After his presentation at the Conference Exchanges in Amsterdam, BeInCrypto was able to ask a few questions to Josh Goodbody, Director for Growth and Institutional Business at Binance.
In particular, we wanted to know what Binance does to insure funds, how Binance is affected by the new regulatory landscape, and how the coronavirus might affect the cryptocurrency markets.
BeInCrypto: As we all know, hacks on cryptocurrency exchanges are still commonplace. For Binance, ‘Funds are #SAFU’ has become a meme by now. What specific steps are you undertaking to insure your customers’ funds?
Josh Goodbody: Security is our top priority. Binance has a dedicated security team that has been striving to enhance our security systems and processes, which is an ongoing endeavor. We keep on pushing security system iterations to combat and prevent cybercrime that is becoming increasingly sophisticated.
While revamping our security infrastructure, we will also be making some of our initiatives public. For example, we created a system to track hacked funds and are willing to share this system with other exchanges and industry players. It is important to note that we established the ‘SAFU Funds’ in July 2018 to protect users in extreme events — we allocate 10% of trading fees to this, so the fund grows daily.
BeInCrypto: With its implementation of the fifth EU Anti-Money-Laundering Directive, Germany has passed a set of new legislation. How does this affect Binance and its German customers?
Josh Goodbody: We see this new regulatory clarity as an opportunity — as with clarity comes the certainty to invest and build. We comply with the local laws and regulations in the jurisdictions where we operate.
BeInCrypto: The new legislation also allows banks to offer cryptocurrency services. Do you see this as a positive step for the blockchain industry?
Josh Goodbody: Absolutely. It will lower the barriers of entry and drive crypto adoption worldwide. Having these highly regulated businesses offering crypto services to their customers will help further the growth of the ecosystem and help incentivize new participants to get involved.
BeInCrypto: A popular feature of your exchange is the Binance Launchpad. For a few months, the opportunities to participate in IEOs on Binance have been distributed exclusively by a lottery procedure. What insights have you gathered from this distribution model?
Josh Goodbody: We listen closely to our users and keep on improving the products based on user demands. Initially, we adopted the first-come-first-served model. The lottery model originated from the community, which we believe is a much fairer distribution process.
We intend to continue improving and will update the distribution model later if we find a better way. We see continuous demand and interest in Launchpad projects, and we will continue to hear from users as to how to make this as good as possible.
BeInCrypto: During your presentation at the Conference Exchanges in Amsterdam, you mentioned how crypto assets are highly correlated among each other, but not to other assets. What are the implications of this for crypto’s safe-haven status and what does this tell us about how crypto assets will react to adverse world events, like the Coronavirus, or global recessions?
Josh Goodbody: Our Research Team has done a lot of work on this subject, and our analysis indicates that crypto assets are, for the most part, highly correlated. This makes sense as the market is very much driven by sentiment. So if we take one asset — Bitcoin — we have seen through its historic performance that it is increasingly behaving like a ‘safe-haven’ asset.
We have done some analysis on whether Bitcoin is a truly non-correlated asset, and the findings are mostly positive but still mixed. Zooming further out and looking at how Bitcoin performed during macro events, such as the Soleimani crisis when the markets were gripped with the fear of an impending US-Iran conflict, Bitcoin did react like a safe-haven asset. Its price rose steadily during the crisis, and during other events when negative news was released to the markets.
However, if we dig deeper, and look at how gold behaved over the same period, we see a more complicated picture. Bitcoin moved upwards, but with less of a consistent pattern. The coronavirus is, of course, a massive macro event, with huge PBOC fiscal stimulus packages being implemented, and interest rates cut throughout the West.
I believe this will have a positive impact on the crypto markets in the longer term. As governments continue to devalue their currencies through quantitative easing, it makes cryptocurrencies an increasingly valuable investment class.
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