Unchained - Why Catherine Coley Isn't Worried About BNB Being a Security - Ep.154

Episode Date: January 14, 2020

Catherine Coley, the CEO of Binance US, talks about her background as a foreign exchange trader, how and why she made the leap into crypto, and how she became the CEO of Binance US. We discuss how Binance US differs from Binance, who Binance US's target customers are, how Binance decides which coins to list, what's on Catherine's wish list to regulators, and whether Binance US will be connected to or cut off from the global, open financial system Binance is building. We also cover why Binance US launched with Tether as its stablecoin, why the company is also focusing on BUSD, how they became comfortable using BNB token on the exchange, whether or not they worry that BNB could be considered a security. Catherine talks about whether the company will offer leverage, lending, staking, etc., and where Binance US's future revenue could come from as exchange fees trend to zero. We also cover what Catherine has learned from working customer support for Binance US and and how she compares the US and Asian crypto markets.  Thank you to our sponsors!  CipherTrace: https://ciphertrace.com/unchained  Kraken: https://www.kraken.com/ Crypto.com: http://crypto.com/ Episode links:  Catherine Coley: https://twitter.com/cryptocoley Binance US: https://www.binance.us/en  Binance US on Twitter: https://twitter.com/BinanceAmerica Binance US blog: https://www.binance.us/en/blog Crypto Rating Council: https://www.coindesk.com/coinbase-led-crypto-ratings-council-draws-skepticism-from-legal-experts Telegram notice about Grams and Ton: https://telegram.org/blog/ton-gram-notice  CZ’s 2020 New Year’s message: https://www.binance.com/en/amp/blog/419417682154909696/Binance-2020-New-Year-Message-Building-Foundations--  Binance US joins Chamber of Commerce Executive Committee: https://www.binance.us/en/blog/419943835304939520/BinanceUS-Joins-the-Executive-Committee-of-the-Chamber-of-Digital-Commerce Multicoin Capital report, Binance is Blitzscaling: https://multicoin.capital/2019/11/07/binance-is-blitzscaling/  Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi everyone. Welcome to Unchained, your no-hype resource for all things crypto. I'm your host, Laura Shin. Unchained held a little giveaway recently for some of the swag we got or produced in 2019, and we are announcing our giveaway winners. Rob Fox won a ballet crypto wallet. Crypto Kyi won the book Bitcoin Billioners. Sohambatia won a ballet crypto wallet sample and an Unchained Rabbit Hole sticker. Ed Rod won our old school cap. Stephen Applegate won a black Unchained Crypto Rabbit Hens. shirt for his kids, Kiko won a gray unchained crypto rabbit hole shirt and an unchained rabbit sticker, David Orloff won the Little Bitcoin Book, and Carrie Ellen won an unchained rabbit mug and a black unchained logo sticker. Congrats to you all. And for the rest of you listeners, if you don't yet have any unchained swag, check out our wares at shop.unshamedpodcast.com. The crypto super app that lets you buy, earn, and spend crypto in one place. Get a metal MCO Visa card with up to 5% back on all your spending. Download the crypto.com app today. Cracken is the best exchange in the world for buying and selling digital assets. It has the tightest

security, deep liquidity, and a great fee structure with no minimum or hidden fees. Whether you're looking for a simple fiat on-ramp or futures trading, Cracken is the place for you. Cipher Trace cutting-edge cryptocurrency intelligence powers anti-money laundering, blockchain analytics, and threat Intel. Leading exchanges, virtual currency businesses, banks, and regulators themselves use ciphertrace to comply with regulation and to monitor compliance. Today's guest is Catherine Coley, CEO of Finance U.S. Welcome, Catherine. Hello, Laura. How are you doing today? Good. Happy New Year. I'm so glad we could finally do this chat. 2020. Can't believe it's here.

You worked for five years at Morgan Stanley doing foreign exchange trading in Hong Kong and London. And that was kind of what you were focused on before you got into crypto. So I was curious to hear about your transition from traditional finance to crypto. Why did you make that switch and how? To me, it was almost inevitable. I spent five years really focused on the macro factors that changed how the world really operated and how people bet on different news headlines, different fundamental factors, different technical factors, and really kind of moved their weight of their own wealth around to realize how markets could be beneficial

to them. So when you introduce something like a new asset class, our kind of trader brain just automatically sees something that we can buy and sell, you know, common phrase of understanding how markets work. So we saw Bitcoin kind of come into this space. For me, it was around 2013 when hedge funds that I was covering started buying this as a PA, which is kind of your personal account, trading just to get a little glimpse of the technology. And that's really where we just began to realize that this was just going to be another asset class that we could trade. So it was very natural for me to move into crypto and very obvious for me seeing the space itself of traditional finance where foreign transactions, um,

the margins were all being compressed and understanding just the cycle that I was in. The opportunity to be on the front line of crypto was one that I had to seize. And now that you've worked in this space for about two or three years, how would you say crypto and I guess in particular crypto trading compares to foreign exchange trading or more broadly to Wall Street in general? It has the same adrenaline factors that I fell in love with when I first moved out to Hong Kong on the trading floor there of just understanding that we are on the first and early days of this market behavior, understanding, recognizing patterns. These are all ones that don't come with

decades or centuries of existing data points for us. So being able to have new technologies be built on top of it is fascinating. Being able to see new behaviors, new consumer behaviors take place around it is fascinating and one that I just continue to kind of keep my eyes open and forward looking to make sure that we can build this in the best way possible. And so tell us a little bit about how you made the transition specifically from crypto, sorry, from traditional finance into crypto. Yeah. So it was probably, it was right before Brexit was taking place or so we thought it was

taking place when Morgan Stanley really kind of did. did a real quick look and said, oh, no, all of our, all of our expats and 40% of our fixed income workforce, we're going to, you know, we're going to get rid of that. And, you know, what an opportunity that actually was for me to really lift up out of my seat and say, I can go anywhere in the world. I can do anything I want right now. What is it that I really want to learn more about? And for me, that was learning how to navigate between a traditional hedge fund macro economics world and that of tech. I was an early adopter of any app or technology that I could get my hands on, and I wanted to know exactly how that world worked a little bit more. So the natural gravity was to

San Francisco to just kind of learn the language, understand how they think versus how I've thought into the largest financial centers in the world, and really kind of break it down and see where I could be a, you know, helpful citizen of that world. So I came over to Silicon. Valley Bank, actually. And all my clients were these great startups. And I just, it felt like I was sitting on the sidelines. I was watching some of my clients just do vertical growth and, you know, really exciting projects that they were building out and traction that they were growing. And I said, I can't sit on the sidelines anymore being a facilitator to these customers. So I said, all right, I had an alert for a while on Ripple, oddly, on LinkedIn. And finally, the day,

came where a job role lined up exactly with my expertise. So knocked on their door and within two weeks was working at Ripple. So that was the first full two feet dive into crypto that I took with my career. And there you were head of XRP institutional liquidity. That's correct. And so what did that role entail? That rule was, you know, every aspect you can think about an asset in this market. I was involved in. So whether it was understanding. expanding XRP trading on exchanges, the global exchanges, getting the listings there, understanding who was trading this, whether it was your market makers, whether it was your retail and institutions, understanding how liquidity can grow, what type of financial

products we actually needed to provide to users to make sense of this. So OTC markets were picking up people wanting large block or tranche trades in an XRP. And then, understanding just our impact on the larger crypto environment with introducing XRP and what other aspects could be built upon it. So if you think about every component that I worked on, that's really what helped me take on this next role. Because anything from custody to market makers to trading liquidity to apps to, you know, OTC, I was involved in understanding who were the key players at that time. And then so why don't you tell us the story of how you became CEO of Binance U.S.?

Yeah, so it wasn't a short story. But I was over in Singapore with Cumberland, which was one of the OTC desks that we worked with on the ExerP side, and they're hosting one of their first big summits where they brought in the likes of Chi Han, CZ, the Winklewe, gosh, Joe Lubin, you know, all these greats of crypto. that were seemingly on opposite sides of every table, they finally brought them into one room. And it was, you know, what a spectacular opportunity to be in that room and really understand how we were going to move forward as an industry and also recognize that some of these folks had never met in real life before. And so with that, I ended up sitting on a bus next to a guy that it turned out to be the CFO of finance. So we, Zhao, I sat next to, and I sat next to and show away. And we kicked it off in a way that was kind of serendipitous and also one that once you have an opportunity where you see eye to eye with someone from different sides of the world,

you kind of always hold on to that. So I stayed in touch with we on a multitude of things. He would be asking me about different market participants, understanding what they were thinking about or going into. And we just shared this kind of common bond and respect for the market and where we were both growing and going as stewards of the space. And so then about a year later, it actually came to fruition. So he kind of tapped me on the shoulder and said, you know, what are your thoughts around, you know, coming to Binance and where you can really add value?

And to me, that was really providing that impact to my own local market in the United States. So being able to bring their global technology and package it up in a way that was useful and productive for American users was something that just was a really important part for me to really figure out how we can fix the infrastructure in the United States to accommodate users to be a part of a much larger global story. Yeah, this is actually a theme that I want to ask you about, but first let's just cover the basics. So what is Binance U.S.?

And how does it differ from finance? Sure. So Binance U.S. provides a, you know, the fast and convenient way for you to bring dollars into crypto markets with a large variety of selection across the tokens that you can buy and sell. And so we have 25 tokens plus listed with dollar and USDT and BTC pairs. And we have an app available on Android and iOS, so you can do this from anywhere you are traveling around. And it's really catered for a U.S. user being able to provide them the compliance necessary within the U.S. regulation, within a vetted platform that really lets people feel comfortable about being part of a global community while also knowing that they're being looked after from a U.S. user's perspective. So, Binance previously did operate in the U.S. and then it closed off Binance to U.S. users and then Binance U.S.

replaced all this. Hopefully, the way I've praised this is not confusing to people. But so why was it necessary for Binance to create a separate entity for the U.S. market? Mostly because the U.S. market is so unlike other markets that they were already in. If you think about just blanket marketing to a global user, that's nearly impossible. So you've got different aspects of understanding the local regulation, understanding the different consumer types, really, really being able to cater to that audience that really make more sense on making this a specific product for the United States. You know, that's really where we saw the need. And finance has done a wonderful job of facilitating global economies to help this out. I mean, think about the other regions that they're in from a Fiat on-ramp perspective.

They've got finance Jersey. They've got finance Singapore. And so spinning up these ways for getting local currency access into these global crypto markets has really been an important factor for Binance to kind of progress in this space. And so for us in the United States, this was the opportunity to bring U.S. dollars and fiat on ramps into a regulated entity that would be up to par for the everyday American user. So Binance famously launched in the summer of 2017 and then it became the when crypto exchange by the end of the year, finance US is launching during a really different time, not during the crazy mania or a market that's similar to the crazy mania of 2017. It's more of a downturn. And also, of course, you have a lot of the regulatory restrictions that

the original finance did not have. So for Binance US, how do you plan to counteract some of these headwinds? There's no better time than the present now. We've had almost 10 years. years of learning how exchanges and marketplaces in the United States have been operating. So for us to be able to come in and understand what has worked already and what hasn't worked, our consumers right now and customers are really, really opinionated in what does and does not work for them. So one of the big components of finance US is that we really are listening and building for our users here in the U.S. There's something that I think is very helpful for our team, but also, you know, quite humbling. And that's, be careful what you wish for is often

what we say, because we'll build stuff that you, we hear our customers meeting. This is a time where they actually know what products they want, are understanding where the burden and the hurdles were earlier. And we're really here to lower those barriers to entry, to really include more people into, you know, this digital era, rather than exclude them or complicate the process anymore. Finance is operational, I believe, in all except 12 of the states. And those 12 states are some of the big states like New York, Texas, and Florida. So I'm curious to hear what your take is on regulation in the U.S.

Yeah, it was pretty hard to realize that I was going to be building something from scratch and not able to provide it to any of my existing network back home. So recognizing, I grew up, I grew up in Florida. I went to school in North Carolina, my sister's in New York. So for realizing that, you know, those big hit home states for me, you know, I didn't have a home court advantage for sure. But there's a, the great aspect is we were able to get up and running in 37 states in the U.S. operating and being able to provide our services.

The states that are remaining, and I get this question actually every day. is, you know, when is my state going to be listed? And we're going through the process of the money transmission licenses that is a requirement for anyone to be able to conduct this style of business in the 50 states. So when we realize that our, you know, peers and of the industry have had seven years advantage of getting these licenses in place before they're able to operate, we're definitely, you know, playing catch up in that aspect. And people need to realize that it is a, you know, it's a long process to go through, but one that we're really excited about doing, because then that lets us really have a little bit more autonomy in the business we can provide

to our users. So hang tight, but also I think it's wonderful that we've had the regulators be able to see now what these businesses are. There's a little less skepticism of, you know, are they profitable and productive businesses to run a marketplace for digital assets? So the state regulators, you know, this isn't the first. time they're seeing our business plan. It's a common practice by now for them to be able to look at these businesses, know the risks, ask the right questions, understand, you know, what standards we need to be holding and what value we're really adding to their state. So I'm pretty excited for being able to roll those out, you know, when the time comes. But it is, it's wonderful to just

also hear the roar from those states of how vibrant their crypto communities are and how much demand there is for our app or other features that Binance US has on our trading platform. But do you feel that going state by state is more onerous than it needs to be? Like if you could change something about U.S. regulation, particularly around this issue, what would you want to see? I mean, I've always wanted to make someone else's job easier than it is. But I think they're doing a great job in terms of understanding what they need to be comfortable with. And of course, time will tell. I say they've had seven years to understand what a crypto marketplace looks like.

But that's only seven years. That doesn't make an expert out of anyone. So we're still really in this state of evolution of understanding what regulation is necessary to keep consumer protection, to really follow up and make sure these are sound businesses. and the protections are all in place for the marketplace itself. But at the same time, where can we allow this innovation to grow? Where can we recognize that there are a slew of jobs that can be opened up when these states really recognize that we can be operational there? You know, there's no, I think we're seeing it more and more. The reason for people being based tech-wise out in California is oftentimes just because the regulation does allow for you to take part in business.

is sooner. And so some of, you know, some of these states, I think that's exciting to see them welcome innovation. And with that, we want to reward them for opening their doors. So going back to that very fast growth period, I mentioned that Binance experienced when it launched, part of its success came from the fact that, first of all, it launched as a crypto to crypto exchange, and also that it mostly played regulatory arbitrage, kind of sometimes avoiding regulations in certain countries that would be pretty onerous. Other times, you know, especially more recently going after jurisdictions that are more crypto-friendly, especially to establish these fiat on-ramps.

But obviously, finance, I don't think, can follow the exact same playbook to grow its market shares. So what is your strategy there? Yeah, I mean, we're here really able to cater to the U.S. user. And that to us is one that is a different playbook than we've seen before with Binance. You recognize some of the perks or features that would be on an exchange that globally would be allowed are not necessarily the same that you'll see in the U.S. But the burdens that a U.S. user has, whether it's taxes, whether it is K.YC. And understanding market regulation, if we can make those features easier and more seamless for our users, then they can start beginning to participate in that kind of global phenomenon or beyond phenomenon, global industry that is.

crypto. So I, you know, I think it's, it's great to recognize what has worked really well on a global scale. And then it's my job to translate that and understand how we can cater and build it for, for the U.S. And that's, you know, we're taking that head on. And when you talk about the U.S. customer, obviously within the U.S., there is a range of different customers and we're seeing some of the other exchanges like Coinbase, you know, cultivate different segments of the market. So who is your target customer or who are your target customers? Target customers, right. You know, I think we've, there is not one customer,

and that's something that I often worry about is the generalization of who's using crypto. But the idea that we have not only a wealth of capital markets and able investors from an institution side, whether they're waiting on the sidelines for more clarity, or they're just trying to understand this market before they dive in, They're still here and based, you know, based largely in the U.S., whether it's Chicago, New York, or even West Coast. You know, there's some serious amounts of capital here that are active traders in capital markets that could see this as a very, you know, plausible next step for them. The other aspect, if you break it down, are people that are crypto-native or this is their first foray or their second foray into day trading and, you know, a routine awareness of these markets.

we're really aware of what they need, and that's a lot more than the brand new customer they would need in a crypto market. Those guys are already advanced in trading in the futures, you know, wanting to see more products, more order types, more charts, etc. First, a new customer is just maybe beginning to learn how to dabble.

What is it like to hold it? What is it like to feel that risk in your hand of understanding that the price does go up, the price does go down? How can you monitor that? How can you access it quickly? and not be burdened by a huge amount of fees just learning about the technology. So we've broken it up in a way that we can provide, you know, an easy on-ramp for first-time users.

We've got a one-click buy-sell on our homepage. So you can just say, I want to spend dollars and buy Bitcoin to an amount. Click, go. You've got it. It sits in your wallet. You can monitor that. Any, you know, every day, watch it, trade it across 25 pairs. that's a really easy system for folks that are just wanting to get in, learn about the markets, and go from there.

The next kind of stage that we offer is our basic and advanced trading platform on our website. And that really breaks it down. You've got trading view charts. You've got more technical analysis available. You've also got, you know, that's where you're going to be leaving market orders. That's where you're going to be really engaging with the market, understanding their order book, understanding of order depth. And that's familiar to a lot of folks that were fell in love with how simple it was, but also how straightforward it was from a trading perspective. And then you bring both of those components

into an app form, and that allows us for the mobile customer. I think about most of the United States and most of the world right now is really on the go. So if you've got a mobile component, that's really how we're able to cater to our users that are going to be checking this, you know, whether it's me late at night, you know, I can close. my laptop now and just have my phone near my bed, probably not good of behavior, but, or you can have it, you know, on your way to class, on your way to, I've had truck drivers message me on Twitter that said, you know, I can't bring my desktop with me on the road and I love trading crypto while I'm, hopefully not while driving, but maybe at a rest stop. Definitely not while driving. Definitely not

while driving, but. I'm a pedestrian, so please don't touch your phone while you drive. I hope you're not crossing highways anytime soon. But the aspect of crypto just allows you to have this added layer of financial freedom that can be on top of your day job, can be on top of your education components. It's just another way to let you participate in a global market and really own and take control of your own capital. And that to me is just something that is profound in markets. We've traditionally had huge hurdles to entry. You know, accredited investors had to be a certain threshold. I remember every day while at Morgan Stanley, like, just begging to become an accredited investor.

I just thought it was so funny that I worked and facilitated some of the largest, you know, money managers around the world. And yet myself, I was still boxed out given I was, you know, two years out of college. But those components to me, that discrepancy of. inequality was just kind of striking. And I understand that there are good barriers to entry as in education first so that you understand what you're trading. But there doesn't have to be that penalty for fees. You know, it shouldn't cost you 1% to take a leap into a new technology. It should be paying you 1% frankly to try something out. So I think that's something that we're really just aware of as a as a as a as a as a global organization and one that I'm really aware of for the

United States given that inequality is tangible you know I think about the number of peers I have that actually dove into capital markets and I was one of a you know thousand that that went into sales and trading. And definitely one of my only peer set of women that dove into crypto. Fortunately, it's such a ecosystem where I found great other peers that are like-minded. And we all get kind of revel in the fact that we're, you know, a little bit rebellious, a little bit forward thinking and definitely stubborn enough to continue to fight for this. So I think there's a nice camaraderie with people that do take the risks, but we need to make it less intimate. less frightening, less scary to understand. And that's really what Binance U.S. and, you know,

the larger Binance has done wonderfully. And one other question about this transition. I was just curious if you had any data on how the switch affected usage of Binance in a broad sense in the U.S. was trading volume from U.S. customers, you know, obviously went after that left Binance. to do you feel like now you have the same level of training volume on Binance U.S.? Or do you feel like people moved off to other platforms? You know, when we launched, we launched with seven coins only. We launched in September, late September 2019. So I'll hold you to the fact that if Binance started in June, they had a three-month

lead on us. But they also had a different environment that they were launching in. But so we started in September with seven coins and then grew that to about 20, 27 quickly within our first 100 days of trading. So that really allowed us to bring in folks that felt isolated when they realized it was only seven coins going to be listed. One of the benefits of finances, it's always been open-minded in the aspect of providing a diverse selection of token offerings. It's not there to be a gatekeeper of what you should and should not trade. It's really just providing that freedom of choice. And that's something.

we definitely believe in as well, but we run through, with the understanding of the U.S. regulation, we run through a digital asset risk assessment framework. And that's a much, you know, tedious process, 75 point checklist to go through each token before we list it. So we kind of put out our list of what we're exploring, and then we spend our time exploring those. And when they pass the framework, we list them. And, you know, we- Can you summarize kind of the top line points that you're looking at? for in a coin before you list it? Sure.

I mean, the, the aspects that you really need to understand from it are, yes, A, their ability to not be a security, understand where they are from a trading liquidity perspective, community perspective. Is there a U.S. user growth? Is this a U.S. targeted project? You know, understanding how the facilitation of providing liquidity from the U.S. dollar perspective would be beneficial to the E.S. ecosystem that it's growing. And then as well, you know, what is the, you know, what is,

what is the component that this is adding to the American access for crypto? So I see us continuing. We've got another list of about 20 or 18 tokens that we are exploring. And I continue to see more listings be something that's positive for the American user, but one that we're also recognizing, you know, there's less volume trading on these smaller coins. So how can we still maintain adequate liquidity on our platform so that people are, you know, incentivized to come to a healthy market rather than one that's quite dry or illiquid. So I think there are components that we've heard good feedback so far of, you know, more BTC pairs.

One of the aspects, as you said, finance launched was crypto to crypto only. So when we consider people that are now using dollars as they're on ramp, that might not be the same audience member that you had on a, the Bitcoin to another alt-coin pair trading. So we have to really remember that there's a lifecycle of a trader that might be crypto to crypto or might be fiat to crypto, and we need to bridge that for both of them. All right. In a moment, we're going to discuss more about regulatory issues. Of course, you guys, I'm sure you knew that I was going to probably really zone in on that. But anyway, first a quick word from the sponsors who make this show possible.

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back to my conversation with Catherine Coley of Binance U.S. When you launched, why did you choose tether as your stable coin? We chose tether as our stable coin. As largely, it was one of the largest stable coins in the market being traded. We understood that a lot of the users globally enjoyed moving there, you know, whether it was profits or taking themselves out of a trading market into stable coins. USDT was, you know, broadly adopted. So that's, you know, really one of the components that was early on that we factored in. I do see us involving more around BUSD. VUSD is a stable coin that can be listed on what's listed on all the finance exchanges, but also on a good slew of other exchanges out there. And still will just allow for one-to-one conversion and really allow for an easy way to have skin in the game, but maybe not in a volatile asset.

So I think that's an important step for people to understand is that moving your funds into a digital asset that is a stable coin is a great progress and a great step that you're taking if you're not comfortable yet understanding or deciding which pair you want to be investing in or trading around. And I was also, you know, just since we were discussing regulatory issues, I was curious. Has finance US applied yet for a bit license? So we're in the process of applying for all of the states that we're missing. So that's the 13 there. So going through the steps of preparing for those applications and understanding, you know, with the steps that we need to take from both, you know, an internal perspective, but also a market and external perspective, going through all those steps for every single one of them. So that's all I'll tell you now. It's quite an arduous process, but one that we take very seriously. It's being led by Chris Robbins in our DC office. who has an extensive regulatory and legal background specific to getting these licenses for digital asset companies. And so we're in great hands for that process, but one that is, it's extensive. You know, it is really something that you have to think through clearly.

And there's a reason why you see companies leaving the U.S. It's not a, you know, it's not an easy, easy space to just pop up and begin business. But we knew that going into it. And, you know, we're not not giving up fighting. We've only just begun. And they've actually proposed some changes to the Bit License. I think just from a high level, one is that for exchanges that operate in the state, they'll be able to list any coins that the regulator approves for listing in New York.

And then also the New York Department of Financial Services will publish a model framework for coin listings that exchanges should follow. what do you think of these proposed changes? I mean, it's fantastic. The more clarity that we get around regulation and more guidance just shows that they're understanding our process even more. So I think the most that we can do is just teach them our business, share with them what we're working on, come and meet in the middle of the road of where their concerns are and what we can do to address those head on.

You know, we've run through, as I mentioned, that digital asset risk assessment framework is one that we, you know, vet through. seriously and are able to kind of reminds me of math class of like proving your work, show the work that we've done in order to be comfortable listing these items or tokens on our platform. So a lot of what regulation entails is just showing that you've done the work in order to do the business. And that's what we're really here to show our work, to do what we're thinking. We've constantly have our consumer in mind because I'm one of them. And you mentioned Christopher Robbins, who leads your legal and regulatory team.

One other thing that you have done on the regulatory front is you recently joined the Chamber of Digital Commerce's Executive Committee. And I just wondered, you know, it seems like obviously regulation is a focus for you guys. If you could present a wish list to regulators and lawmakers, what would you put on it? I have a wish list, but I, you know, I was waiting until next week to share that with them. The components that we really want people to come into this space when they are looking to be, you know, the authority in it is understanding where both the consumer and these companies are coming from in terms of the products we can provide folks. The ability to let American users compete in a global marketplace is really an advantage for the U.S. itself.

you're able to not hold back your customers or your citizens from partaking and understanding what is affecting the world at large. So the aspects of pain points that naturally drive people towards using crypto as a solution don't necessarily affect us directly in the U.S. given that we don't change currencies between state lines. But when you recognize that every flight out of Singapore as an international one, and you can't use your same currency anytime you land in an airplane, that's when you recognize that there is a significant advantage to cryptocurrencies and this component that allows for a digital representation of value as we know it. So I think that the components of understanding the pain points and the benefits on a global scale

and then bringing that into why the U.S. still needs to be an active participant in this industry is a really important one. And what I've spent my whole life doing, being a translator for on the ground, understanding a global market and bringing that into why it's relevant to a U.S. user. So I'm familiar with, you know, navigating the unknown and providing a digestible answer to people who may never ever see what is over on other sides of the world. And that's something that I really think that we're in the right place here with Binance U.S. Well, this is actually what I was curious about because I saw, I mean, it's obvious if you look at Binance's strategy overall, but, you know, they have this very, like, global strategy in the sense, like, you can tell that they see these kind of like

global financial markets in the future. And I saw multi-coin capital. had a report on how Binance is blitzscaling, as they called it. And one of the lines in it was, Binance is competing to be the centerpiece in a global open financial system. So, you know, when I was looking at that and thinking about finance U.S., I was just wondering, like, where does Binance U.S. fit in? Is it being excluded from that global open financial system? No, not at all. I think we're just catering towards, I mean, you could call the U.S. a global open financial system inside of the U.S. borders practically. You know, there's an insane amounts of, I call it, like topography within the U.S.

of various user types, various understandings of sophistication of market products. And that to us is the bubble or the world that we get to work inside of. What I get to make sure is that that product and that community is not left behind. So we have a fascinating aspect. They're called Binance Angels. And they're really just global volunteers that want to be, you know, committed to updating everyday users about our products or understanding or helping facilitate an understanding of how Binance can really cater to the needs of individuals all over the world.

And so we have that component already in the U.S. as well with the Binance Angels, just being able to welcome all types of folks through. with our community channel, understanding their pain points, understanding, you know, how does this work? I don't understand it. You know, the ability to listen to people from all walks of life is best when you're building it with everyone in mind. So for us at Binance U.S., I mean, I think one of the fun components

is our team is really made up of what we see right now in the United States. So, you know, whether it's welcoming, you know, diversity of thought, perspective, or background, whether it's really just addressing, you know, the different model of who we see coming into crypto. We're building that as a component within our own team and within our own product. And that's something that the blitz scaling you mentioned, I mean, what, 400 plus employees in 40 countries, that's an amazing advantage when you've got that amount of perspective being able to be behind the product. Well, but so then how will Binance US be connected to the wider world of things going on in Binance? Like, will they always, will the US customers just be trading with each other? Or, you know, I mean, well, let me, let me ask maybe like a more specific question around this. I noticed like in CZ's 2020 New Year's message, he had this little section on degrees of decentralization. And in one of them, he full on admitted quote,

finance chain slash decks is definitely less decentralized than Ethereum. And as some examples, he said that the code is not open source and there are a limited number of validator nodes. But so, for instance, you know, Binance here is working on this finance decks. But then is it hard for Binance U.S. to offer things that could be closely tied to that decks? Like, you know, could you list the BTCB token that they have on Binance desks, which is essentially a token that's pegged to the value of VTC, just so people who, so people can

easily trade cryptocurrencies that are not on the Binance chain. Like, could you offer that? I mean, it's certainly something that we can look into. One of the benefits of being a local partner to a global partner that is Binance is the technology that they're building, we're able to license and use and provide for our users. So every, every day, practice. when finance builds something new. It's kind of another component that I can factor into our product here in the U.S. So that's really how we see the benefit of a U.S. market being able to still take place with a global ecosystem. So understanding whether it is components of Finance Academy or, you know, we see their growth of, you know, decks with futures, with lending, with staking,

all of those components in the build-out that Binance is working on, we absolutely can process and bring in. It's just up to us to make sure that we're doing it in a way that is within the U.S. regulation, with the U.S. user in mind, and that will build that bridge between someone that is a finance-U.S. app user, someone that's a Binance.com user. They'll have a lot more things in common than they think, but they're both protected in their right ways of where they're operating. So I think that's more of this global phenomenon that I see is a huge benefit of finance. And it's a huge benefit of Bitcoin. It's something that we're bridging the barriers that people have normally had and why things have

been unknown. And so if you can have a common bond around the world based on the fact that you trade your digital assets on something that is, you know, black and gold, that's more common of a bond that you had than you had 10 years ago. And I think there's something fantastic about finding similarities around the world in scope of diversity that really crypto itself has done wonders for. And we need to preserve that narrative instead of celebrate the alienating one or the division of tribalism. There's something far more beautiful about being able to understand that you've got the best trading technology in the U.S. United States and you also have the best trading technology in a global arena. You are not left behind.

You're understanding these markets crisply. You can really gain a lot of awareness around how the rest of the world is working. One other aspect of work that finance is doing that looks like it could bump up against some of the regulations here in the U.S. centers around the B&B token, which looks like it could be classified as a security in the U.S. just going by the Howie test. I think people could argue that it is an investment contract in a common enterprise with profits dependent on a third party, which in this case would be Binance. So I know that Binance US does enable people to use the B&B token. So how did you determine that B&B was safe to use here on Binance U.S.? Yeah, I mean, just like any other token that we listed, we went through our digital

asset risk assessment framework, which is 75 points. of understanding how this token would be both available for our U.S. users and compliant within our measures for maintaining U.S. regulations. So, you know, with comfort, we've been able to see the benefit of B&B offering trading discounts for our users. And I think there's an additional amount of utility that we see B&B providing, whether it's down the line with finance charity foundation and other aspects where we can really build in and build upon the utility that we see with the chain itself. You've seen countless projects build on top of it.

You've seen it be super, you know, useful in terms of the payments mechanism as well. So I think there's just, you know, people can argue many, many sides of it. We're comfortable with it through our digital asset risk assessment framework. And, you know, we'll always be evaluating and reevaluating the coins we've listed to make sure that they're still within our digital asset risk assessment framework based on the regulation at the time. But regulatory clarity is an evolving process. And we are, you know, as you know, keenly, keenly listening and in the right conversations in D.C. and also part of the Chamber of Digital Commerce to make sure that we can ensure the acceptance and the use of digital assets in the U.S.

Yeah. Just looking at the data points, which are few and far between, but at least some already exist. Obviously, we saw what happened with KIC and its kin cryptocurrency. And I would classify this as an example of a token that was very closely associated with a company where the SEC, you know, pretty much said very clearly, like, you know, this is a scenario where it would fit the Howie test. Recently, we also saw with Telegram, they published a blog post where they also very clearly did. associated themselves from the Graham cryptocurrency, even to the point of saying that this notice superseded anything that was in the white paper. And some of the things they said in that blog post where that telegram will have no control over the ton network and that the ton wallet will

not be integrated with a telegram messenger service. And so I just wondered, you know, when you see these developments, does that at all give you pause about the B&B token? No. And why not? It's a scenario by scenario case. I think each time you see an example or a case made, it's appropriate to evaluate it at that point. But these are all, you know, part of the process going forward. I'm still comfortable with our assessment. All right. In October, several exchanges came together to form the crypto rating council. Some people on Twitter, especially, of course, smirked at the idea of such a council. They seem to indicate that they thought it was a conflict for the exchanges and that the exchanges could not be impartial judges of whether or not a token is a security. What do you think of the idea of the council? And is by Nancy West interested in joining? Yeah, that that launched right after we had opened our doors. So we were not involved in any of those conversations.

And I think that's, you know, it's always interesting to be the outside man. and one that we're comfortable with our own measures for following the framework and working with regulators. I think that the amount of detail we have in our framework is, you know, one that is what I'm proud of, that that amount of scrutiny that we go through for each project is not trivial. And so, you know, the components that I found difficult with the CRC was around the limited explanations that they had for the rating and then the bullet points to follow up just seemed a little bit light for how serious we take assessing tokens. So I'm fully confident in those teams individually being good stewards of the market. And I think that they probably

have the best intentions going through with this. But it's one where we see there being strength in individually being excellent at reviewing your tokens versus ganging up. Binance also offers services like margin trading, and it's actually quite popular there with 45% of users on Binance engaging in margin trading. What would need to happen for Binance U.S. to be able to offer margin trading? Well, a lot, but components that every day we're working on trying, to, as I kind of said, translate these attractive products from a global perspective to a U.S. market and a U.S. user. So really breaking it down to what is the component that people are

excited about in margin trading and how can we factor that into current licensing requirements regulation in the U.S. aspects of a futures market are entirely different in the U.S. as well as on a global scale. And we see that with, you know, you can't translate global futures matching engines into the same element in the U.S. goes through a clearinghouse with an FCM. You know, there are components that are just built differently. And we're aware of all those factors. So that's something that we just factor into our recipe and go forward.

And Binance has also started offering lending. Is that something finance, U.S. is looking into? you? I got another component. You kind of look at the laundry list that finance.com has, and I kind of salivate like a kid in a candy store realizing what I can bring to the U.S. user. I just have to prioritize where it fits in with regulatory ease and access and, you know, really what's right right now for the U.S. to gain access. I think there's, I'm always aware that if you create a extremely complicated product, early, early on, you won't be able to cater to a larger market.

And one of the components that is, you know, one-on-one on healthy markets is being able to have adequate liquidity. So, you know, catering to the niche, 0.001% of crypto users really is still at a disadvantage this early on into understanding these markets. So, you know, we're building things out in a method that we think is appropriate. for getting the most kind of broad scale of U.S. users familiar, comfortable with our platform, with our app, with our, you know, our trading pairs, and then being able to kind of bring them with this journey of where they want us to go as well. So the need for lending or even a product that has yield has been a huge component that we've seen very attractive when people cannot, you know, time alpha as well as they need.

in a market. So being able to earn yield on a passive amount of crypto holdings is a fantastic product, one that I definitely see down the line as something we'd want to be offering to our users because it makes sense as something counter to the traditional markets, which would be holding your money in cash, earning nothing, or, you know, not understanding the benefits of compound interest. And what about the Binance Launchpad? Is that something you ever see by Nancy West offering or, you know, offering something similar? Something similar? And when you think about the breakdown of kind of IEOs in the U.S. And if they've, the pendulum has kind of swung both ways. You've seen it go highly popular to highly unpopular to maybe coming back in the middle of the road.

So really assessing where we are with regulation, where we are with the comfort of the market. and what's the appetite for new coins to be launched onto an exchange. I think that are really all the factors we consider. And so it's something that, again, on the cards, but probably for Q1, I mean, when we first launched a large part of what we were working on was just getting us up to par where we were with our peers. So getting an app was a huge, you know, a huge moment for our. us to be able to now provide a mobile solution for our users. I can't believe we launched with just

a desktop and seven coins. That's night and day different to what we are right now, which is kind of incredible when you think it's only been roughly 100 days since we've been alive. And how many people are you? We're nine. Oh, wow. Yeah. So we're a scrappy group. I think that's one of our benefits and advantages, though, is that having a nimble team that is catered specifically to the excellence of this product, we are keenly listening to our users, building in real time based on their feedback, you know, being able to target and address each aspect that we need to build in a way that is as fast as Binance does operate. I mean, the components that make finance wonderful is that it always, it's a go-getter. I wanted to be a part of a story that was a

doer. I'm as much of a dreamer as well, but doing things and making things happen is something that is a wonderful feeling. And CZ's team and the effort that they do and the way that they just constantly build and reiterate and iterate and ship products, it's remarkable. And it's unlike anything else I've seen. So, you know, being able to be a part of that story and learning how the ecosystem has evolved within two years to be where they are, that's an incredible energy to be a part of. And one that we definitely embody here in our team. You know, we're based in San Francisco and D.C. We come from the likes of previous FinTech. I kind of always am looking for people that have had a couple tours of duty, whether it's, you know, we've got Robin Hood,

Western Union, BitFliar, EY blockchain, SOFi, like all of my team has seen one rotation from the traditional to the innovative. And now we're on our kind of second or third turn to really know how we can better deliver products, better, you know, cater to the users, really, having a keen ear to what people need. Coinbase has begun offering custody for institutions and staking. Do you see Binance U.S. also offering similar services in the future? You know, one of the things that we really do pride ourselves on as well is freedom of choice. So not being the, you know, there's a benefit to being a one-stop shop.

That certainly is what the institutions adore with having, you know, prime brokers do everything for you. And that's something that crypto never offered. It kind of democratized the prime brokerage model. which made them a little uncomfortable because they didn't want to do that much work. And I don't blame them. They're trading tons of assets and huge volumes. You don't have time to log in to your nano and click a bunch of buttons. But the elements that I find most exciting is that there are other institutional custody providers out there that are excelling in the space.

And for us to compete directly with them, I think would be just a little bit of a time waste on our part. So where I see this kind of evolving is that we provide a freedom of choice for people to custody their solutions at these various providers, but then be able to leverage the liquidity of finance US itself. So we've worked, we partnered with Tagomi in that aspect for institutional clients that want to trade in the ways that they ideally would like to, but access the liquidity and the coins that we provide through our system. So I see a similar model working in the custody component.

I also recognize that institutions aren't going to keep all of their coins in one place. And so naturally, we don't want to be isolating ourselves from preventing people from having that freedom to trade with us at any time by having something locked up with someone they've got to trade there. We more or less would like to facilitate this liquidity for everyone. For now, crypto exchanges can charge fees like 1%, but in the future, that's likely to trend down towards zero. What other forms of revenue is Binance US exploring? I mean, you think about just in what we've seen with traditional retail equity providers with the drop to zero fees. I also, you know, having seen the margins on FX products,

you think about these things called non-deliverable forwards, which are actually the way that Asian countries had to implement for currency restrictions following the Asian financial crisis. So the non-deliverable forward was the means to which you could not be able to access the local onshore markets and currencies. And that's, you know, component that has brought another product to the market. Those used to be highly illiquid and very different from the spot market on shore. And so you'd have huge spreads that you were able to capture trading those. And that's also why people didn't trade them is because they lost, you know, there was a lot of inefficiencies in that market. I saw those spreads go down to, you know, nearly nothing in five years of the markets.

So I see that same thing happening at an accelerated rate here. We've dropped our fees to just, you know, 10 basis points. And then if you use B&B, you get 25% off of trading fees. So, you know, start your day off with, you know, really, really low trading fees. That's, we're already starting there. So, you know, additional revenue components that we can think about are our elements where we see our users. Where do they provide or where do we provide value to them that is worth, you know, monetizing? And I think those components are going to be ever changing and we'll see what really that value comes. comes from it, but at the same time, we really just are focused on making sure that people have

an easy access to these markets and that we're not having a barrier to entry to make ourselves or make our business something that's preventing technology from getting in the hands of users. So it's a little bit of a different component versus the kind of Silicon Valley, subsidize and then raise the price on your user. Our ethos is just different, and we can innovate upon that. as we build out adoption. You worked customer support for finance for three days. Still do.

It was not three days, by the way. It's still ongoing. So it's been about three months or more. How long, September is a long time ago. No, I'm still available on Twitter. You can still DM me. I'll still chat with anyone and everyone. That is if they're polite and ask questions.

What are some things you've learned from doing that? Like what are you noticing from the users? and, you know, more than just like what they're requesting. Well, right. Beyond that, it's the geography difference that I didn't know there were such vibrant communities inside of the United States in states that I wasn't even paying attention to. And so kind of refocusing on the United States is really, I'm so curious and fascinated and a lot of what 2020 will be spent on is visiting these communities and really understanding

why it's working or where they see the adoption of crypto. benefiting their own lifestyles and communities. And I think it's just great and fascinating to see pockets of, whether it's the university blockchain graduates that go on and now are pursuing crypto and their first jobs and understanding, you know, maybe their first paycheck isn't going to be in U.S. dollars. Mine was in Hong Kong dollars. So that's how I had to learn about FX so quickly.

But the, you know, there's a component to which we're going to be seeing the seeds of native crypto adoption take place earlier on. And I think that's a fascinating wave to be welcoming. And so whether it's learning people who have, I love to know what their day job is sometimes, if they have a day job, if sometimes their day job is just finance. And I'm like, go for it. To the moon. Trade all day.

I'm here for you. But the different components that said this is a, this is an. equalizer for me. I'm able to, you know, pursue a passion of mine that might not be a financial advantage. And therefore, I can still follow the markets, take advantage of my capital, and access crypto to benefit my lifestyle or benefit my future or my generation following. So that to me is the really great component. The other one is just to enjoy that people love hoodies. So, you know, I've never seen people, actually, this is a true fact. I never wore a hoodie before I came to Binance, and I haven't taken mine off since I started. So I'm due for a laundry day,

that's for sure. But there's something that's both comforting, but also really nice to be kind of part of a part of a company that has such a culture and being able to bring our, our flair to it in the U.S. and, you know, be able to provide something that I think people will be not only proud to be a part of, but welcoming their friends to understand so that there's, again, that common bond that we can start beginning to lower the stigma of involving in crypto, lower the stigma of financial ownership. You know, I think it's,

we've gone miles from where we were people discussing money was so taboo. And now I talk about money every day. Like it's crypto. There's a, there's a community welcoming the ownership of your own capital, the growth and management. That's a huge progression from where we've been. And I think that's something that is smart for the world to take. awareness of. It is engaging to see how it benefits and, you know, allows for people to do more things than they have previously being in their own financial burdens of their own societies. But that's something that's just a huge component that I think is, I enjoy chatting with people. They might not even know I'll get this philosophical with them on Twitter until it's like four

in the morning. And I'm like, all right, guys, I got a podcast in the morning. I got to sign off. But that's the human element to which I think I can never avoid. And I think we take for granted that we're building products for humans at this stage. And we need to make sure that they work for humans and that we are human in the process. And last question, this is something I like to ask people who I guess have a familiarity with crypto. in Asia as well. But since you've run a U.S. version of a crypto company that came out of Asia, I was curious how you would compare the crypto trading cultures between Asia and the West.

Yeah, it's fascinating, localizing a product into a market that I know natively having grown up here, but also have professionally grown up internationally. So the light bulb effects of where the pain points are are a little dimmer here. versus every day in Asia you were burdened by some form of an FX rate ruining or making your day. And so I think that element of being able to provide the education in the U.S. is super important. But there's still the human element of enjoying when you're selling something higher than you buy it. And so that component is, you know, universal. The other elements are around kind of the referrals or the promotion or how fast things can spread.

You think about just how viral Asia is as a, you know, community where trends can be set and spread so quickly, given the concentration and the density of their cities, given the, you know, the appetite in the awareness of tech and mobile and, you know, e-commerce that exists outside of the U.S. So I think those are things that are such an advantage from the Asia focus. I think it's interesting to compare that in contrast with Europe as well, which is a different beast on its own. And one in the U.S. that I take as well is that, you know, Being the home for people's digital asset trading is a common, you know, we're creating a comfortable space for them to know that we are, you know, building it exactly the way they want. And that customization is something that a U.S. market really does care about. They're, you know, we have a plethora of

variety for people to choose from, but they want to choose the one that fits how they operate exactly. And so that's, that's really something that is a focus. for us in the U.S. is catering our product to exactly the needs of an American user, whether that is, you know, natively our app is in dark mode. You know, components of there's, you know, it's a simple UI. You're going to be cleanly understanding what's happening. You've got, you know, really straightforward components that are still top-notch, you know, part of the technology and the tech suite of the globally leading, you know,

cryptocurrency marketplace. So I think that's something that we really enjoy, but kind of can cater to making sure that we're, just keep it simple is always a nice motto for the U.S. And they get it. But they, with simplicity does not mean stupidity. So, you know, they do want the advanced products and features. They do want to have more sophisticated products available in the near time. They do want to have that diverse variety of tokens to choose from.

So all of those components I celebrate. But it's pretty neat. Great. Where can people learn more about you and Binance U.S.? Absolutely. So easiest place right now, we've got a couple, I call them bugles or ways that we communicate. Twitter, follow us on at Binance America. We also have a telegram announcements channel, which is fantastic just to, you know, it's only the

announcements that come out. So that's where you would have learned about our beta testing of our app and then our launch of our Android and our iOS app. And then any of the, you know, additional listing components come out through that channel. You can also find us on our website, finance. us. We have a blog that we keep updates on when we have, you know, new announcements of certain elements. You can follow me.

I'm at CryptoColi. My DMs are open. If you have any help or needs on the customer support, it's at Binance US help and we'll be there to answer. So really looking forward to letting the U.S. have finally the experience of Binance, but catered for them in the U.S. now in their hands. So download the app on the app store, the Google Play.

We're really excited to see, you know, where these communities can grow and be a part of a much larger global story. Great. Well, thanks so much for coming on Unchained. Thank you so much. Really looking forward to. Shout out to my listeners on the United. Thanks so much for joining us today. To learn more about Catherine and finance U.S., check out the show notes inside your podcast player.

Want to show your love for Unchained? Check out our T-shirts, mugs, hats, and stickers at shop.unchainedpodcast.com. Unchained is produced by me, Laura Shin, with help from Factual According, Anthony Youne, Daniel Ness, Josh Drew, and the team at CLK transcription. Thanks for listening.