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00:00WILL ALL LARGE BANKS AND FINANCIAL INSTITUTIONS, WILL THEY TRADE OR TRY AND SELL CRYPTO AND A COUPLE OF YEARS? > > I THINK THEY SHOULD. MOST INSTITUTIONS OR ORGANIZATIONS SHOULD BE LOOKING AT CRYPTO AT THIS STAGE. IT WILL BE THE FUTURE OF THE FINTECH INDUSTRY AND IT ' S GOING TO BE THE FUTURE OF MONEY. ANYBODY WHO DOESN ' T UNDERSTAND MONEY BE AT A SIGNIFICANT DISADVANTAGE. FRANCINE: THAT ' S A PRETTY BOLD STATEMENT. ARE YOU WORRIED BECAUSE CRYPTO TRADING IS MIGRATING TO MAINSTREAM EXCHANGES THAT THAT ' S THE BIGGEST CHALLENGE FOR FINANCE? > > THE DEVELOPMENT OF ETF ' S IS A VERY POSITIVE THING. THEY CAN TYPICALLY REACH CUSTOMERS WE WOULD NOT BE ABLE TO REACH. TODAY WE ' VE ONLY BEEN ABLE TO PENETRATE A VERY SMALL PERCENTAGE OF THE GLOBAL POPULATION. TRADITIONAL INVESTORS IN THE STOCK MARKET THAT WE SO FAR HAVE NOT BEEN ABLE TO REACH. HAVING THEM BRING THOSE PEOPLE IN THE CRYPTO IS A HUGE WIN FOR THE INDUSTRY. FRANCINE: AT WHAT POINT ARE YOU COMPETING -- AT THE MOMENT YOU ' RE SAYING IT ' S A DIFFERENT MARKET. AT ONE POINT WILL YOU BE COMPETING FOR THE SAME CUSTOMERS? > > RIGHT NOW THE CRYPTO INDUSTRY IS ONLY ABOUT 5% PENETRATION GLOBALLY. PROBABLY ONLY ABOUT 400 MILLION PEOPLE HAVE CRYPTO. I THINK WHEN WE GET TO 95% ADOPTION WE MAY VIEW THE MARKET AS SATURATED A LITTLE BIT AND THEN THERE MAY BE SOME COMPETITION BUT RIGHT NOW WE ARE ALL -- THERE IS REALLY NO OVERLAP. THE MORE PEOPLE WOULD BRING TOGETHER IN THE INDUSTRY BETTER IT IS FOR EVERYONE IN THE INDUSTRY. EVEN WHEN THE MARKETS REACH 95% IS ALWAYS NEW APPLICATIONS THAT CAN BE BUILT. I NEVER HAVE THE FINITE MINDSET, THE MARKET IS INFINITE AND. THE MORE APPLICATIONS WE CAN BUILD THE MORE PRODUCTS WE CAN OFFER TO PEOPLE, THE BETTER. FRANCINE: THE NEW YORK CITY MAYOR ELECT IS PRETTY BIG ON CRYPTO AND HAS A LOT OF PEOPLE TALKING ABOUT WHAT IT MEANS FOR CRYPTO AND THE CITY. HE WANTED TO BE CRYPTO FRIENDLY AND HAS TALKED ABOUT IT BEING TAUGHT AT SCHOOLS. WHAT DOES HE REPRESENT FOR THE INDUSTRY? > > HE REPRESENTS ONE OF THOSE EARLY ADOPTERS THAT ARE VERY KNOWLEDGEABLE ABOUT THE TECHNOLOGY. ANYBODY WHO IS NOT INTERESTED IN THE TECHNOLOGY WILL BE AT A DISADVANTAGE. HE IS OBVIOUSLY EXTREMELY SMART AND -- FOR INNOVATIONS. NEW YORK HAS BEEN A FINANCIAL LEADER GLOBALLY AND IT ' S GREAT TO SEE THAT. > > AT THE SAME CUP -- AT THE SAME TIME, BINANCE IS UNDER INVESTIGATION. DO YOU FEEL YOU ARE UNFAIRLY TARGETED? > > I WANT TO CORRECT THAT STATEMENT. THE U.S. MEDIA SAYING WE ARE UNDER INVESTIGATION. I DON ' T KNOW WHERE THAT COMES FROM. WE ARE THE LARGEST EXCHANGE IN THE STATES AND MOST REGULATORS WHEN THEY WANT TO LOOK AT THE SPACE THEY LOOK AT US. WHICH GIVES US AN ADVANTAGE. IT GIVES US CHANNELS WITH THE REGULATORS. WE CAN BE THE LEADERS AND HELP SHAPE HOW THE INDUSTRY SHOULD WORK WITH REGULATORS. SO WE VIEW THAT IS A VERY STRONG ADVANTAGE. FRANCINE: I ' M GLAD YOU CORRECTED ME BECAUSE THERE ARE NUMBER OF STORIES OUT THERE. CAN YOU PLAY OUT VIEWERS WHAT THE U.S. REGULATORS ARE LOOKING AT WITH BINANCE? ARE THERE PARTS THEY WANT TO KNOW MORE WHEN IT COMES TO MONEY LAUNDERING AND THINGS LIKE THAT? > > I CANNOT DISCLOSE SPECIFICS WITH WHAT WE COMMUNITY WITH REGULATORS. NO U.S. REGULATOR HAS ISSUED A STATEMENT AGAINST US. WE ARE IN COMMUNICATION WITH A MOST ALL REGULATORS. ESPECIALLY THE ONES INTERESTED IN CRYPTO. THE U.S. REGULATORS TYPICALLY CARE VERY HEAVILY ABOUT TERRORIST MONEY LAUNDERING, ETC.. THAT ' S HISTORICALLY THE FOCUS OF THE U.S. REGULATORS AND WE WORK VERY CLOSELY WITH THEM. I BELIEVE WE HAVE STRONGER PROCEDURES THAN TRADITIONAL BANKS. WE DEPLOYED MORE ADVANCED TECHNOLOGIES, AND MONITORING AND TRANSACTION MONITORING. WE USE THE SAME THIRD-PARTY TOOLS LAW ENFORCEMENT AROUND THE WORLD USES. WE HAVE THE SAME KY SEE VENDORS, SAME ANALYSIS TOOLS. DIFFERENT COUNTRIES CARE ABOUT DIFFERENT THINGS. WE DO WORK VERY CLOSELY WITH REGULATORS AROUND THE WORLD. FRANCINE: LAST TIME YOU WERE ON YOU SAID YOU SPEND MOST OF YOUR TIME WORRYING ABOUT REGULATION. IS THERE ANYTHING FINANCE CAN DO TO A PLAY REGULATOR CONCERNS OVER MONEY LAUNDERING? > > WITH CRYPTO THERE IS A MISCONCEPTION THAT MORE PEOPLE USE IT FOR MONEY LAUNDERING. IT ' S ACTUALLY MORE DIFFICULT IN CRYPTO BECAUSE THE TRANSACTION ON THE BLOCKCHAIN ARE PERMANENT AND TRANSPARENT. EVEN THOUGH THEY ARE KIND OF PSEUDO-ANONYMOUS, THERE ARE DIFFERENT TRAILS YOU CAN FOLLOW TO FIGURE THAT OUT TO A VERY LARGE EXTENT. SO MONEY LAUNDERING WITH BLOCKCHAIN AND CRYPTOCURRENCY IS MUCH HARDER THAN WITH FIAT CURRENCY. I THINK THAT ' S A MISCONCEPTION PEOPLE HAVE. WE DO NEED TO WORK VERY CLOSELY WITH REGULATORS TO COMBAT THE SPREAD -- COMBAT THIS. FRANCINE: YOU ' RE TALKING ABOUT MONEY BUT FROM PLACE A TO PLACE B. WHAT ARE REGULATORS CONCERNED ABOUT WITH THE MONEY AT POINT A, THERE ' S NO ONE TO CHECK WHERE THAT COMES FROM. > > YOU HAVE TO KNOW YOUR CUSTOMERS. WE DO KYC GLOBALLY. THERE ARE SOME SMALLER EXCHANGES THAT STILL DO NOT DO THIS. BUT WE WANT TO LEAD BY EXAMPLE. WE USE ONLY ANALYSIS TOOLS THAT ANALYZE WHERE CERTAIN TRANSACTIONS COULD BE FLAGGED AS POTENTIALLY QUESTIONABLE AND WE WILL LOOK INTO THOSE DETAILS. THE TOOLS ARE VERY COMPLEX. THE PROCESS IS RELATIVELY ESTABLISHED. FRANCINE: DESPITE THE PRESSURES WE WERE TALKING ABOUT, BINANCE HAS GONE FROM STRENGTH TO STRENGTH TO THE LARGEST CRYPTO EXCHANGE. WHAT IS BEHIND OF YOURS -- WHAT IS BEHIND YOUR SUCCESS? > > PRODUCTS AND SERVICE ARE TWO OF THE FUNDAMENTAL PILLARS. AND THEN VALUES. I THINK THE THIRD THING IS REALLY IMPORTANT. WE HAVE CONTINUED TO GAIN MARKET SHARE OVER THE LAST 4.5 YEARS AND IT SHOWS HOW MUCH USERS TRUST US. YOU CANNOT JUST GET THAT FROM ADVERTISING AND MARKETING. YOU HAVE TO TAKE ACTIONS. WE HAVE ALWAYS WE PROBABLY DON ' T HAVE ENOUGH TIME ON THIS MEDIA -- MEDIUM. FRANCINE: YOU ' LL HAVE TO COME BACK FOR A ONE-HOUR SPECIAL. ONE OF THE OTHER THINGS WE ' VE BEEN TRYING TO FIGURE OUT IS THIS NEW INITIATIVE TO SUPPORT SOME OF THE CRYPTOCURRENCIES IN FRANCE AND IN EUROPE IN GENERAL. > > THE U.S. IS A VERY SEPARATE ENTITY FOR US. SERVICE THE INTERNATIONAL COMMUNITIES. WE DO VIEW EUROPE AS A VERY LARGE MARKET. IT ' S ALWAYS BEEN AN EARLY ADOPTER IN CRYPTO. WE VIEW FRANCE AS A VERY STRATEGIC POSITION FOR US IN THE REGULATORS ARE EXTREMELY PRO-INNOVATION. AND THE LOCAL TALENT IN FRANCE, WE WANT -- IS QUITE STRONG. WE WANT TO LEVERAGE THAT AND HELP TO GROW IN FRANCE AND IN EUROPE. FRANCINE: YOU ' VE BEEN HIRING A LOT OF HIGH PROFILE PAID HOW IS THE ONBOARDING GOING? > > PRETTY WELL IN GENERAL. THEY COME IN AND BRING A LEVEL OF EXPERTISE THAT WE DID NOT HAVE BEFORE. AND THEY CAN LOOK AT OUR SYSTEMS, THEY CAN EXECUTE SOME OF THE IMPROVEMENTS. MORE IMPORTANTLY THEY CAN COMMUNICATE WITH EX COLLEAGUES WHICH ARE PREVIOUSLY REGULATORS. THIRDLY JUST BY HAVING THEM INCREASE CREDIBILITY. THERE COLLEAGUES HAVE A RESPONSIBILITY WITH WHAT THEY SAY. SOMETIMES WHEN THEY TALK WITH A CRYPTO GUY LIKE MYSELF. HAVING THOSE JOINING IS FANTASTIC. THAT ' S HELPED US ON THE REGULATORY EFFORTS SO MUCH THAT WE WILL NOT BE ABLE TO ADJUST WITHOUT THEM. > > I HAVE A COUPLE OF OTHER THINGS WE NEED TO FOCUS ON. I KNOW YOU ' RE INVESTIGATING WITH ONE CRYPTOCURRENCY. WHERE ARE YOU WITH THAT? > > IT ' S A BLOCKCHAIN PROJECT LIST DID WHERE WE DON ' T HAVE CONTROL. THERE ARE A FEW THINGS WE COULD DO. IF ANY OF THE MONEY -- ILLICIT HACKER MONEY, THE FUNDS FROM THAT PROJECT, WE CAN HELP TO FREEZE THAT. WE HAVE TO BLOCK THAT. WE CAN ALWAYS TRY TO USE THIS DATA TO TRY AND DISCOVER WHO THE SCAMMERS ARE TO THE EXTENT WE HAVE DATA. IT ' S NOT 100% GUARANTEED. WE WORK WITH MULTIPLE SECURITY FIRMS IN THE INDUSTRY AND LAW ENFORCEMENT. THIS LARGE NUMBER OF COORDINATIONS GOING ON. WE DON ' T KNOW WHO THE GUYS ARE. I DO ADVISE PLEASE DO NOT JUST INVEST IN PROJECTS YOU DO NOT UNDERSTAND. SPEND FIVE TO 10 DAYS TO UNDERSTAND A PROJECT BEFORE YOU INVEST. FRANCINE: WHERE YOU CONCENTRATING YOUR EFFORTS WITH YOUR $1 BILLION FUND? DO YOU HAVE SOMEWHERE SPECIFIC YOU WANT THAT TO GO AND WHAT YOU ' RE TRYING TO ACHIEVE WITH IT? > > THERE ARE SO MANY EXCITING THINGS IN THE BLOCKCHAIN SPACE. WE ARE PUSHING QUITE HARD PAID ALL OF THOSE AREAS WE ARE HAPPY TO INVEST. ALSO MORE INFRASTRUCTURE AREAS. SECURITY, BLOCKCHAIN ANALYSIS, ALL OF THESE AREAS WE ARE MORE THAN HAPPY TO INVEST. WE WANT TO DO AS MUCH AS WE CAN. FRANCINE: THANK YOU SO MUCH AS ALWAYS FORGIVING US THAT.

Binance CEO on Crypto ETFs, Regulation

Changpeng Zhao, Binance chief executive officer, discusses crypto ETFs, industry regulation, and investing in Europe's crypto infrastructure. He speaks with Bloomberg's Francine Lacqua on "Bloomberg Surveillance: Early Edition."