SEC sues Binance , how will Coinbase affect the encryption industry? What does this mean for entrepreneurs in the crypto industry? Will the crypto bull market in 2025 still come as expected? At a time when the market is ups and downs and the encryption industry is panicking, Bitui interviewed Dr. Cao Jing, the founder of AscendEX .
Cao Jing is the founder and CEO of AscendEX, a one-stop cryptocurrency financial service platform peak . Summit AscendEX is an industry-leading digital currency trading platform, providing efficient investment, trading and financial management solutions for global users. Cao Jing once founded the quantitative trading fund Delpha Capital Management (Delpha Capital Management) and served as the chief investment executive. Previously, George Cao Jing worked in the New York and London branches of Barclays Capital as the director of quantitative investment, responsible for the quantitative trading of stocks and index products in the US, European and Asian markets.
The following is the transcript of the interview:
Comparison: The SEC has sued Binance and Coinbase, both of which face charges of listing unregistered securities. The SEC classifies 19 tokens as securities. If the SEC wins the lawsuit, how will it affect the encryption industry?
Cao Jing: Gensler said that the registration and registration of cryptocurrencies in the way of securities requires a lot of work, but it is not impossible . I think that after the FTX thunderstorm, the SEC is determined to lead the entire cryptocurrency market in the direction of compliance. Of course, this has been thought for a long time, but there have been debates before, whether to follow the SEC or the CFTC . So this time it seems that basically I made up my mind to go to the securities side to get it, so is it necessary to go this way? I think that except for some digital currencies, if the remaining cryptocurrencies want to trade, American users may have to take the path of securities.
Bitui: In other words, the SEC is willing to see a path similar to Wall Street, where exchanges , brokerages, and clearing agencies are separated?
Cao Jing: But the current difficulty is that the entire system is not sound. Some of them can do liquidation and custody. In fact, there are relatively few trading platforms that can be brokers, and there are relatively few currencies. That is to say, I think it is If the SEC wins the case, it will suppress the activities of cryptocurrencies in the United States for a long time to come.
Bi Tui: If the exchanges will be more cautious in listing everything in the future, and it is even possible that these projects in the future will be securities , will these entrepreneurs have a greater impact on the entire industry?
Cao Jing: What we see is that many projects in the United States are unwilling to continue to operate . They either want to find buyers or stop operations directly . In fact, these projects have raised a lot of funds before. If they stop operations or sell them all at once, the funds investing in these projects will suffer relatively large losses, which in turn will prevent more new money from entering this industry and doing this industry . As long as your project is good enough, financing and listing is very easy . If these projects are defined as securities this time, for entrepreneurs in the United States, what is the difference from the traditional start-up listing in the traditional financial industry ? It may be even more troublesome to take securities, so why do entrepreneurs do this? The second is that for the funds investing in these projects, there will be Liquidity problems. If I invest in your project and you do not list or do not list the currency , how can I withdraw? This leads to the fact that funds are unwilling to invest, and entrepreneurs are unwilling to do it because they cannot get funds to invest. Anyway, it will have a great blow to the entire ecology of the United States.
Bitui: What does this mean for your exchange?
Cao Jing: There should be no direct impact on us, because we do not accept American users, but the indirect impact is very large . Because everyone knows that American users are the best users, whether it is from the funds they trade or their belief in cryptocurrencies. There is a previous survey that 30% of American adults own cryptocurrencies, so Once they are not so easy to trade, they may take away part of the Liquidity in the market in the short term, which will make the bear market in the currency circle longer. This is a result we can foresee in the short term, and then It will make institutional investors more hesitant to enter this market.
Bitui: Will the four-year bull market still come in 2025 ?
Cao Jing: Institutional investors, especially American institutional investors, either went bankrupt after the FTX incident, or stopped making additional investments and gradually withdrew. It also has the potential to make future bull markets less robust. But the bull market will definitely come, because firstly, there is not much room for the Fed to raise interest rates. Once the interest rate is lowered, there will be Liquidity overflow, and a lot of new money will enter this industry . The second is that the halving of Bitcoin is indeed a big plus. Then the third is that I think that after the economic recovery in China and Asia, more money will enter this industry.
Bitui: What consequences are Coinbase and Binance facing?
Cao Jing: In fact, the lawsuit against Coinbase is okay, and it is estimated that the fine will be settled in the end. There is a high probability that Binance US will be shut down. However, Binance itself does not want to operate in the United States, and the cost of compliance is too high . Well that's not a big problem . Moreover, the amount of the lawsuit against Binance is actually not that big, it may be more than 500 million US dollars, which Binance can fully afford, but the key question is how much impact will it have on Binance International's non-US business ? The second, more serious issue is whether there will be criminal charges against Changpeng Zhao himself. If so, it will be more serious.
Bitweet: If the SEC wins the lawsuit, will Coinbase change its business model?
Cao Jing: Coinbase will not change its business model, but will limit the number of coins listed. Coin base became a little more aggressive for a period of time last year, listing many currencies . If the SEC wins the lawsuit, Coinbase will re- evaluate whether some currencies meet the SEC's definition of non-securities . Some coins may be delisted if they feel it is risky.
Bitui: Will it affect the model that Coinbase is not only an exchange , but also a brokerage and a clearing institution ? Is Coinbase likely to be required to split ?
Cao Jing: It should not be affected . I think Coinbase should be done by a separate entity. Its infrastructure should be complete, even if it is not complete, it is easy to do it again . Because there are still many providers of basic service facilities in the United States, if you really want to find a custody or clearing institution , you can also find it. This is not a particularly big problem . If you look at Coinbase ’s quarterly report, its main income still comes from transaction fees , so its business model should not change . However, operating income will drop sharply, overall operating costs will rise, and there will be more regulatory requirements . The second is that the number of currencies it can support will decrease, and the transaction volume will be affected. In addition, if institutions and retail investors are less willing to enter this market, then the entire profit will drop.
Bitui: The encryption industry has been saying that it is eager for compliance before , and they all hope that clear regulation can promote development. So does the behavior of the SEC this time belong to this category?
Cao Jing: Embracing compliance is for every company to look at the market conditions at that time . During the bull market, every company’s profits are very high, so everyone may be most worried about the issue of risk control, what should be done and what should not be done. If it is very clear, then spend time and money to do this thing, and then Focusing on growing the business is certainly welcome . Well, in the case of a bear market, everyone’s profits are very thin, and it is difficult to survive. If compliance is suppressed , many small and medium-sized enterprises will not be able to survive . This situation will lead to a reshuffle of the industry.
Tweet: Cryptocurrencies have been banned in China, and the United States is now facing increasing regulatory pressure. When the world’s two largest economies are cracking down on cryptocurrencies , do you think this industry can still be the same as before? So boom?
Cao Jing: I think supervision is cyclical. After the financial crisis in 2008, the U.S. regulators supervised financial institutions. You will find that the most stringent ones are from 2008 to 2010, and then gradually the government will change the economy, and it will relax . So I'm not that worried.
I think the sudden tightening of supervision this time is indeed a response of the SEC to the FTX incident . It is indeed necessary to tighten crackdown the industry. After the general election and the change of government, it may be slowly relaxed in two years . Well, although China has banned it in the mainland , it has opened another hole in Hong Kong, and its attitude towards the encryption industry is relatively subtle, so it cannot be said to be completely banned .
Tweet: The United States is now under increasing regulatory pressure , and Hong Kong is becoming the Web 3 center of Asia with great fanfare . Will the SEC’s actions promote Hong Kong’s becoming a Web 3 center ?
Cao Jing: I think it is difficult to assess the real benefits of Hong Kong to the entire blockchain industry in the short term, because Hong Kong itself has a relatively small customer base and a relatively small talent pool.
The reason why Hong Kong’s license makes everyone more excited is because the Shanghai-Hong Kong Stock Connect will allow domestic institutions or retail investors to have certain legal channels to trade. This is what everyone is more interested in , because Hong Kong itself relies on the Chinese market after all. developed. There are still many details that are unclear.
Bitweet: After the SEC sued, is Bitcoin the only safe cryptocurrency?
Cao Jing: The safest is definitely Bitcoin. Ethereum may also be safer . If Ethereum is defined as a security, it will affect the positions of many US institutions in Bitcoin and Ethereum, which will cause selling pressure on the price in the short term . Long term is actually fine .
Bi Tui: I noticed that you also have investment experience in the field of AI. Now ChatGDP is so popular. In 2018, we all said that the next outlet is blockchain. Now let’s see if AI is the next one. A vent?
Cao Jing: I think there will be a wave of new hot spots every five years . Before the mobile Internet, then new energy, then smart cars, and then blockchain big data, it is difficult to predict where the next wave will be .
Bitui: In 21 years, you had 88 million US dollars in cryptocurrency stolen by hackers, and you later returned it to customers. What kind of problem does this expose?
Cao Jing: At that time, the whole business was developing very well , but the whole system could not keep up with the rapid development . In fact, at that time, we were very entangled in whether we should quickly seize this market share and make the company bigger. We should calm down and stop business development and improve our own security facilities. These two directions are always competing for resources , so it does allow hackers to catch a loophole during that time. After learning from the pain, we have also spent a lot of resources and time to improve security issues, including various compliance systems and processes. We now externally host our own wallets .
Bi Tui: When developing, we are rushing forward. It is difficult to have more energy to do basic settings. In fact, I think the entire currency circle may be like this. This is a particularly brutal growth industry. Everyone is rushing forward , and now you may have encountered a blow, and it is time to lay a solid foundation.
Cao Jing: This is not only the currency circle , but also when Internet companies are expanding wildly. You dare not stop, because when you stop, the market share may be taken away by others . Therefore, when the infrastructure is not enough in the future, it is always a contradiction for entrepreneurs to hold on.
Author: BitpushNews Susan Feng
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