want to support Web3 startup entrepreneurs who are truly willing to stick to long-termism, so that all ordinary investors and retail investors can share the rewards brought by project development, just like Bitcoin.
No matter what industry you are in, you ultimately need to create something, provide services to users, and really move the world forward, even if it’s just a little bit. In the process, you may gain revenue and profit, and at the same time, you can support users and token holders to grow and succeed together. Only win-win things can last. If you cut a handful and run, you will eventually hurt your reputation. So I may be a little traditional in terms of investment framework and thinking about the industry, but we still want to give it a try.
How do you view the market?
He Yi: The industry may reach its peak next year or the year after, but this is just my personal opinion. Some people may think that this view is too simplistic.
At the same time, we must realize that as the scale of the entire industry continues to expand, it may face a ceiling. Cryptocurrency will be compared with various assets such as gold and stocks. In this case, the growth rate may no longer be as fast. But I still believe that market cycles will continue to exist. I am more optimistic that the next high will appear next year or the year after.
Richard: Although there may be some market fluctuations in the future, the general trend is still positive. First, more and more countries are regulating cryptocurrencies, which will increase investor confidence. Second, institutional investors are actively deploying in the cryptocurrency field, which will bring more funds and investment to the industry. Therefore, I am very optimistic about the general trend of the entire cryptocurrency industry.
Currently, the adoption rate of cryptocurrencies is about 5% worldwide. If more countries regulate the crypto industry and the industry moves towards compliance, the adoption rate could increase to 10% or 20%.
Note: All articles shared or reprinted on this account are intended to convey industry information and do not constitute any investment advice or suggestion. Investment is risky and you should be cautious when entering the market. Welcome to follow Chafang Blockchain and stay tuned for more exciting content.
