CZ Valentine's Day AMA Event Highlights

Binance Blog · 2023-02-16T15:35:10.000Z

Content Highlights Binance CEO Changpeng Zhao (CZ) participated in a one-hour live broadcast on Twitter Spaces on February 14, 2023, answering user questions and focusing on topics such as stablecoins and BUSD. BUSD is neither issued, created or operated by Binance, but simply uses the Binance brand. Binance is a platform designed to help people acquire a variety of crypto assets, including stablecoins, and we will continue to work with different stablecoin issuers. Although the minting of new BUSD has stopped, the supply of existing tokens in circulation is still sufficient. The New York Financial Services Authority (NYDFS) also issued instructions to Paxos to ensure a 1:1 anchor ratio and ensure timely response to redemption needs. Regulations are tightening. In the long term, traditional financial service providers will be constrained in using this new technology, making them less competitive. However, the cryptoasset industry is extremely resilient. Different countries or regions have different regulatory attitudes towards blockchain, Web3 and encrypted assets. Dubai, Bahrain and France, for example, currently have a generally positive attitude towards these industries. CZ said: "In the Twitter AMA event on February 14, 2023, I answered the following questions. Topics included BUSD, its alternatives, Circle, etc. Please note that the following may be different from the original words. I have deleted Removed some unnecessary content and reused more concise expressions, [and added some content that was missing in the original words]." Regarding BUSD, its alternatives and the fiat-anchored stablecoin BUSD, there have been some troubles recently , and the market experienced the panic of Luna/UST failure last year. Do you think that under such circumstances, will there be alternatives to fiat-anchored stablecoins? Also, why is our industry still using the dollar system? Should our industry be anchored in hard assets? For example, why not anchor to gold and set up trading pairs in gold? Do you think there will be any problems with this? CZ: Your question is very informative. First of all, most people’s assets are still legal currency assets. They use US dollars to calculate the price of crypto assets, so the need for fiat-backed stablecoins still exists. Judging from the current pressure on US dollar-anchored stablecoins, I think the industry is likely to gradually adopt non-US dollar currencies for anchoring, including the euro, the yen, and even the renminbi.Now we've seen a number of viable alternatives. Algorithmic stablecoins may rise again, with different risk characteristics. When we use one asset as collateral for another asset, there is a risk of anchoring decoupling. We want to ensure that users are aware of and aware of these risks. One problem with UST is that it is not transparent enough. When UST collapsed, no one knew how Do Kwon and his team responded, and Do Kwon was too slow to restore the peg ratio with BTC reserves. If the algorithm for restoring the anchor ratio is written into the smart contract in a transparent manner (such as DeFi/Uniswap), people can at least know the existence of this risk. That might be a better way, but it needs further refinement. [As for anchoring gold or other physical assets, that is another topic. I think the reason why these practices have not taken off is because it is almost impossible to verify that the anchor is real, and pricing is difficult to determine. So, I think a real viable alternative to stablecoins has yet to emerge. 】There are many possible solutions to the problems we face, and many projects dedicated to solving these problems have recently contacted us. In short, the entire industry will work together to find solutions and continue to iterate. Regarding whether BUSD is still safe, thank you for participating in the event on Valentine's Day. My question is: Is BUSD still a safe asset? CZ: First of all, happy Valentine’s Day to everyone! Regarding BUSD, you can read the announcement on the New York Financial Services Authority (NYDFS) website. They asked Paxos to ensure a 1:1 anchoring ratio and ensure timely response to redemption needs. Therefore, although the minting of new BUSD has stopped, the supply of existing tokens in circulation is still sufficient. It is believed that users will not suffer any losses. Regarding the judgment of the trend of BUSD and CZ, based on the latest developments of BUSD, how do you interpret its overall trend? What impact do you think these latest developments will have on the market? CZ: Overall, regulation is definitely tightening, and many banks have withdrawn their support for crypto-asset companies. Coinbase was fined $100 million not long ago; then Kraken was fined $30 million for its financial management project; and now BUSD is affected again. In the short term, the crypto-asset industry will be negatively affected to some extent because our legal currency deposit channels have been reduced and the product types have become smaller.But the crypto asset industry is extremely resilient, and we can see that after the FTX incident, crypto asset prices have begun to recover. But in the long term, regulatory tightening will constrain traditional financial service providers in using this new technology. Their adoption of blockchain technology may lag at least three to five years, resulting in their future failure in this emerging field. Competitiveness is reduced. Regarding NFT, I would like to ask you to talk about your views on NFT and whether you hold NFT yourself. CZ: Okay. Simple answer: I don’t hold any NFTs. I don’t collect art, and I don’t listen to much music. I have a programmer background, and I run a company. Those of you who have read my previous blogs will already know this. People often give me some NFTs, but I actually don’t remember which wallet address I put them in. But I think NFT technology is great. We have only seen the tip of the iceberg about the potential of this technology. Regarding the role of stablecoins and Binance first, how do you think the stablecoin market will evolve in the future? What role does Binance play in this space? Second, how do you respond to the negative comments about stablecoins? Some people say that they are just another form of fiat currency and a weakening of the decentralized characteristics or spirit of crypto assets? First of all, it should be noted that BUSD is not issued by Binance. It uses the Binance brand – which we agreed to. But this idea was not created by us, but by Paxos. So we see ourselves as supporters, facilitators. The Binance platform is designed to help people acquire crypto assets, including stablecoins. We aim to provide liquidity and work with multiple stablecoins. The stablecoins we currently support include USDT, USDC, TUSD, etc. In the future, we will continue to cooperate with different stablecoin issuers and creators. As for the second part, I think stablecoins offer a lot of value to the cryptoasset industry. They must have an absolutely positive impact on encrypted assets. It is a bit like a combination of native encrypted assets (such as Bitcoin) and the traditional fiat currency world. Moving money around the world through banks is difficult, slow, and expensive. But through stablecoin transaction operations on the blockchain, it will be faster and cheaper.Without stablecoins, crypto asset prices would differ in different countries and on different trading platforms. My question about Circle and Binance and BUSD is about an article in Bloomberg saying that Circle complained to regulators about the way you manage BUSD. Do you see this as an attack on Binance? What do you think about this? CZ: Many people forwarded that article to me. I actually don't believe that's true. I think any crypto industry professional understands that hurting one player hurts everyone involved. BUSD was attacked, USDC also suffered from redemptions, and its market value was greatly reduced. I don't think Circle would do something stupid like this. In addition, we all know that the media likes comparisons and is happy to see us "fighting" each other. You can’t blame them, after all, they make a living selling stories. But when reading media articles, we should not accept them all, but should take a critical eye. So I didn’t pay too much attention to the content of that article. Binance has always cooperated with different stablecoin partners, and we will continue to do so and continue to work hard to build a global open ecosystem. Regarding the SEC’s regulation of crypto-assets, the SEC has recently begun to launch a large-scale attack on crypto-asset projects – at least in my opinion. What advice would you give other crypto founders to get through this? Moving to Dubai would be a suggestion for me. Do you have any other suggestions? CZ: First of all, I look at this issue differently than you do. I don’t think the SEC will publicly claim to “launch an attack.” This is probably what others are saying. But it is a fact that regulations are tightening, and it is also a fact that there is more attention on crypto assets. As you said, different countries or regions now have different regulatory systems for blockchain, Web3, and encrypted assets. For example, Dubai, Bahrain, and France generally have a positive attitude toward cryptoassets, as do many other regions, so you can try to explore different regions. If you take your project seriously, moving to a new country can be a good thing. People often move between different neighborhoods and cities in the same country, but sometimes feel apprehensive about going to a new country. I don't know what is the reason for this.[We all live on a rock anyway, and its name is "Earth"] I'm not an expert [nor a lawyer], but I think it's important to get expert advice. Consult with an attorney who understands your product to make sure you don’t cross any regulatory red lines. But there is still a lot of uncertainty [and lack of clarity] in this area. In addition, you can also actively communicate with regulatory agencies. Some regulators are approachable, depending on who you are and who you know, and there's a certain amount of luck involved, but at least most regulators say they welcome communication. Also look at what others are currently doing, which is to “go with the flow” as much as possible. [Herding behavior. ] Overall, many countries and regions are very welcoming to our rapidly growing industry. Extended reading: "CZ's Principles" "A Letter from Binance CEO: Resilience is King in 2022" "Binance Founder Changpeng Zhao (CZ): My Time Management Rules"

Key pointsBinance CEO Changpeng Zhao (CZ) participated in a one-hour Twitter Spaces live broadcast on February 14, 2023, answering user questions and focusing on topics such as stablecoins and BUSD.
BUSD is neither issued, created, nor operated by Binance, but uses the Binance brand. Binance is a platform designed to help people access a variety of crypto assets, including stablecoins, and we will continue to work with different stablecoin issuers.
Although new BUSD minting has stopped, the existing supply of tokens in circulation remains sufficient. The New York Department of Financial Services (NYDFS) has also issued instructions to Paxos to ensure a 1:1 anchor ratio and to ensure timely response to redemption requests.
Regulation is tightening. In the long run, traditional financial service providers will be constrained in their use of this new technology, making them less competitive. However, the crypto asset industry is extremely resilient.
Different countries or regions have different regulatory attitudes towards blockchain, Web3 and crypto assets. For example, Dubai, Bahrain and France currently generally take a positive attitude towards these industries.
CZ said: "In the Twitter AMA event on February 14, 2023, I answered the following questions. Topics include BUSD, its alternatives, Circle, etc. Please note that the following may differ from the original words. I deleted some unnecessary content and re-used more concise expressions [and added some content that was omitted in the original words]."
About BUSD, its alternatives, and fiat-pegged stablecoinsBUSD has had some troubles recently, and the market experienced a panic last year with the failure of Luna/UST. Do you think there will be alternatives to fiat-pegged stablecoins in this situation? In addition, why is our industry still using the US dollar system? Should our industry be anchored to hard assets? For example, why not anchor to gold and set up trading pairs with gold? Do you think there will be any problems with doing so?
CZ: Your question is very informative. First of all, most people's assets are still in fiat currency. They use US dollars to calculate the price of crypto assets, so the demand for fiat-pegged stablecoins still exists.
Based on the current pressure on the US dollar-pegged stablecoin, I think the industry is likely to gradually adopt non-US dollar currencies for anchoring, including the euro, yen, and even the renminbi. Now we have seen a number of viable alternatives.
Algorithmic stablecoins may rise again, and their risk profile is also different. When we use one asset as collateral for another asset, there is a risk of decoupling. We want to ensure that users are aware of these risks.
One of the problems with UST is that it is not transparent enough. When UST collapsed, no one knew how Do Kwon and his team responded, and Do Kwon was too slow to restore the anchor ratio with BTC reserves.
If the algorithm for restoring the anchor ratio is written into the smart contract in a transparent way (such as DeFi/Uniswap), people will at least know that this risk exists. That may be a better way, but it needs further improvement.
[As for pegging to gold or other physical assets, that’s another topic. I think the reason these practices have not taken off is that it is almost impossible to verify that the peg actually exists, and the pricing is difficult to determine. Therefore, I think there is no real viable alternative for stablecoins yet. ]
There are many possible solutions to the problems we face, and many projects dedicated to solving these problems have contacted us recently. In short, the entire industry will work together to find solutions and continue to iterate.
Is BUSD still safe?Thank you for participating in the Valentine's Day event. My question is: Is BUSD still a safe asset?
CZ: First of all, happy Valentine's Day to everyone!
Regarding BUSD, you can read the notice on the website of the New York Department of Financial Services (NYDFS). They require Paxos to ensure a 1:1 anchor ratio and ensure that redemption requests can be responded to in a timely manner.
So, while new BUSD minting has stopped, the existing supply of tokens in circulation remains ample.
I believe that users will not suffer any losses.
Judgment on the trend of BUSD and CZBased on the latest developments of BUSD, how do you interpret its overall trend?
What impact do you think these latest developments will have on the market?
CZ: Overall, it is certain that regulation is gradually tightening, and many banks have withdrawn their support for crypto asset companies. Coinbase was fined $100 million not long ago; then Kraken was fined $30 million for its wealth management project; and now BUSD is affected again.
In the short term, the crypto asset industry will be negatively affected to some extent because our fiat currency deposit channels have been reduced and the product variety has also been reduced. However, the crypto asset industry is extremely resilient, and we can see that after the FTX incident, the price of crypto assets has begun to recover.
But in the long run, tightened regulations will constrain traditional financial service providers in their use of this new technology, and their adoption of blockchain technology may lag behind by at least three to five years, making them less competitive in this emerging field in the future.
About NFTI would like to ask you about your views on NFTs and whether you hold any NFTs yourself.
CZ: Okay. Short answer: I don’t own any NFTs.
I don't collect art, and I don't listen to music much. I'm a programmer, and I run a company. Those who have read my previous blogs should already know this.
People often send me some NFTs, but I actually don’t remember which wallet address they are in.
But I think NFT technology is great. We have only seen the tip of the iceberg so far about the potential of this technology.
On Stablecoins and Binance’s RoleFirst, how do you think the stablecoin market will evolve in the future? What role does Binance play in this space?
Second, how do you respond to the negative comments about stablecoins, some saying that it is just fiat currency in a different form and a weakening of the decentralized characteristics or spirit of crypto assets?
First of all, it should be noted that BUSD is not issued by Binance.
It uses the Binance brand - this is with our consent. But the idea was not created by us, but by Paxos. So we see ourselves as supporters and facilitators. The Binance platform is designed to help people access crypto assets, including stablecoins. We aim to provide liquidity and work with multiple stablecoins. Currently, the stablecoins we support include USDT, USDC, TUSD, etc. In the future, we will continue to work with different stablecoin issuers and creators.
As for the second part, I think stablecoins provide a lot of value to the cryptoasset industry. They are definitely a positive influence on crypto assets. It is a bit like a combination of native crypto assets (such as Bitcoin) and the traditional fiat currency world. It is difficult, slow and expensive to transfer money around the world through banks. But through stablecoin transactions on the blockchain, it will be faster and cheaper.
Without stablecoins, the prices of crypto assets in different countries and on different trading platforms would be different.
About Circle, Binance, and BUSDMy question is about an article in Bloomberg saying that Circle complained to regulators about how you guys manage BUSD. Do you see this as an attack on Binance? What do you think about this?
CZ: Many people forwarded that article to me. I actually didn’t believe it was true.
I think any professional in the crypto asset industry understands that harming one participant is equivalent to harming all participants. BUSD was attacked, and USDC also encountered a redemption crisis, and its market value was greatly reduced. I don’t think Circle will do such a stupid thing.
In addition, we all know that the media likes to compare and is happy to see us "fighting each other". We can't blame them, after all, they make a living by selling stories. But when reading media articles, we should not accept them completely, but be critical. So I didn't pay too much attention to the content of that article.
Binance has always worked with different stablecoin partners, and we will continue to do so and continue to work hard to build a global open ecosystem.
Regarding SEC’s regulation of crypto assetsThe SEC has recently begun a massive attack on crypto projects — at least that’s what I see. What advice would you give to other crypto founders to navigate this difficult time?
Moving to Dubai would be one suggestion I would make. Do you have any other suggestions?
CZ: First of all, I look at this issue differently from you. I don’t think the SEC will publicly claim to “launch an attack”, which is probably the argument of others. But it is true that regulation is tightening, and it is also true that there is more attention paid to crypto assets. As you said, different countries or regions now have different regulatory systems for blockchain, Web3, and crypto assets.
For example, Dubai, Bahrain, France are generally positive about crypto assets, and there are many other regions as well, so try exploring different regions. If you are serious about your project, moving to a new country can be a good thing. People often switch between different neighborhoods and cities in the same country, but sometimes they are afraid to go to a new country. I don't know what the reason is. [Anyway, we just live on a stone, and its name is "Earth"]
I'm not an expert [nor a lawyer], but I think it's important to get expert advice. Consult with a lawyer who understands your product and makes sure you don't cross any regulatory lines. But there's still a lot of uncertainty [and lack of clarity] in this area.
Another thing is to actively communicate with regulators. Some regulators are very approachable, depending on who you are, who you know, and a certain amount of luck, but at least most regulators claim that they welcome communication.
You can also look at what other people are doing right now, which is to "follow the crowd" as much as possible. [Herd behavior.]
Overall, many countries and regions are still very welcoming to our fast-growing industry.
Further readingCZ's Principles
A letter from Binance CEO: 2022, resilience is king
《Changpeng Zhao (CZ), Founder of Binance: My Rules for Time Management》