Are you VIP? Binance is there to support active traders, big investors and asset managers. Even in a down cycle what are the opportunities for investing in crypto? We asked Binance's Catherine Chen how institutions are acting in the asset market.
Walter Jennings: Welcome to Waves in the Finoverse. I'm Walter Jennings, the host of a podcast, brought to you by Finoverse. We're talking with the wavemakers creating ripples, waves, and tsunamis across finance, crypto, FinTech, Web3 and beyond. Listen weekly to hear the change makers talk firsthand about their experiences in this dynamic industry. I'm joined here live at Hong Kong FinTech week with Catherine Chen, who is head of VIP and Institutional at Binance. Welcome to Waves in the Finoverse, Catherine.
Catherine Chen: Thank you for having me, Walter.
Walter Jennings: Let's begin by unpicking. What is VIP and Institutional and what is Binance?
Catherine Chen: Well, I like to think that Binance does not require explanation. However, Binance today, a lot of people view us as one of the world's most liquid exchange. We serve, possibly the largest user base in the world. And again, today, exchange is just part of the Binance ecosystem. Binance today is extremely wide. We provide a range of crypto services and product to our investors. To know what VIP and Institutional is, I think, people probably need to understand a little bit about what the Binance VIP program is.
So VIP program is basically the loyalty program, which we reward very active participant within the Binance ecosystem. So again, as a Binance user, there is the regular user, and then there is also user cover and service by the VIP program.
The VIP programs come in night hearing from one all the way to night. So, unlike in traditional finance world, whereby different profile of client are actually kind of served by different group of financial service provider that like a pine wealth individual are served by private bank. Big institutional clients are served by wholesale banking, investment bank corporate are served by SME.
Here at Binance, we serve all profile of professional user under the VIP program. VIP user basically get a range of VIP channels, VIP special perks, as well as preferential fee and a lot of priorities within Binance's ecosystem.
Walter Jennings: And is the VIP program based on assets under management or transaction volume or years with, or months on the platform?
Catherine Chen: Yeah, no, thanks for asking that. So historically, again, Binance started out as an exchange. So historically, yes, VIP program does put a heavy focus on rewarding user who has contributed to the highest trading volume.
However, today, given how wide Binance ecosystem is, actually, there are a number of different way to become a Binance VIP. From going back to very active trading, trading volume contributor, but also if you are a big investor, also a big asset holder. So if you hold large amount on the exchange or if you borrow a lot within the ecosystem to finance other activity, all this type of avenues allow a user to become a VIP client of Binance.
Walter Jennings: Now, over the years, the number of exchanges worldwide have grown. How do you retain your VIP clients?
Catherine Chen: Well, to be honest, Binance, one of our mottos is to stay extremely user focused. So part of the very important tasks of the VIP team is basically we are constantly engaging with our user to listen to their feedback. And we're constantly building, whether it's a crypto bull or bear cycle, we're constantly hearing what our user is looking for, what we can do better.
So in fact, you know, Binance over time we continue to grow the product within our universe continue to increase, and at the same time, our infrastructure continues to become even more user friendly for this group of professional users, individual or institutional like.
Walter Jennings: And what has the VIP response been to the market volatility this year?
Catherine Chen: Mm-hmm. So again, so if you're talking about ex.., so there's always the existing VIP and there is the aspiring VIP. So again, I think overall across the board, it is true that we are probably going through a down cycle. So trading volume is definitely, slightly decreased as you know, as a function of that.
However, for our existing VIPs, so I'll talk about that, right? So if our, our existing VIP who are already very active participant within the ecosystem, they're actually viewing this as a great opportunity for them to continue to adjust their strategy, continue to enhance their infrastructure, and also just continue to look for good investments for so that they can get ready for the next cycle. Now, there is also another group of emergent and surging client base, which is aspiring VIP today. They are basically the biggest institutional client. This clients for them, they're also getting ready, right? They are increasing exposure into blockchain technology.
And a lot of them are actually using this. In fact, a lot of them have said this to us, like, this is the bear cycle they have been looking for. They were waiting for Bitcoin to go back to a level where they feel comfortable to go in and that they're getting ready. So, you know..
Walter Jennings: Look, Catherine, along with the VIP, you look after institutions, and I've been fascinated because back in 2020 we were talking about when will institutions get into crypto? And here we are 24 months later and they're heavily... How do you see the growth of institutions in crypto going forward?
Catherine Chen: So, I think to really look at this, people actually need to know that, in fact there are half already been a wave of institutional entrance into crypto. They were the early, they were almost, they were not. You can almost view them as crypto native. Their background is financial institution, institutional investor, but they are actually as early as the fellow crypto native guys, right? You know, there has been a lot more talk, is the newly entrant institutional investor.
Now, this group, I think a lot of them are basically in the mode of getting ready, set, ready, go, right? And right now is the time and what our job is not only to help them, smooth the journey to make sure that this journey into crypto is as expected and hopefully as close to the experience possible towards what they are getting in TrapFi. And also just setting stage and get ready so that when they are ready to build up their portfolio, it's as smooth right as possible.
Walter Jennings: Yeah. I know a lot of institutions had reservations, in earlier days about directly holding crypto assets because of the custody issues. How does Binance solve that for institutions?
Catherine Chen: Well, I'm glad you are. So in fact, early day, a lot of institutional investor thanks to the financial innovation of crypto instrument, a lot of them can actually get away having to hold the physical asset. However, it is true, as we have more and more diversified type of institutional investor, a lot of them are actually looking to HODL.
So for those institutional great custody is extremely important. And that's why today we also around end of last year we had this latest initiative, which is Binance custody. It was the first, fully regulated institutional great platform that we have set out to build, particularly for our institutional investor who has this pain point of needing the most user-friendly product to help them hope crypto securely.
Walter Jennings: Now, Catherine, I'm trying to find you more clients. Where would I find within a financial institution, which parts of the groups involve you? Is it the treasury? Is it, you know, the portfolio management? Where do you find the most interesting within the banking sector for crypto?
Catherine Chen: Well, if within the banking sector, then obviously you need to look at, you know, again, what type of bank it is. Uh, let's say if it's an investment bank, at the end of the day, if they have an off shrew to whereby they are or, or the investment management arm under the bank, then it would usually be, yes, you're right.
That'd be the portfolio manager. If again, for some financial institution, assuming that their local or relevant regulatory body actually allows such investment, then yes, it could be the treasury of the financial institution who might be interested in talking to us.
Walter Jennings: And what's their hero journey? What is the start of a conversation with you look like and how do you get them ready to go full crypto?
Catherine Chen: Yeah. Um, so well on that note, so in fact we are constantly talking to our client and we have actually received a lot of this feedback from our client that Binance is probably one of the most underrated institutional platform because again, we started out serving big retail client base. But actually because of how user focused we are, we have built a whole suite of institutional great product, and which our institutional client love. But a lot of the newly entrant, they don't know, which is why we actually went about and launched Binance Institutional earlier this year.
And in fact, we didn't do anything fancy. Those are already product within the ecosystem. We just basically put them all in a one stop place, very easy for the institutional client to see. So that, let's say if a one, if a new institutional client come in and say "Hey, I wanna get started in crypto, what do I do?" They can very easily go to our Binance institutional homepage, which is on binance.com, and look at the full suite of product infrastructure available for them to make it at very, very smooth journey for an institutional client to get started in crypto
Walter Jennings: Fantastic. Well, Catherine, thank you so much. Now listen, we have a habit of asking people their musical taste and whether or not there's a track you would like to hear in the Finoverse. Is there any music that you hear, playing in your journey in the Metaverse.
Catherine Chen: Well, I actually can't remember the name of the song, but again, you know, working so hard Binance I don't actually get a lot of time to be here, listen to music, but I recently watched Top Gun Maverick and the football scene, what, what's that sound? Um, 90 99, um, by One Republic.
I don't know why, but you know, I just.. even when I think about crypto and when I think when I'm working, whatever I, that song keep on playing at the back in my head, I don't know what it is. I'm sorry...
Walter Jennings: No worries. Well, we'll play it during your episode. Thank you for that.
Catherine Chen: Thank you.
Walter Jennings: Thank you so much for joining us on Waves in the Finoverse, and good luck during Hong Kong FinTech Week. Thank You.
Catherine Chen: Thank you, Walter.