CZ Open Letter: Resilience is King in 2022

Judging from the data, 2022 was a year of ups and downs for the crypto industry. For Binance and the entire crypto industry, after the bankruptcy of projects such as Celsius, Voyager, and FTX, we should learn to reflect. On the surface, the entire crypto ecosystem seems to be full of crises and failures in 2022; crypto asset prices have fallen from last year's historical highs; large platforms have fallen one after another, causing users and regulators to lose confidence in the industry; policymakers, the media, and the public have also become more strict in their scrutiny of crypto assets.

Although the combined effect of these factors has encountered great resistance to industry development, as an emerging industry, it is not these challenges that define us, but how we overcome them. From this perspective, 2022 should make us more optimistic than any year in the past, because Binance and the entire industry have shown amazing resilience and perseverance.

When crypto assets first came out, there was a group of people who made a living by discrediting Bitcoin. They claimed that "Bitcoin will definitely return to zero", and began to sell books around this assertion, gather popularity on social media, and invite so-called "big names" to preach everywhere, and they also made a lot of money. The current FTX collapse is also their "business opportunity". They call it the "Lehman Brothers moment" of crypto assets and compare the Bitcoin price retraction with the Internet bubble. What they deliberately don't mention is that both are a kind of cleansing of the industry. As far as I know, the Internet and banking industries are currently doing well.

Popularization and construction

One of the measures of success in the cryptoasset industry is adoption. Despite the difficulties in 2022, blockchain adoption has never stopped, with individual and institutional investors from around the world continuing to pour into the space. For individual investors, emerging markets are the dominant force; for institutional investors, KPMG, JPMorgan Chase, Rakuten, CVS Health, Tencent, Fidelity Capital, Baidu, Tesla, Cloudfare, PayPal, American Express, Accenture, Christie's, BlackRock, Nasdaq, McDonald's, Google Cloud, Mastercard, Sony, Nike, etc. have also benefited from the introduction of blockchain solutions this year. It is true that various crises this year have eroded trust in the cryptoasset industry and hindered mainstream adoption. However, what we are seeing now is that the demand and interest in cryptoassets remains strong. Based on this, the industry will continue to create high-value, high-availability products and services. Through hard work and focus on building, we will regain user trust and become stronger.

While there are many negative factors affecting token prices, project reputations, and individual investor wealth, my goal remains to keep everyone at Binance focused on what matters most: building, and staying user-centric. I am proud that we remain true to these core values ​​in everything we do. Our business and team have expanded: Binance now has 7,500 employees from more than 100 countries, currently serving more than 120 million users worldwide. We continue to build bridges between the world of crypto assets and traditional finance. For example, through Binance P2P business, users can trade crypto assets with more than 100 fiat currencies. In addition, we have invested more than $500 million in Web3 and blockchain innovation projects through Binance Labs and donated more than $20 million to non-profits and relief organizations around the world through Binance Charity. I can feel that we have accumulated the most important and precious resource: the trust and loyalty of Binance community members, which is unquantifiable. We are very grateful for their support.

Compliance and transparency

In 2022, there may be another important aspect that will make significant progress for the crypto asset industry: regulatory compliance. This plays a vital role in the popularity of crypto assets and user safety. I am proud to say that Binance has been, is, and will be at the forefront of regulatory compliance. In the past year and a half, we have seen significant progress in strengthening regulatory certainty in the blockchain industry. As a responsible industry leader, Binance will continue to strengthen its close cooperation with global regulators and law enforcement agencies to promote blockchain popularization and education.

To better promote and coordinate this work, we will continue to work with the industry to explore user protection standards. It is expected that regulators will be skeptical of the industry in the future and it will be difficult to regain public trust. However, I believe these are short-term challenges that will only benefit the long-term development of the blockchain industry. At present, we need the entire industry to work together in one direction, that is, to make the industry more transparent, compliant, and secure. To this end, I have proposed six principles that the industry should follow to protect users. The industry should accept regulatory policies related to user protection, such as guidance on centralized exchange custody requirements, asset marketing, risk assessment and disclosure, etc.

As of the end of this year, Binance has obtained operating licenses and registrations in 14 countries or regions on five continents, once again proving our commitment to meeting the highest regulatory standards. In addition, we have launched a "Transparency Initiative" that includes public wallet addresses and verification of user assets through mechanisms such as Merkle trees. These are all important tasks to regain trust and further achieve the ultimate goal of creating a world of financial freedom. We will continue to advance compliance and transparency next year.

Looking ahead

Whatever the upcoming 2023 brings, we are ready. Binance has an excellent, diverse, and mission-driven team of professionals, a management team composed of management experts, and sufficient financial reserves. Our core business model is simple, but its ability to withstand external shocks is strong. We have ambitious goals and adhere to a set of fundamental values, which allows us to focus on building without being affected by possible fear, uncertainty, and doubt. In the coming year, we will focus on building practical tools, continuing to expand the team, and supporting promising projects.

In my opinion, the impact of the FTX incident will take a long time for the industry to digest and process, and a lot of effort will be put into making everyone realize that the success or failure of the blockchain field is not determined by a few negative cases. Every bear market is better than the last one, and I also think the industry will recover quickly. Although the market is still suffering from the secondary impact of the incident, the price of crypto assets has been very strong. Whether it takes a month or a year for the market to recover, we will be stronger when we come out of the bear market.

At present, the most important thing for the entire ecosystem is to "protect users" while innovating and building to bring crypto assets and Web3 into the lives of more people. I believe that infrastructure and data tools will continue to develop, Web3 asset ownership will evolve, and non-custodial and multi-chain wallets will rise. Our industry has created a number of Web3 peripheral products, including NFT and GameFi, which can provide basic usability for users. I think the next bull market will come from innovations in product usage and creating unique usability.

Such a bull market may come next year or the year after. We cannot predict the exact time when it will come (and it doesn’t matter). Binance will focus on what we should do: improve the transparency, security and compliance standards of the industry, and build, innovate, be user-centric, and lead the industry to continue to develop.

CZ

December 28, 2022