Crypto is becoming the infrastructure. And although everyone is talking about AI, but to be realistic, the infrastructure of AI, AI payment is most likely crypto. So the institutions I think are just building the rails, but they haven't really adopted. I mean, the biggest Bitcoin ETF is probably IBIT, BlackRock. It's only 0.5% of their overall ETF. It's just tiny. And you know, the other day I was like, it would be nice to get to 5%. If it's 5% then it's 10 times where we are. Then after FTX fell, a lot of jurisdictions start to be quite nervous about crypto and that's when UAE kind of took the opportunity. We're open, we want to support this industry. And then I think it was Binance and us who made the announcement first that we are moving our headquarters to UAE. And I mean this was all in the press release. Actually one of the things the minister was very open about, we want you to move your headquarters here. What it takes? You know, we were like, well, we need visa support, we need this support. That's a very pro-business.
Welcome to Onchain Capital where we talk about the future of finance from AI innovation and crypto policies to the power shift between east and west. Today I'm privileged to have Ben Zhou, the CEO of Bybit, with me today in Hong Kong. So Ben, thank you very much for coming on the show.
No, thank you. Thank you for inviting me. It's a pleasure.
So last time when we met it was in Abu Dhabi. Obviously things have changed quite a bit since the last few months. I do want to talk about the Middle East a bit but before we dive into that I want to go into a little bit about what you're seeing in the world of crypto today or digital assets and more in general because I think the industry have really moved quite a bit from the past 5 years, right? Very crypto-native and then we went through a whole NFT memecoin phase and now it's about tokenized assets, tokenized bonds, securities. So the industry have moved quite a bit. So what are you seeing in the space today that really get you excited and really lead you towards the things that you are building in the company?
Yeah. So I think for me generally describing the industry, I think the industry or crypto as a whole is graduating. Meaning that I think the first part where we are, most people talk about the speculative nature of crypto. Although it's still speculative, we still have... still very much so. But it's not the main focus anymore and crypto is becoming the infrastructure. And although everyone is talking about AI, but to be realistic, the infrastructure of AI, AI payment is most likely crypto. What we've seen over the past even last year, there are more and more countries releasing very much crypto-friendly framework to regulate as a financial industry. So sitting here with suits and tie, you know, I'm really seeing that the industry is maturing and it is a new technology revolution to what finance will be in the future which is connected 24/7, borderless. And this is what I think a lot of even Bybit or most the exchanges are building towards is a one financial app. Because we're realizing with this technology and where the regulatory framework is heading towards, is for the first time in the world there's opportunities technology will unite everything. Because even today, value transfer, payments, financial sectors are still segregated. A client from Hong Kong faces different sets of financial choices compared to a client from Nigeria. Which will be, I think even just like how internet due to information everyone's on the same playing field, I think five years down the road with regulatory maturing, technology maturing, overall financial freedom will be matured.
So you talk about the movement of money, right? Let's double click on that. So you mentioned Nigeria, Hong Kong, right? Some of these emerging markets. And the interesting thing about Nigeria is that obviously Nigeria is a massive exporter of energy, right? And coincidentally, one of the biggest buyer of that energy is in China and a lot of those trades settles here in Hong Kong. Now, traditionally that would be done through banking infrastructure, Swift and everything else. Are you seeing some part of that flow potentially going onto the crypto rails as well?
What we've seen mostly is retail flow if we specifically talk about Nigeria because they have a lot of people working outside of the country and working in the country transferring money. So from a crypto exchange perspective we see a lot of retail flow being transmitted through stablecoin. I think that's something already established. Now Nigeria as a country is still forming its regulatory framework. Actually in Africa the most advanced is probably South Africa and then we see I think Uganda is coming up and Congo is trying to release something crypto framework. But obviously Hong Kong is a lot more advanced in stablecoin and crypto trends. So I think it needs to be both sides have the institutional compliance framework ready to be able to do so. But if you look at probably Japan, Hong Kong or US, Hong Kong, probably some of the institutional money flow is already conducted through stablecoin and crypto rails.
Even though these jurisdictions that you mentioned, the US, the Japan, Hong Kong, there are very established financial centers already. So you would think the need of actually going onto the crypto rails is probably lessened, right? Because there are so many different ways that you can interact through it. But you're also seeing crypto rails being used for...
But in reality, no matter how established it is, it's not 24/7. And also if you wire money for institution it takes two to three days and for those two to three days there's a lot of things can be done, a lot of opportunities can be conducted within two three days. So what crypto offers is make it more efficient, 24/7. So that if you do export, importing, you can actually take advantage of two three days. There's many other things and even to leverage on FX flows, fluctuations, how to hedge it. So there's a lot of things happening underneath of that as well.
So when we were chatting in Abu Dhabi before you mentioned there's a whole payment tooling that Bybit is already building under its portfolio. I also read that you are launching Maybank, right? Which is more of a real like a neo bank type of capabilities. So is that going into the direction where as you mentioned the Africas, the Latin Americas where there's probably still massive unbanked population and that's the segment that you're going after?
So actually for the Maybank product, well first of all for the audience to understand is what we give our clients basically IBAN the moment they open up a Bybit account. And so it gives them a banking on and off-ramp. If they want to deposit crypto and they want to pay let's say to a car dealer to buy a car and they don't accept crypto, now all of a sudden you have your own bank account, you can transfer euros, US dollars to that dealer. But actually what we've seen for most of the developing world where we are in India, Brazil or the BRICS, clients are skipping the account opening part. They are jumping directly into crypto. So it's like how where you have mobile phone, people don't use the land phone anymore. So when you have a newer technology people actually skip the middle part. So the Maybank product actually is not served to those clients because when they go to a dealer typically they really accept crypto and it's easier for them to use crypto directly and they don't need to go through this middleman or try to find traditional bank account anymore. But however, if they need to travel to Europe or they need to travel to where it's more established, they need a fiat transfer or an on and off-ramp solution and that's where the Maybank product comes useful.
So it's a particular segment that you're going after. Correct. Because I have talked to several guests on the show before and there's the notion of trying to cover the 1.4 billion unbanked population around the world by giving them for example crypto credit cards and crypto wallets essentially to bridge that gap so to speak, right? They skip the bank account opening aspect. You're still opening an account but just not a bank account. But what you're saying is the Maybank product isn't just covering that, it's also actually upscaling towards a point where it's interacting directly with the merchants.
Yeah, so we do see some demand for Maybank in those countries that's different. But the trend I see, I think five years down the road people will skip that part. Meaning that you talk about crypto card, that's a credit card typically rely on Mastercard or Visa. But Mastercard, Visa adoption is not as high in let's say Nigeria or Brazil then compared to let's say EU. So actually giving client a Mastercard is not help their need but they already skip to. And when you go to Brazil you see already restaurants, vendors, they use QR payment. So we use Bybit Pay and directly they can transfer crypto to a vendor and the vendor already accept crypto. So what we've seen is this new wave of money is already being accepted and that might completely leave the legacy system. And this also explains why the legacy system players such as Mastercard, such as NASDAQ, even TradFi players are really coming onto crypto because they don't want to miss the boat, right? And they want to kind of hedge their bet a little bit because they also want to see this technology as changing things just like how landline is being shifted to mobile phone and how internet is shifted the traditional.
So let's talk about that, right? So you have crypto-native players, right? Large platforms like Bybit that are now moving beyond just crypto trading, beyond the things that we've known for the last 10 years. You are now offering what I would call traditional financial services. At the same time, you have the traditional guys, right, that are now also trying to get into the crypto space. Now, in a sense, you can think about it as colliding, right? You've got two forces colliding. At the same time, you can also be creating opportunities for collaborations. Is that what you're seeing? Like are you seeing more of a competitive stance when the Mastercards are buying BVNK, right? And Stripe is buying Bridge. Like one side is going this way, the other side is going this way. Do you see it as competitive or is it really more collaborative?
I think it's collaborative and what used to be again segregated is now being all connected through this technology. So we see TradFi players, even regulators. The reason why last year alone there are I think 44% more VASPs being matured, meaning countries starting to regulate crypto, the latest being Vietnam and then you have other countries, is that they see this opportunity. First is cannot be stopped when the people start using it because it's decentralized. Second is they see it as opportunity because regulated countries are competing. And if you look at capital market, it's really the US has the deepest capital market where EU is a little bit lacking, right? Hong Kong is not actually, right? But for EU regulators why do they go so hard on crypto, Amit, is because they see this technology will bring capital market to their already seen, right? And also bring more audience. When you talk about tokenization, when you tokenize a RWA, it means that previously it's hard to sell, maybe they can now distribute to Brazil, India or many places where they can't. So again this technology simply is unified everything, make everything available online. And that's what a lot of people sees the opportunity and that's when the TradFi players comes in. They say look, it probably has more game to work with this player or work this industry than trying to kind of go against it.
So I had on my show earlier a few episodes ago Mark Greenberg from Kraken coming in to talk about the xStocks and also the launch of Payward. And there was this conversations about today a lot of the securities on their platform are primarily US securities but they are now looking across the board including also other regions including potentially the reason why he was in Hong Kong, there's some talks about potentially some of the A-shares and Chinese stocks that are listed in Hong Kong. Are you also working into that direction as well? Looking at assets that can now be brought onchain and be transacted onto Bybit and potentially connecting that also into the banking systems through a lot of the payments and banking toolings that you have created.
Yeah. So we have around 2,000 banks connected globally and also local liquidity. So you go to Indonesia, we have local currency to USDT liquidity pools. When you go to Thailand, we have the same. So to answer your question, I think tokenization is the next big thing where even with this cycle where it's bearish, everyone's focusing more on tokenization because people do see the opportunity. Let's say you have Hong Kong stock or Hong Kong ETFs that are extremely popular. Now we actually have clients say from when I was in Argentina, a family office, interesting story they shared to me is like I want to use Bybit to derisk. I was like, oh, okay. That's something new. Because typically people don't use crypto to derisk, right? Typically, they use crypto to go 100x. That's the typical stereotype. But no, they said because as a family office, they face the challenge of deploying capital and portfolio. They want to derisk because most of their asset is sitting in that region, right? And for them to get a gold ETF or Hong Kong forex currency ETF or Hong Kong stock or whatever or even from Standard Chartered, from HSBC it's harder and it's much easier for them to get token and then using that. And what they require is to see full transparency. If we are working with let's say a fund company here in Hong Kong, they want to see the papers. They want to see how this RWA is redeemed. They want to test it. If they have the RWA can they redeem it? And as long as we can prove the whole process given full transparency then they will deploy. And they say well we don't even want to deploy bitcoin, we just want to deploy stablecoin to these things. So we are actually derisking our existing portfolio and we're not touching crypto, we're just using crypto as an infrastructure.
Interesting. Yeah, so that's a classic example of how tokenization would help to distribute your asset globally rather than the current pool of client you're looking at. That's fascinating. That's actually fascinating. So if we double click on that a bit, right? Obviously you've got the emerging developed market, a developing market and of course you have the US, EU, Hong Kong, Japan, you know, very developed market. And I read in the news the other day that there's some conversations between Coinbase and Bybit in terms of the US market. Can you maybe comment on what you're thinking about in that regard?
Yeah. So for us, it's obviously a market that's been leading the way this whole cycle was Trump being very open and pro crypto. And I think with, for a variety of different reasons. Yeah. For number one, when GENIUS Act was passed, it was no surprise for people in the industry because stablecoin is really a pro-US dollar domination thing, right? And there's no hiding there. And but now with clarity on the way, I think US is definitely somewhere we should consider and look into. So we've been looking to the US and see if we could find partners to do something there. So we still exploring. And I mean the news about Coinbase because we are exploring ways to work together. So I can't comment too much on that. But we are also exploring other partners in the US to see. But so far Bybit haven't made a commitment in the US yet. But definitely it's a place we want to explore and we shouldn't be ignoring this market.
