Why the CEO of Binance U.S. says big trading volumes aren't a top priority — yet

Binance’s partner exchange in the U.S. launched in September of last year.

Binance.US was announced alongside a move in June 2019 by the primary Binance exchange to block residents of the United States. One day prior, Binance announced that it would license its trading engine and wallet software to a U.S.-based partner firm, BAM, with which it would launch the Binance.US.

“Binance.US will be led by our local partner BAM and will serve the U.S. market in full regulatory compliance," Binance CEO Changpeng Zhao said at the time.

Since then, Binance's US arm has been racing to grow quickly and catch up with other U.S.-based exchanges. Thus far, it has listed 30 coins and 65 trading pairs, and launched an app and an over-the-counter (OTC) trading desk. 

Still, the exchange has yet to reach daily average volumes anywhere near its biggest competitors. Research from The Block shows that Binance U.S.’s daily average volume since launch just surpasses $10 million, while daily average volume for USD pairs on Kraken and Coinbase — an indicator for stateside volumes at the exchanges — has been over $54 million and $100 million, respectively, since the time of Binance U.S.’s launch. 

The fledgling firm’s CEO, Catherine Coley, says that, for now, its primary goal is to determine how its products and services can be designed so as to best serve U.S. customers, particularly those who are new to crypto. If it's able to achieve that, the idea is that the numbers will follow.

Coley recently sat down with The Block to talk about the realities of being what amounts to an upstart crypto exchange in the U.S. 

Binance U.S. has yet to produce daily volumes that compete with other exchanges. Is that something that concerns you? 

You're always paying attention to volume because that's what's helping drive liquidity and liquidity is what gives people confidence that they can make a transaction on your platform and not skew the price or move the markets drastically. So that's certainly something that the more volume we have on our platform, the more comfort people have with placing orders of larger size without having to move the market. So we certainly take the growth of our own volumes as something as a milestone that we mark. But it in comparison to our peers, I mean, a lot of them are also looking at it at a global business level. And we're purely inside the United States. So with that, we know where we humbly stand in comparison to our peers.

How do you view competition with those peers? 

When you come into a landscape eight years late to the game in an industry that's only 10 years old, most would say you've lost the race. And so for us to even be considered in the realm of competitors is a huge accomplishment. And I'm still very aware of our position in the space, and that we are kind of a budding offering for U.S. users. 

But it clearly comes down to the fact that, as a U.S. resident, I wasn't happy with what I was able to use to access digital assets. I really wanted to be able to build something that would welcome people sooner into the dialogue around money, around wealth, and also be able to open up more products at a lower price point that would allow people to come in and really gain control of their financial fitness.

With that perspective in mind, what is your long-term vision for Binance U.S.?

Binance U.S. really is a much more focused and concentrated version of a larger global vision. So when you think about the goal of really alleviating and equalizing access to financial markets, that needs to come at a global level, whereas the nuance, behavior, customization and tools will all be at a local level. So that's really where Binance U.S. comes in with its focus to deliver purely to American users the same access that the rest of the world is able to have in getting into digital assets. 

From our viewpoint, there was such a discrepancy between how the U.S. was able to access digital assets compared to the rest of the world. And we saw that it needed not only more attention, but a specific team dedicated purely to the United States. That way we will not get distracted by better adoption elsewhere or more flexible regulation, but stay really committed to the cause of making sure that the United States itself is not left behind in this migration into a digital era.

How about short-term goals?

Key short-term goals are to serve the U.S. When we launched, we were only able to serve 37 states, given that licenses are required to operate in most states as a money transmitter. So we are clearly focused on getting all of the states available where we can launch and operate freely. 

So it's really an ambitious short-term goal. It certainly would be my personal and professional goal to be in all 50 states by the end of 2020. That goal requires not only the muscle of my team, but the diligence and work of state regulators. The regulatory conditions that we're facing make it even more difficult.

Besides the state licensing issues, what other regulatory challenges are unique to the U.S.?

From day one, the difference between Binance and Binance U.S. is that we're having to reformat all of our systems in order to allow for us users to come in easily through a fiat currency, through the U.S. dollar, which requires know-your-customer, anti-money laundering, Bank Secrecy Act requirements. Those are big words for following distinct instructions and processes to show that we're doing every step we can to know who our users are and where they're using their money. 

That really comes from bringing in expertise as well as building out systems that can handle this. So we've brought in a compliance team made up of people from Robinhood, Western Union and Bitflyer — key groups that have built this for existing crypto businesses. Their ability to translate what we really need to be able to accommodate the U.S. user in this process, as well as be fully aware of the types of flows that are happening on our platform, really comes from having that expertise in-house. 

How are you addressing the regulatory environment outside of your own compliance initiatives?

Some of the work we’re doing on that front is joining certain groups that will allow us to get in the conversation, getting in those rooms that are really necessary for us to have leading conversations with industry developments. We think about that with the Chamber of Digital Commerce allowing us to really be on the front foot of what's happening in Washington, DC. Another one is the Proof of Stake Alliance.

We also have an office in DC where our dedicated legal and regulatory team is based. And so we're very much from day one committed to being involved in those decisions being made. 

The renomination of Hester Peirce for another [SEC] term was really something that I'm quite excited about, and particularly to have her continue fighting for those steps to really be progressive in the regulatory space. One of the things that’s still challenging, though, is that she's still a minority opinion when it comes to the Commission. So you’ll hear our cheering section continuing to support her in her endeavors to push our industry forward.