After his presentation at the Amsterdam conference exchanges, BeInCrypto Josh Goodbody, director of growth and institutional business at Binance, was able to ask some questions.
In particular, we wanted to know what Binance is doing to secure the funds, how the new regulatory landscape will affect it, and how the corona virus could affect the crypto markets.
BeInCrypto: As we all know, hacks when exchanging cryptocurrencies are still common. For Binance, “Funds are #SAFU”, this has already become a meme. What specific steps do you take to secure your customers’ money?
Josh Goodbody: Security is our top priority. Binance has a dedicated security team that has worked to improve our security systems and processes. We continue to enforce iterations of the security system to fight and prevent cyber crime, which is becoming more sophisticated.
As we renew our security infrastructure, we will also publish some of our initiatives. For example, we have created a pirate tracking system and are ready to share that system with other exchange and industry players. It is important to note that we set up the “SAFU Funds” in July 2018 to protect users from extreme events. We allocate 10% of the exchange fees so that the fund grows daily.
BeInCrypto: Germany has passed new laws with the application of the fifth EU directive against money laundering (AML5). How does this affect Binance and its German customers?
Josh Goodbody: We see this new regulatory clarity as an opportunity – because with the clarity comes the certainty of investing and building. We comply with local laws and regulations in the countries in which we operate.
BeInCrypto: The new legislation also enables 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 to entry and drive the global adoption of cryptocurrencies. The fact that these highly regulated companies offer crypto services to their customers will help promote the growth of the ecosystem and motivate new participants to get involved.
BeInCrypto: A popular feature of their exchange is that Launchpad by Binance. For several months now, opportunities to participate in IEOs in Binance have only been distributed as part of a lottery process. What ideas did you get from this sales model?
Josh Goodbody: We listen carefully to our users and continue to improve the products based on user requirements. First we adopted the “first come, first serve” model. The lottery model has its origin in the community, which we believe is a much fairer distribution process.
We will continue to improve and update the distribution model later if we find a better way. We see continued demand and interest in projects like Launchpad and will continue to listen to users on how they can do this as best as possible.
BeInCrypto: During your talk at the Amsterdam Exchanges Conference, you mentioned how strongly crypto-assets correlate with each other, but not with other assets. What impact does this have on the safe haven status of cryptocurrencies and what does it tell us about how crypto assets will respond to unwanted world events like the corona virus or global recessions?
Josh Goodbody: Our research team has worked a lot on this topic, and our analysis shows that crypto assets are largely highly correlated. This makes sense because the market is largely determined by the mood. So if we take an asset –– We have seen through its historical performance that it increasingly acts as a “safe” asset.
We did some analysis on whether Bitcoin is a really uncorrelated asset, and the results are mostly positive, but still mixed. If we go a little further and see how Bitcoin behaved in macro events like the Soleimani crisis when the markets began to fear an impending conflict between the United States. and Iran responded to Bitcoin as a safe haven. Its price rose steadily during the crisis and during other events when negative news was sent to the markets.
However, if we dig deeper and see how gold behaved over the same period, we see a more complicated picture. Bitcoin moved up, but with a less consistent pattern. Huge PBOC stimulus packages were implemented and interest rates in the west were lowered.
I believe that this will have a positive impact on the crypto markets in the long term. As governments continue to devalue their currencies through quantitative easing, cryptocurrencies are becoming an increasingly valuable asset class.
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