CZ Open Letter: 2022, Resilience is King (full text)

By the numbers, 2022 has been an up-and-down year for the crypto industry. For Binance and the crypto industry as a whole, it is even more important to reflect after the successive failures of Celsius, Voyager, FTX and others. On the surface, the entire crypto ecosystem in 2022 seems to be full of crises and failures; Crypto asset prices have fallen from last year's record highs; Big platforms have collapsed one after another, causing users and regulators to lose confidence in the industry; Policymakers, the media, and the public are also increasingly scrutinizing crypto assets.

While these factors have combined to create significant headwinds, as an emerging industry, it is not these challenges that define us, but how we overcome them. From this perspective, 2022 should be more optimistic than any year in the past, as Binance and the industry as a whole have shown amazing resilience and perseverance.

When crypto assets first came out, there was also a group of bitcoin detractors who made a living by declaring that "Bitcoin is going to zero," and started selling books, building buzz on social media, and getting so-called "bigs" to preach about it, and making a lot of money. The current FTX collapse is also a "business opportunity" for them, calling it a "Lehman Brothers moment" for crypto assets and comparing the bitcoin price correction to the dotcom bubble. What they studiously fail to mention is that both are a cleansing of the industry. As far as I know, the Internet and banking are fine right now.

Popularization and construction

One measure of success in the crypto asset industry is penetration. Despite the difficulties in 2022, the popularity of blockchain has never stopped, and individual and institutional investors around the world continue to pour into the sector. For individual investors, emerging markets are the dominant force; For institutional investors, KPMG, jpmorgan Chase, Lotte, CVSHealth, Tencent, Fidelity Capital, Baidu, Tesla, Cloudfare, PayPal, American Express, Accenture, Christie's, BlackRock, Nasdaq, McDonald's, Google Cloud, mastercard, SONY, Nike and others have also benefited from the introduction of blockchain solutions this year. To be sure, this year's various crises have eroded trust in the crypto industry and hindered mainstream adoption. However, what we are seeing now is that the demand for and interest in crypto assets remains strong. Based on this, the industry will continue to create high value, high availability of products and services. With hard work and focus on building, we will regain the trust of our users and become stronger.

While there are many negative factors affecting the price of tokens, the reputation of the project, and the wealth of individual investors, my goal is to keep everyone at Binance focused on what matters most: building, and staying user-centric. And I'm proud that we still uphold these core values in everything we do. Our business and team have expanded: Binance now employs 7,500 people in more than 100 countries and currently serves more than 120 million users worldwide. We continue to build Bridges between the crypto asset world and traditional finance. For example, through BinanceC2C, users can trade crypto assets in more than 100 fiat currencies. In addition, we have invested over $500 million in Web3 and blockchain innovation initiatives through Binance Labs; Has contributed more than $20 million to non-profit organizations and relief organizations worldwide through Binance Philanthropy. I can feel that we have accumulated the most important and precious resource: the unquantifiable trust and loyalty of members of the Binance community. We are very grateful for their support.

Compliance and transparency

There is another important area that may make significant progress for the crypto asset industry in 2022: regulatory compliance. This is crucial to the popularity of crypto assets and user security. I am proud to say that Binance was, is, and will continue to be at the forefront of regulatory compliance. Over 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 work closely with regulators and law enforcement around the world to promote blockchain adoption and education.

To better advance and coordinate this effort, we will continue to discuss customer protection standards with the entire industry. It is to be expected that the industry will be viewed with suspicion by regulators in the future and that regaining public trust will be difficult. However, I believe these are short-term challenges that will only benefit the blockchain sector in the long term. Right now, we need the entire industry to work together in one direction, which is to make the industry more transparent, compliant and safe. To that end, I propose six principles that the industry should follow to protect its customers. The industry should accept regulatory policies related to user protection, such as guidelines on custodial requirements for centralised trading platforms, asset marketing, risk assessment and disclosure.

As of the end of this year, Binance has been licensed and registered in 14 countries or territories on five continents, reaffirming our commitment to meet the highest regulatory standards. In addition, we have launched the Transparency Action Plan, which includes disclosing wallet addresses and verifying user assets through mechanisms such as Merkle tree. This is important work to regain trust and move closer to the ultimate goal of creating a world of financial freedom. We will continue to advance compliance and transparency in the coming year.

Look into the future

Whatever story the upcoming 2023 brings, we're ready for it. Binance has an excellent, diverse team of dedicated professionals, a management team of management experts, and a strong financial reserve. Our core business model is simple, but our ability to withstand external shocks is strong. We aim high and hold to a set of fundamental values that allow us to focus on building without being distracted by the fears, uncertainties and doubts that may arise. In the coming year, we will focus on building practical tools, continuing to grow our 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 needed to make people realize that success or failure in the blockchain space is not determined by a few negative cases. Each bear market is in better shape than the last, and I also think the industry will recover quickly. While the market is still dealing with the second-order effects of the event, crypto prices have been solid. Whether it takes a month or a year for the market to recover, we will come out of this bear market stronger.

At present, the most important thing in the whole ecosystem is to "protect users", while innovating and building, so that crypto assets and Web3 can enter more people's lives. I think infrastructure and data tools will continue to evolve, Web3 asset ownership will evolve, and unmanaged and multi-linked wallets will rise. Our industry has built a number of Web3 peripherals, including NFT and GameFi, that provide basic usability. I think the next bull market will come from innovation in product usage, creating unique usability.

Such a bull market could come next year, or the year after that. We can't predict when it will come (nor does it matter). Binance will focus on what we should be doing: raising standards of transparency, safety and compliance in our industry, and building, innovating, and focusing on our customers to continue to lead our industry.

CZ 

December 28, 2022

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