Binance CEO: The World's BIGGEST Crypto Player

0:28Make large crypto trades with Cracket OTC. through Payward Interactive, Inc. For more information, go to realvision.com backslash Kraken OTC. Join me, Raoul Pal, as I go on a journey of discovery through the macro, crypto, and exponential age landscapes. In The Journeyman, I talk to the smartest people in the world so we can all become smarter together.

0:55Richard, welcome to Real Vision. Thanks for having me, Raoul. So a great pleasure to be here. Yeah, I can't believe it's your first time, I think, on Real Vision. Yeah, it is. It is my first time. We've had many of the Binance team. So it's great to get you on. And as ever, how I like to start these things is just to get your crypto story. Because everyone's story, how they got in, what was the hook, you know, and a bit of your career story is always really interesting for people. Oh, okay. Thanks. So I got into crypto right about the time Binance got started. So Binance got started in July of 2017.

1:35In around March of 2017, I mean, I go to all these conferences quite regularly. And there's a Futures Industry Association conference that's held every year in Boca Raton, Florida. So I go for that. And that's attended by exchanges, traditional exchanges like New York Stock Exchange. What were you doing at this point? I was a regulator, right? So I was the CEO of Abu Dhabi Global Market. So it is a come together of the top exchanges, the regulators around the world, discussing topics, looking at future trends. And in that particular 2017 session, I noticed something very unique. I noticed quite a lot of crypto voice coming through.

2:17And I started talking to them of fascination. And the more I speak to them, the more I realized that this looks like a very exciting asset class for the future. And this could represent the future of finance. But I studied quite a fair bit. And my hypothesis then is that for this to go mainstream, you need two dimensions at play, right? So first, you need clear regulations because you could have the early adopters into this space. But for it to go mainstream, So many of the users will require clear rules, how their assets are being protected, how is the security functioning, etc., etc. So my hypothesis is you need to bring about clear rules and regulations in this one.

3:02Secondly, once that is in place, then the institutions, the corporates, the high number of individuals then will come to this pace and this pace. And then this can go mainstream, right? So in about 2018 at Abu Dhabi Global Market, we came out with one of the most comprehensive crypto regime in the world to regulate this space. So I got involved then. And I always tell people I'm not the type of regulator that regulate banks but don't have a bank account. So I started my crypto journey, opened two accounts with two different exchanges and I started trading them to get my feet wet, so to say, into the crypto scene.

3:44And so your mental model, you were talking about adoption, but what was it, you know, when you started investing in the space, what were you thinking about it? Was it Bitcoin that was bringing you in or the use of blockchain technology? What was the hook in your head that you thought, you know what, this is really interesting, both for you personally and as an industry? Well, it's a mixture. So firstly, is the usage of blockchain technology. It brings so much efficiency, transparency, enhancing security, right? The immutable nature of it. And then you can use it for different areas from supply chain financing to find different parts of the financial sector infrastructure, right?

4:26So if you look at most part of financial system today, the operating arcade, right? If you look at financial architecture behind most banks, most trading houses, securities firm. And in the next two decades, Many of them will be replaced with blockchain and AI technology, if you think about it. So that is fascinating, even in 2017. So that's one part. And of course, BTC, Bitcoin, as part of that particular tool for the future. I mean, if you think about it, it is really fascinating. Many parts of the world that we have, which has very low financial inclusion rate, meaning it's so expensive. People don't have bank accounts.

5:11People can't make payments. But crypto, Bitcoin, allow people access to that payment system, allow people to transfer value within borders and cross-border instantaneously at a fraction of the cost in which they have to incur. Unlike correspondent banking, if you transfer money through the banking system, it takes two to three days, it takes huge fees. But that doesn't happen. And crypto never sleeps. It's 24-7. The hurdle rate is extremely low. Anybody can get onto it. So it is a fascinating thing. And Bitcoin is very decentralized and allows a lot of all these things to come into play. So I got into it because of a variety of reasons.

5:54One of the things that also people don't realize is around the world, let's say you're in the Philippines or in Nigeria, wherever you are, you don't get access to the same kind of investment products. You can't invest in Tesla, for example. You can't invest in Apple. You can't, you just, you're restricted in what you can do. But here is the world's first globally homogenous asset that is fractionizable. So whatever your wage is, you can put 10 % in. And that's kind of a game changer because it's investing in this new infrastructure of the internet. And it's available to everybody. You know, one of the things that really struck it home for me is I get my hair cut by some Filipino guys here in the Cayman Islands.

6:35And they're all crypto junkies. And I'm like, why are you guys all crypto junkies? They're like, well, we just send remittances home to our families via stable coins. Then we open a Binance account. Before you know it, we're trading crypto. And it's kind of a life-changing opportunity for us. I'm like, OK, yeah, it really has that duality. One is the ability to move money around. For people who don't get access to dollars, I mean, this is a fractionalized euro dollar market, the stable coin market. And so if you're in the Philippines or India or wherever, your access to dollars is actually very limited.

7:10But here you get the access to the dollar system. But in addition, you also get the investment opportunities as well of the space. It's super interesting. Absolutely. So you have many detractors of crypto saying that it's not a good store of value, not a good store of wealth, right? So for anybody that has been in for this period of time, I mean, I've been in from 2017 and now it's 2024. I would say that compared to most major currencies around the world, you're better off holding on to Bitcoin or stablecoin compared to the traditional fiat currency locally. So even against the US dollar that has appreciated against most major currencies and other international currencies around the world, Bitcoin is superior.

7:58I mean, look at the prices today compared to 2017. So as a whole of wealth, as a store of wealth, you're much better off either holding on to stable coins or to Bitcoin, right? With the passage of time. So I think that's one dimension that you have highlighted. Again, the second area is fascinating, right? Remitting value across borders. Traditionally, if you go to exchange houses, if you go to banks, they charge you up to 10%, 11%. I mean, it starts from 7%. So you have to incur exorbitant fees of a huge amount. And if you think about low-income earners, that takes a huge chunk away from what they can give to their families and friends.

8:44Whereas using crypto technology is really a fraction. They get it instantaneously, 24-7. You don't have to work over the weekends. None of the banks and exchange houses are working, etc. So it is beautiful. So, okay, so that's your regulator. You've opened a crypto account. It's 2018. What's next for you in your journey? Well, I stepped off crypto. I'm sorry, I stepped off being a regulator in right about 2021, March. I sort of semi-retired, went back to Singapore, took on some advisory role, including advisory role for digital banks, took on some board seats. But through a mutual friend, And I was introduced to CZ right about June that year.

9:33And then had several conversations with him. He then convinced me to join Binance. And I joined Binance in August 2021. And the rest is history.

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10:19With a simple and intuitive platform, you could trade anytime, anywhere. Experience the fast, accessible futures trading you've been waiting for with Plus500. With over 20 years of experience, Plus500 is your gateway to the markets. Visit us.plus500.com to learn more. Trading in futures involves the risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus500, it's trading with a plus. Yeah, I mean, it was quite a time to join because it was, it suddenly, it went from being a boom to a bust time and then it became very stressful for everybody because, you know, regulators were complicated.

10:55The markets were complicated. The blowups were complicated. How did that make you feel when you come into the space and suddenly you need to deal with, you know, the volatility of the downside of the space? Well, I mean, for those people that have been involved in this space long enough, volatility is par for the game. Yeah, I've been in it since 2013. I've gone through this. Yeah, much earlier than me. So this is par for the course, right? But if you look at it, if you think longer term, and most of us are holders for the longer term, it is on the upward trend. You have ups and downs as with any asset classes, but over time, it is on an upward trajectory.

11:36So I think I'm not too concerned about volatility. But the landscape, I must say that the landscape between 2017 to 2021, the time I joined Binance, has changed drastically. So if I move you back to 2017, when I first came across Bitcoin, None of the global regulators were looking at it. We were one of the first to start looking at it at Abu Dhabi. And none of the global institutions, if you talk to any institutions, corporates, there were no believers. Everybody's a skeptic. People are saying that it's a scam. It's used for money laundering, et cetera, et cetera. By 2021, I think that has shifted a fair bit, but not as what we see in 2024.

12:19By 2021, the regulators start to take notice and start to think, oh, maybe we should start regulating this space. So the direction of travel then becomes, okay, we do think that you need greater compliance into this space. And I think that's right about the time I joined, Binance. But by 2024, if you look at what we have today, it's totally different. 2024 is a landmark year, right? Firstly, we have much clearer regulations around many parts of the world, including in Europe, with the advent of Mika regulations. Having said that, only one third of global regulators are regulating crypto. Two thirds are still not regulated.

12:59Yeah, because you're so global. You have to deal with a lot of different countries. But yeah, only a few have it in place. Singapore did a good job. Singapore did a good job. Yeah, as with many other places. So that's one dimension that has become very clear. And then with the approval of ETF in the US and now in many other places around the world, Canada, Australia, Hong Kong. I think that has been a game changer. Then secondly, with institutional embracement. I mean, who have thought the largest asset manager in the world, CEO Larry Fint of BlackRock, who have gone from crypto skeptic to now crypto believer, believing that he's a legitimate asset class on his own.

13:43So that shift has been drastic and very marked in 2024. is not only black wrongs, the black lock, JP Morgan, the Citibank, Standard Chartered. So if you look at all the top financial institutions in the world today, everyone has a crypto agenda. Everyone has crypto deployment. So that's very exciting. So where are you seeing, what kind of year-on-year growth are you seeing? Because again, you're the largest player in the industry. So you're a good place to kind of assess where growth is. have we seen a dramatic increase in growth or are we just getting back kind of in line with prices with the kind of activity levels we saw?

14:24Where are we in the activity of the industry? And then we'll talk about the different component parts of who's active and how, but how are you seeing kind of volumes overall? So let me just take a step back and give you a backdrop. So, you know, we just celebrated our seventh year anniversary quite recently on 14th of July. Now we have more than 210 million users on the Binance platform. So being the largest platform globally, serving global users, we have the deepest liquidity pool. So people trading with us, you know, get substantial savings. But taking a step back, the first 100 million users that we have took us five years to onboard.

15:03The second 100 million users that we have took us two years to onboard. So you can see the pace of adoption being very fast. So from last year to this year, I mean, we went from 150 to 200 million users pretty quickly. And, you know, people say it's a very volatile asset class, etc. I mean, there's volatility. So you have to do your own research. You have to know how the markets behave. It is not isolated. It's not independent. It's associated with things like risk assets, macroeconomic environment, etc. But if I tell you, in the beginning of this year, 1st Jan of 2024, where Bitcoin is right about 43 ,000, 44 ,000, that, you know, this asset will have gone up by 50 % end of year.

15:56You think that that's pretty good return, but, you know, today at 67 ,000 is more than 50 % return for the year. So, it is good. And I look at several trends on that front, right? So, I'm bullish. I'm still very bullish on this sector for several reasons. I think firstly, I mentioned about regulations, much clearer regulations, enable a new category of investors to come into place with the ETF, right? So the ETF allows the institutions to come on board. You see a lot more institutions starting to do allocation into this space. I think we're just beginning, right? Like Jenny Johnson from Fidelity has said, a lot of institutions are still doing their deliberations, increasing the allocation to this space.

16:41So I believe you're still very early day issuing. And the ETF suits a different purpose. You and myself, we may not trade in an ETF because it's only trading during the US hours. It's not 24-7. You can't take risk during weekend or you can't hedge your position. But then it allows many users of different risk profile, different category. They are much more familiar with traditional financial markets. using that to gain exposure into crypto. And most of them are long-term holders. So it brings different kinds of users and inject new liquidity into this asset class, which is long-term positive. If you look at the fundraising of the crypto asset managers, the VCs, the private equity, they managed to continue to raise a substantial amount of funds that invest into many different projects into this space.

17:35And that is long-term positive because it brings about much more new use cases into the future. And new use cases always drive crypto adoption and deployment on that front, right? From ICOs to DeFi in the beginning to NFTs, etc. The more use case that's coming through, the better it is for the entire crypto ecosystem. So a lot of these new use cases are coming through. And then if I look at traditional financial institutions, this year, we have onboarded 36%. We saw a 36 % increase in onboarding of institutional investors just on our platform alone. Because a lot of traditional houses that trades traditional asset classes, commodities, securities, bonds, now are adding crypto desks to their trading desks.

18:29And that's a huge positive. So that's why I'm very bullish for the future because of all these trends I'm seeing. I still think that we are just beginning, given that globally crypto adoption is only about 5 % to 6%. What do you think the percentage of active accounts is versus total accounts right now? So I look at Coinbase's and they've got like 110 million accounts of which I don't know where we are now. Call it 15 % or 20 % might be active. Where are you in the kind of activity levels? It's around there, right? So it really depends. That will grow as the bull market develops. It's one of the signals when participation starts really building.

19:15Yeah. So I believe that different exchanges use different parameters to measure active accounts, whether you have done one trade in the past seven days, etc., etc. But having said that, there are many different types of users in crypto, right? So some use it for payment, some use it for the reasons that we mentioned, but some use it to hold things like stable coins. Because in their local environment, where the local fiat currency is going through deflationary situation, given hyperinflationary environment that they are facing, they are much better off holding on to stable coins, right? Compared to many other asset class.

19:57And you service those kinds of regions a lot. So it's a strength of you guys. Even without crypto speculative activity, you just get lots of underlying activities. People are moving either US dollars around or capital around all sorts of places. And we have many holders. So today, I mean, our total assets of clients on our platform has exceeded more than 100 billion US dollars in the beginning of this year. So we serve different type of users. So if you look at just active definition alone, it might not be accurate, given that different users use the platform for different reasons. And what about corporates?

20:38Because we've seen a trend of corporates in Asia using stablecoins for payment rails and stuff like that. Are you seeing corporates? I think Brazil, we've seen a growth there in corporates as well. What are you seeing in that side of the equation? Because that's something that most people don't really understand that's going on, but it's growing fast as far as I can tell. It is growing fast. So in different parts of the world, you mentioned Asia Pacific. It's not only Asia Pacific, Latin America. Yeah, Brazil is very big in that. Absolutely. So in different parts of Latin America, in Middle East, North Africa region, for example, you are seeing those developments and movements as well.

21:15So, I mean, we serve global market, we serve different regions and we are seeing some of those trends coming through. So, I mean, we always place our user first. We are a very user-focused organization. So depending on the needs of users, and we target clientele across a huge spectrum of needs as well as different ticket amounts. So from your very high VIPs, traders, holders to retail. So each of them will probably, each different category of users will have slightly different needs. So we try to target our program to their different units. And which regions are you seeing the largest growth in?

21:58Because that's also interesting because you are so global. It's just very fascinating. I do think that there are different pockets of hotspots, sparks in most of the regions. But generally, the countries that have the fastest pace of crypto growth and adoption normally have two characteristics. The first is very young demographics. So the population is younger in age compared to older demographics. And it's easy to understand why. Because if you look at recent survey across the world, the youth, the young adults are holding more crypto in their assets portfolio compared to stocks. So that's a very interesting phenomenon across the world.

22:45So where demographics is much younger, they tend to hold much more crypto and crypto adoption is very fast. And also, they know the technology, right? They are very IT savvy. They know how to set up, you know, cold wallet, et cetera, very easily compared to, you know, people that are much older. And people that are much older, they have accumulated their assets in traditional assets and they are familiar with that. So you ask them to get into crypto. There is some, you know, inertia on that front. The second element that we normally see and associated with much faster crypto adoption is where financial inclusion is lower.

23:25So you talk about developed markets, for example, in different parts of Europe, in different parts of the States, normally it's slightly lower in terms of the pace of crypto adoption compared to Latin America, compared to different parts of Africa, compared to different parts of Asia Pacific, where financial inclusion is lower. because people have no means to do transfer. Very difficult to get into investments in financial assets. They don't own their bank account because it's so costly. They have to jump through hopes. And even then, the bank don't want to open a bank account for them. So normally, with those two elements, you see a very fast pace of crypto adoption.

24:08And what about India and China, which both have struggled. they keep opening and then closing and opening and closing. Where do you see the developments in those two to get a more open crypto environment from them? I think it's very difficult for me to speculate on those because every country will have their own policy and political considerations on that front. So what they have to do is really decide what's best for the country. But on our front, as a crypto player, I'm sure many other crypto exchanges and players are the same. It's really, we wish to work very closely with government that believe that the Web3 industry is an industry of the future.

24:58Because we have some of the best and brightest talent around the world that's involved in this industry. So together with AI industry, blockchain, Web3, will be a big industry of the future. Given that, you need to bring in talent pool for that front. You need clear regulations on that front. You need supportive rules and regulations that on the one hand, foster the innovation, support the growth on this sector. And on the other hand, manage the risk as well. So we are always in conversation with different governments around the world, different policymakers, regulators, to say that we are very happy to work with them to come up with pro-market as well as pro-market frameworks to manage the risks, right?

25:46To really make Web3 a very exciting industry for them. That will bring in front-end investments, that will help them cultivate the right talent pool for the country for the future. Yeah, and again, for India and China, they have all of the talent pool. I mean, they have enormous talent pools. I mean, we're seeing a lot of developers coming out of that. a lot of activities. So, you know, hopefully they get their regulations right, you know, keep their eye on what happened in, you know, Abu Dhabi, Dubai, you know, close proximity. And they've done such a good job. And you can see it in Dubai and Abu Dhabi already.

26:23The talent is getting attracted, as you say. It's creating capital formation opportunities. It's creating all sorts of opportunities for the region, which is great to see. Absolutely. So we got involved. I mean, the Dubai government reached out to us right about end of 2021, right? where I sort of relocated back to Dubai to really formulate a framework that supports the innovative aspect of crypto and blockchain, at the same time, manages risk. And now we are fully licensed by the Virtual Asset Regulatory Authority in Dubai on that front. We are happy to be here. But when we started being involved in that project to come up with this regulatory framework, in 2021, there are not that many blockchain and crypto companies in the world, as you know.

27:14Now is a very vibrant, is a flourishing market here. You have many different projects, exchanges, asset managers, you know, liquidity providers, market makers. I mean, the whole spectrum of players are here. You have many interesting projects that have been launched here. So you can see how smart regulations, good regulations, can bring about a drastic difference to a country in terms of talent pool, in terms of FDI to a country. So when we're talking about institutions, again, what kind of region and what kind of institutions are you seeing starting to sign up? Look, activity levels from them are still relatively low.

27:54They're building their confidence and their understanding. But where regionally are you seeing institutions adopting this as an investment thesis? I would say that all the different regions, you have people that, you have institutions that are ahead of the curve. They are early adopters. They try to embrace this. So I've seen that in different parts of Asia Pacific, even in places like Europe, right? But most of them, I see people, I mean, institutions that are pushing the agenda, coming from places like Latin America, coming from different parts of Asia, I think those are much more advanced compared to many of the other regions.