How Pakistan Could Dominate Crypto in 5 Years | Changpeng Zhao

Thank you. Thanks for having me again. It's a pleasure to be here again.

Well, I think Pakistan, number one, Pakistan has you, and number two, Pakistan moved really fast on this crypto regulation. And I think the leadership of the country understands what the young population wants, which is proper crypto adoption. So I think it's fantastic to see the country of this size are able to have this clear vision from the leadership and ability to move at this speed.

Sure. I think most people underestimate the impact of crypto, the positive impact it has on the economy. I think just a few numbers, right? There's way more people in this country who use crypto than they are using banks. I think the people using crypto are in the millions and the people who are using banks are probably in the hundreds of thousands. And as you said, the people who are trading stocks are probably around 300,000 people, whereas today Binance hosts 300 million people trading crypto. So the population in crypto is actually much larger. And number two is many of the current activities before the regulation, they're kind of in a gray area. People are not sure how to conduct them, etc. And many of this force is kind of under the radar where the reserves for the users are now counted towards the nation's foreign reserves. Many of the transactions are not included in the tax calculations. The tax policies for crypto still have to come. We would like to see favorable regulations on that as well. There are many industries which are really big: exchanges, the stablecoins, tokenizing of assets, all of this brings more investments into the country in an indirect way. So if you think about it, if you can tokenize a commodity, a reserve, it can be gold, it can be energy, it can be something else. If you can tokenize and distribute that, then you actually get investments for that. So a lot of this actually really helps the country's economy. So the more economic activity there is, the more likely the population is going to benefit. When the population becomes richer, the country becomes richer. So all of this is hugely positive for a large country, large population like Pakistan.

Well, Pakistan has quite a few interesting advantages. It's a very young population, and the younger populations are typically more early adopters, they're tech-driven, they're easy to adopt new technologies. Number two, I think based on my interactions with Pakistan over the last year or so, Pakistan moves really fast. So when the leadership have a clear vision and the leadership understands what the population wants, it moves really fast. And Pakistan is already, according to different reports, already like the top three crypto country in the world that have the largest population who have crypto. So all of those factors are really good for crypto and Pakistan.

Well, first of all, it feels really good to be pardoned. You know, I think if you're really hungry and then you get food, it always feels good. And so I think I personally been through a lot. I still think that's the best decision for myself, for our team, for all the BNB holders, and for crypto in general. I think for all of those groups of people, it's the best decision and it's also the best outcome. So I want to especially thank President Trump. I think this just restores my faith in the US justice system. So I think that's a great thing to happen and it's also in some ways a validation for crypto because a lot of people think of me as the crypto guy. Having a pardon for me personally, it's good for me personally. I really appreciate it, but it's also a vindication of how far we've become now. The mainstream, the biggest governments in the world are recognizing crypto is a proper technology. It's good innovation.

Sure. So I think there's way more opportunities in crypto than any other industry. So if you think about traditional financial industry, if a young person want to start a bank, it's pretty limited opportunities. I don't think there's a lot of opportunities. If they want to build an AI company, they probably don't have the large data, the large compute, all the chips, etc. So both of those industries require quite a bit of resources to do a startup, to innovate. Whereas in crypto, it's all virtual. If you interact with the blockchain, the blockchain will never reject you. And if you build a protocol, there's a very active community in the blockchain space and they're all mostly early adopters today. So there's way more opportunities for innovation in the blockchain space in my opinion. And I think we just got to educate the youth more. So we need to push more education, more university programs, more entrepreneurship programs, more incubation seasons, etc. And I encourage all the... Pakistan has a very strong youth developer ecosystem. Many of them work on outsourced development work for overseas projects. I think look, you can participate in overseas projects and then once you learn enough experience, you can build your own project. So I think innovation, blockchain is one of the best places for younger people to innovate.

So if I was that much younger, if I was 20 years younger, I would definitely experiment with startups early. But at the same time, I would advise that people control the risks. Don't like borrow all your family's money and lose it and just spend it and not have a successful project. Entrepreneurship is high risk. So learn to control risks. Learn to experiment, pivot, learn cheap ways to find product market fit. And once you have a product that people want, double down on scale. So basically entrepreneurship, at least the way I look at it, is that simple from a high-level conceptual point of view, but finding product market fit is really, really hard. So you have to continually pivot. But luckily today if you have a good project in crypto space, raising money is not an issue. There's lots of money floating around. It's very easy to raise money, issue a token. You can do ICO, IDO. You can even do a memecoin. There's multiple ways to raise money. There's enough money in the industry. There's multiple ways to raise money and this is probably the first time that entrepreneurs from non-Western countries can raise money easily. So a blockchain offers that. So if I was a younger person, I would say look, experiment with startups early. Learn about how to build products, build a team around you, have technologists, have product people, have customer support people, etc. So build that team and build that group of friends that you can work with and try to build products other people can use.

I'm really not too sure. So again, I'm not a very good predictor of markets. We follow trends. So right now, you know, there's a lot of discussions about prediction markets. But prediction markets is a small sector of the entire industry. It's an important sector and I think it has a lot of potential to grow. Is memes over or not? I really don't know. And then what's the next thing? I also don't know. It depends on the builders who build those products. So if you have a team of 10 guys that build a killer product, then that's going to take off. That's going to build a new sector in the industry. But I think for entrepreneurs, you should follow trends but you don't chase everything. For example, Binance is an exchange platform. So we list projects, in that sense we follow trends. We support different hot areas, etc. But it doesn't mean just because memes are hot we drop everything else. It doesn't mean when prediction markets are hot we drop everything else. Now AI is very hot now, it doesn't mean that we drop exchanges and do AI. You should find a combination of what you're interested in, what you're good at, and what has value for other people. I would change that. I would say what you're passionate about, not just interest. You have to be really passionate about it. And then what you're good at and what has value for other people. So just because something else is hot right now, if you don't know how to do a prediction market, don't do it. If prediction market is your thing, then do it. Even when it's not hot. So there's some balance between following trends versus building for your passion. Many things take many years to build and then suddenly they become hot. And then when that thing becomes hot, you have to be ready to catch that opportunity. So that takes many years before that to build that expertise and knowledge.

I bought at $600.

No, we're not late. So I think any industry takes multiple decades to build. If you look at the internet, there's still plenty of internet startups that are very successful within the last two, three, five years. So it doesn't mean that just because the internet is like what, 30 years old, there's no opportunities. The technology continues to evolve. And if you look at the internet, right, in 1995 we said look, we're going to have virtual reality conference calls soon. We still don't have that even today. The video calls, very many times we're like, 'Hey, can you hear me? Signal is not really working,' etc. So there's many more things to be built on the internet, there's many more things to be built on the blockchain, and there's many more things to be built in the AI space. So all of these industries are still relatively new. Of course, blockchain has been there for about 10 years or so. But this is actually the ideal time to build because if you're a super early adopter, the regulations are much more uncertain, the penetration is much smaller, the adoption is much smaller. The other factor is actually just look at adoption rate. I think if you look at adoption, we're nowhere near saturation for crypto. People estimate probably about 7 to 10% of people in the world have some level of crypto access. But then if you look at their net worth, probably less than 10% of their net worth is in crypto. Many of them just buy a little bit, buy like a couple thousand dollars and just to have it. So in net worth wise, we're probably less than 7% adoption. So we're nowhere near saturation. So this is going to be many more new products. We don't have crypto insurance. We don't have crypto prediction markets are still pretty new. There's Polymarket but it's by no means saturated the market. So we don't have crypto payments. We don't have a lot of crypto stuff. We have crypto payments but they're not big. So the industries have not really developed too much. So I think there's many, many opportunities.

Right now it's a little bit hard to tell. So there's two sort of theories that people talk about. This is not well, partially my opinion but I think just things I hear about. But one is that crypto has four-year cycles. So we should be near the peak of the bull run if we go by the four-year cycles. So what's going to happen next year? Are we going to enter into a crypto winter? But there's another force which is quite strong as well, is the US government is very pro crypto right now. We have never had the world's largest government supporting crypto that strongly. And also there's an election coming, there's a midterm election in the US next year. And based on everything I heard, President Trump kind of measures his success by the stock market performance. So with the quantitative easing, with the rate cuts that's coming, very likely the US stock market is going to do well. When the stock markets do well, people have more cash and they diversify into crypto investments, etc. So historically we've seen that when stock markets do well, crypto also do well and vice versa. So that force is quite strong as well. So that could actually be the fact that pushes what we call a super cycle. Again, I cannot predict future. But I'm a builder in the space. So I actually don't look at day-to-day prices that much. I'm not going to exit the industry. So we're just going to continue to build in the industry for the next 5, 20, 50 years.

So I think, well, this is the power of crypto. We're very confident that by adopting crypto, having the proper regulations in place, and by welcoming crypto exchanges in, we can significantly increase the reserves for the country basically. So well, Binance is a custodial exchange. We hold many of the users' assets. Typically in banks you will count the user deposits or funds towards some kind of a national reserve. And crypto probably should be classified as a foreign reserve because it's not issued by the country natively. So we believe by just having the exchange licensed, you can increase the country's foreign reserves significantly. On top of that, we facilitate a lot more remittances and most of the remittances come one way from outside of Pakistan into Pakistan. And then if we also embark on stablecoins or tokenizing of different assets, that brings a lot of foreign reserves into the country I believe. So I think that's a very good thing. Every country wants that. So I would think that that would be a very good thing for Pakistan.

Absolutely. Absolutely. I think tokenization is coming regardless with or without any country. Many countries will tokenize their assets. There's good and bad ways to tokenize your assets. The bad way is you tokenize your assets, you spend all the money and then the assets belong to somebody else. There are better ways to tokenize your assets where you don't have to sell the assets immediately. You can sell the token. Once you get the money, you have a financial market that you can invest. You can build other tools to enhance that asset type. I give you a very simple and clear example, right? US had a lot of oil but they were all in hard-to-extract places. So to extract those oil you need a lot of money. You need to invest a lot of money to be able to extract them. Once you extract them then you can sell the oil. The US had a good stock market. So people were investing very heavily into the oil companies. So the oil companies got money up front so they can invest in the drilling technologies which eventually led them to have a large amount of oil. So a lot of those similar situations happen with many commodities that countries have. So without the investment you may not be able to build a market for that asset. Whereas if you can tokenize it first, then you will have the money to build that industry. So many people don't realize this yet.

Absolutely. So let me ask this way. Which country doesn't want the global population to buy their stocks?

Yeah. So every country, when you have your stock market, you have Pakistan companies, you want the world to buy those stocks.

So in that way, tokenizing stocks allows the global population to buy those tokens that is basically direct investment into those stocks of Pakistan. So the countries who do it first will reap the benefits. So we're already seeing US moving pretty quickly. Abu Dhabi is moving forward as well. And I believe Pakistan can and will move very quickly given the speed that we saw over the last year or so. So I think that's a huge benefit for the Pakistan listed companies, Pakistan stocks, which in turn will benefit the Pakistan economy and the population.

Well, I don't think we need to wait that long. If we keep moving at this speed, in five years, Pakistan will be one of the crypto leaders in the world. And being a leader in crypto will have significant economic benefits for the country and for the population.

Right. So again, I'm not a regulatory expert but on the flight of capital I have some controversial opinions which I'll share directly. I think number one is people try to control flight of capital, many countries have this for FX controls. So I think those are fine, those are effective to some extent. So I think in crypto you can adopt those regulations too. So there's nothing that you can do in banking that you couldn't do in crypto. So you can have the same limits, etc. That's one third of the solution. I think the other stronger solution is to say look, if you're building an economy that's growing quickly, money will stay and more money will come. Foreign investment will come. So the smart money doesn't invest in super mature markets. Super mature markets have limited growth potential. The highest growth speed and highest growth potential is in markets where they have a lot of growth potential. We saw this in China over the last couple decades, right? So 20 years ago it was not the leading economy but it's grown so much because of the good governance, etc. So in countries where they have good governance, they encourage technology innovation, they encourage business innovation in general, that's probably the best way to prevent capital flight because not only will there be less capital flight, more money will come in. The other thing which is a bit counterintuitive in my opinion is if you have FX controls too strongly, then the money couldn't come in. Foreign money, if they come in, they need to be able to leave. If you cannot take money out, the foreign investments are less likely to put money in. So that's a thing that some countries are too restrictive. So while I do support the controls for FX, for capital flight, I think it's important, but I think it's more important to build a very strong economy that's fast growing. That's probably the best way to solve that problem. And I think Pakistan is on the path of welcoming many new technologies into the country, including crypto, including AI, including data centers, including mining. So I met a lot of business leaders here already. And I see the trend. So for me, this is a very good trend to see.

Sure. So I can talk about it a little bit separately. I think the more computing power we have, the better. The better it is for crypto, the better it is for humanity. Because with more computing power is more productivity. We can do way more things. So with quantum computing, you will be able to potentially decrypt some of the encryption mechanisms we have today, but we will have new encryption mechanisms. It's always cheaper to encrypt than to decrypt. So if we use the same quantum computing to encrypt, then it will take them that much longer to decrypt. So which just means that we have to upgrade the encryption mechanisms in some of the protocols, which there are ways to do. So there are ways to upgrade Bitcoin protocol. There are ways to upgrade every other protocol. So the more compute we have, the more secure it is. So the computer doesn't work only on decryption, computer also helps encryption. So there are also some nuances. They say, 'Well, if Satoshi Nakamoto is not going to move his coins off his addresses and no one else has access to those addresses, then would the first quantum computer hacker be able to decrypt all his coins?' There are ways to go about it. Bitcoin is a protocol that's maintained by the community. The community as a whole can vote to say, look, we're going to, the next upgrade of the protocol, where if we're near quantum compute, where we think that's pretty close to decrypting those addresses, we can say the next upgrade, we're just going to lock those addresses. So if a community collectively decides that's the best thing to do, then it's okay. It's still decentralized. It's not centralized, but we still have solutions for that. On the AI part, same thing. The more AI agents we have, I think the better it is for crypto. I think if we just take one use case, which is payments. Let's say AI will develop, we each going to have thousands of AI agents working for us in the background and many of them are doing microtransactions, etc. So AI is going to have like a thousand times more transactions, doing that much more transactions for us. And which currency are they going to use? They're going to use blockchain. That's the most native technology-driven interface. AI is not going to be able to do a selfie KYC verification. They can't swipe a card. So AI is going to use blockchain. So crypto is the currency for AI. So the more AI we have, the more they're going to use blockchain. So I think the newer technologies will use the older technologies. AI is a new technology that will use blockchain, that will use internet. And blockchain uses internet very heavily. But blockchain can also benefit from using AI a lot. So that's just one use case which is just purchasing or payments. There's many, many other use cases AI can bring to blockchain and vice versa. So I think we're just at the beginning. I can't imagine all the possibilities. But the smart entrepreneurs will develop those applications over time.

Absolutely. Yeah. Absolutely. Robotics again, they cannot go open a bank account.