To understand CEO Catherine Coley of Binance.US, and her recent public commentary on how the U.S. should consider the digital exchange of money as opposed to sending out stimulus checks by mail during COVID-19, one needs to start by viewing her LinkedIn page for her diverse and highly credentialed experience.
From her time at Morgan Stanley in forex trading, she lists how she ‘paddled with Morgan Stanley's lead Dragon Boat team winning #1 Corporate boat at Hong Kong's Stanley International Races 2012, 2013, 2014’, an experience Coley verified for me. From time managing institutional liquidity at Ripple, you also see how she co-founded a non-profit called Women In Money which she describes as ‘making sure we were getting the most growth out of the money we earned while growing our network of financial feminists.’
So when policymakers in D.C. think of a cryptocurrency exchange or digital asset marketplace, the initial impression of the Wild West with hackers stealing millions of dollars of customers’ money or terrorists and cartels trading Bitcoin on the dark web, would be hard to maintain after reading her op-ed calling on policymakers to consider using stablecoins for economic stimulus payments to promote social distancing.
Seeing herself at the digital frontier of the future of money and speaking with her on her beliefs in the prospects in the U.S. of a digital currency, I quickly realized Coley is rooting for the U.S. to catch up to the rest of the world in this extremely challenging and unprecedented time. While a digital dollar may not start right away, as the discussion continues, I think we can count on Catherine Coley as continuing to be a public leader in these discussions.
As a former U.S. regulator, I felt it important to clarify for the readers the distinction and separation between Binance.US and Binance, the world’s leading cryptocurrency exchange by volume that is not U.S.-based. Also, from my experience with bank examinations, it is important both fintechs as well as banking institutions should always strike for transparency when dealing with the public - particularly when asking for the public’s trust with their money or taking a position on how a government should issue its own currency or pay its citizens.
My three key takeaways that I learned from the interview that I did not know before and found most interesting:
- That the CEO of Binance, Changpeng Zhao, sits on a three member Board of Directors with Catherine Coley and another individual, Wei Zho, even though Binance.US promotes themselves as an American company.
- That Binance.US does not comment on who owns the company.
- That Binance, from my perspective, will be the most dominant name in cryptocurrency exchanges for the next five years.
Jason Brett: How could we create a digital dollar now in terms of actually standing it up and seeing the benefits of social distancing in this specific pandemic in your opinion?
Catherine Coley: How we would stand up a digital dollar right now today, I see it less today as being a binary choice and more as providing U.S. citizens alternative solutions. So, those who are comfortable with accepting stablecoins on their digital asset platforms would be available to do so immediately. We also would be able to have educational sessions that could be shown and shared across the public to get people comfortable if they wanted to set up. Having it as a run-through one path only through stablecoins is not the answer. We’re seeing that the US has been over time aggressively needing to have customizable solutions [with]...people who actually want their payments to be in their hands on their phones, but that’s not for everyone. So the idea of being able to provide the stimulus in a way that’s meaningful for Americans currently would be to provide a variety of solutions.
Jason Brett: Binance.US is obviously a very large exchange. What are your thoughts about the concept of digital wallets and what would your company be in a position to do to help if there was a mandate for all the member Federal Reserve banks and the non-member banks to opt-in to a digital wallet as far as establishing those services within banks across the United States?
Catherine Coley: Right. We have seen digital wallets and distribution of U.S.-backed stablecoin-regulated entities work to the tune of ... quite a many people have already adopted this as a means of distributing funds ... so I think it would be beneficial for banks and member banks to welcome the idea of a digital wallet - more people are accepting of that concept than Congress might think. But I do think the digital dollar they were defining was dramatically different than the digital dollars we talk about with stablecoins. So, it’s hard to definitely connect a one-to-one between stablecoins being digital representations of the U.S. dollar, backed one-to-one custody, have FDIC insurance on Paxos for the custody of the U.S. dollar - that’s a different path than one being issued directly into the banks and being able and available for those setting up bank accounts, but very similar in the steps of the process. One must go through KYC (Know Your Customer) to open up a bank account - one must go through KYC in order to open up a digital asset marketplace account, your funds are stored there but it’s being facilitated through the marketplace or the bank itself and there is hopefully or likely FDIC insurance on those dollars that are being represented there, beyond that it’s very similar. It’s going to be leveraging ERC-20 networks in order to distribute the coins and be able to check for double spend while the other would be a digital ledger confirming credits and debits.
Jason Brett: So let me ask you a slightly hard question as an ex-regulator. Were you and other companies in the space to start hosting these digital wallets? One thing that was clear from Senator Sherrod Brown who is actively pushing this to get banking for all is the idea of letting everyone having a free bank account in the U.S. I would think that this would come with an extreme level of consumer protections - as you know we are big into consumer protection in the United States- so how do you see that dealing with the regulatory risk in terms of consumer protections were there to be these mandated digital wallets ? How might a company like Binance or any of your competitors be prepared to manage that and whatever specifications governments might need to occur to protect consumers with these wallets?
Catherine Coley: We offer free accounts anyways on Binance.US ...The tricky part of course going through the regulatory cycle is knowing who your customer is and making sure we are accounting for all those who are who they say they are... [who are] trying to open up accounts on our platform. I don’t think we would ever compromise our policies on that front to allow more people in. They would still have to follow through with proof of address and social security numbers to verify that they are actually U.S. citizens that are alive and well and are who they say they are. As far as the risks and policies and protections, we have our terms of service on how we are protecting our customers on that front. I think the comfort that people find with bank accounts is oftentimes they had a place they could go down the street to talk to someone when that became an issue. If something was wrong with their bank account, they could go down and talk to someone in their branch. In times like this, when going down to the local branch ...[entails] putting yourself at risk, it no longer becomes a benefit or an advantage to have an in-person brick and mortar location where you can talk to people. So I think that’s something we are not necessarily realizing, that the comforts we found in banking infrastructure...[were] in-person people, real vaults, storage, safety deposit boxes- all of those things are so physical. When your concept of reality is that you should be staying at home and only access things through your phone and internet, it takes away some of those advantages.
Jason Brett: One of the things in a Wall Street Journal article this morning was the Federal Reserve Chairman Powell expressing concerns on individual’s privacy if we were to go to Digital Dollars. What are your thoughts there?
Catherine Coley: I think that’s something that...with each violation of privacy there is additional scar tissue that gets built up and more defense. It’s something we put as a priority for our security- our customer’s information is the most important to be protected- and it comes down to the level of what blockchain was built out of self- sovereignty data protection and privacy, true to the ethos of cryptocurrencies or digital dollars. Certainly the U.S. would want to have a surveying eye of these dollars being distributed. This is not necessarily the same element for those who hold Bitcoin.
Jason Brett: Couldn’t you argue that this happens with our bank accounts now with BSA (Bank Secrecy Act) requirements?
Catherine Coley: Certainly, everything has to go through the same level of scrutiny, bank secrecy, and AML (Anti-Money Laundering) policies on our side as [it would]...on the banking side...
Jason Brett: My point in bringing that up is that the high dollar amounts get flagged, but what I am thinking is if I go buy a cup of coffee do I really want Catherine to know that I had a latte that day for $5? In other words, if there is anything you can say to folks so that they understand that this isn’t a surveillance state like China?
Catherine Coley: Most of the factors that you will be able to know to see if you move stablecoins from your digital wallet through ACH to your bank account but you will not be able to see what happens beyond that. Usually the bank accounts can see whether you are spending on coffee or Amazon, whereas in the digital wallet realm it’s only merely the buys and sells are regulated and the wallets and the addresses you are sending it to, so it is a little more secure in that aspect...
Jason Brett: The average age of a Congressman or Senator on the Hill is 61 years old. I am not sure if Sherrod Brown or others know how to use their own cell phones. What would be your plan if we were to roll out a digital dollar...over the next 6-12 months and make that a new form of currency? How do you think companies such as yours ...[would] assist in those efforts in terms of public outreach and in terms of making sure folks, especially baby boomers, understand how to use these accounts and are familiar with them?
Catherine Coley: Right, I think about my grandmother listens to NPR constantly...[which provides the] ability to stream and have educational sessions on a daily basis, [and walks] people through how to use things on platforms and mediums [in a way that]...they are more likely to digest and have access to. I do still think that is a great point for a nation to want to educate their population on something that is inevitable. The truth of our generation regardless of this stimulus or another rebate is we will be moving into a digital frontier. The idea that this conversation has brought up is that the future of money is going to take center stage in our conversations whether it is in the near-term instant to affect COVID-19 or down the road. Continued evolution of acceptance and education is going to take efforts on both parts. [It is]...truly up to the next generation of Congressmen and those involving money, but it’s really difficult to turn a blind eye when the rest of the world and the rest of the U.S. is becoming more digital already. Money will have to follow.
Jason Brett: You talk about NPR as a trusted outlets as far as delivering education for folks like you and me, and Americans thinking about going out to get their next set of groceries, what’s going to happen with their jobs. I even have a neighbor that ordered parts off of Amazon to build a ventilator. What do you say to those who may ask why are you talking about a digital currency right now? Why is this a public good we should be considering versus other priorities?
Catherine Coley: There are a couple of components in digital assets we are seeing the benefits of largely. For one, Binance Charity Foundation has been able to essentially globally crowdsource funds through digital assets for affected nations for COVID-19. We released an initial donation of $1.4 million and now have increased that to $5 million dollars and are able to do so with open addresses that allows people to distribute to first responders. I think that is something that is entirely online and entirely borderless which is the type of aid that needs to be seen. When you see digital assets able to work in these adverse situations in this crisis [when we are]...not able to leave our homes [and are]...only open to the Internet, [the] only ways to communicate in the ways we are familiar with, the great advances so far [are] through digital assets. The other elements that we are worried about...[is] making sure we are consciously building a foolproof society so that situations like this do not affect us in such a dramatic way. There is an acute awareness that people see that the keys of your financial well-being under your own roof are becoming important rather than potentially putting things in a centralized party. We still need marketplaces like ours to be able to provide liquidation from coins to U.S. dollars. That is still super important for allowing that flexibility.
Jason Brett: Representative Tlaib introduced the concept of $2 trillion dollar platinum coins printed by the U.S. Mint that the Federal Reserve would buy that would essentially provide us $2 trillion to distribute, making the policy point that Treasury should be in charge of fiscal policy, while Federal Reserve should be in charge of monetary policy. What are your thoughts about the distinctions between the two and how do you see that in a digital monetary world if we start issuing these digital dollars who should be in charge of the monetary and fiscal policies for the U.S.
Catherine Coley: Do we have three hours? I think there is a huge amount of debate worth having with a room of scholars, a room of economists, and a room of practical individuals as well - not saying the other two are not helpful but some real-world experience would be helpful amongst textbooks in just assessing when power is given into certain hands how is it affected and how does it actually ring true. One of the aspects we see in digital assets is protecting us against issues such as that where inflationary aspects may take place or money may be printed out of thin air. That is something always of concern regarding the purchasing power that one would have with their initial amount of currency. With Bitcoin, there is a decreasing amount of money supply and therefore [there will be a]....consistent trust with that digital asset. That is something that is probably foreign and confusing for most of Congress and most economists out there, that at a time when the U.S. is needing things, a Two Trillion Dollar Coins seem perfect. Extremely reactionary for elements for that to be the solution, there could be some further looking under the hood into how this could affect us in the long term. It is not going to be very far in the future for us to pay $30 for a burger.
‘I think one of things corporates shy away from responding to disasters and that is the opposite of what Binance Charity Foundation has done. It spun up a campaign for when Dorian came through Bahamas and Miami. It has the ability to provide instant funding and care for people in need so I think that is one of the benefits that Binance Charity Foundation is doing, it can probably explain and distribute through to those legislators of how we respond to disaster in being able to get stimulus funds into people’s hands quickly.’
Jason Brett: Could you elaborate on what Binance Charity is?
Catherine Coley: Binance Charity Foundation was built to bring the crypto native infrastructure to help those around the world. Most charities would [accept]...dollars and [move] it that way. Binance Charity is building out so tokens would be distributed among groups such as feeding schools in Africa, etc. so they launched the #Crypto Against COVID, [which are] wallets that you can deposit funds into that will then be used and tracked through to their first responders. So I believe...they spent [the first million] on buying masks...for this new campaign up to $5 million. They will be giving it to first responders in Italy, Spain, and the U.S.
Jason Brett: That’s great. Can you see your charity being part of a digital dollar initiative...in the U.S.?
Catherine Coley: Certainly, I mean I think one of things corporates shy away from [is] responding to disasters and that is the opposite of what Binance Charity Foundation has done. It spun up a campaign for when Dorian came through Bahamas and Miami. It has the ability to provide instant funding and care for people in need so I think that is one of the benefits that Binance Charity Foundation is doing. It can probably explain...how we respond to disaster [in terms of]...being able to get stimulus funds into people’s hands quickly. And certainly a lot of people like myself ask how does this work in crisis when [we] might not even have internet, or phones, or power, and it is clearly...giving those funds to those who can get to the front line, so the Red Cross or Jose Andres cooking meals for everyone.
Jason Brett: One of the audiences that seems to be paying attention to this now is one that maybe has not had the benefit of holding a digital dollar or wallet. Technically there are these stablecoins that you describe them that are representing U.S. dollars. It isn’t the digital dollar as described by the Federal Reserve, but they certainly are out there. What would you say to my readers as far as if they wanted to get started with Binance, [what should they do]...to see what it is like? What would be some steps for them? Is it as simple as downloading an app for an Iphone or Android or is there some research or resources that they can look up online? Obviously we won’t give out your personal number, but how can people get started?
Catherine Coley: Absolutely, it is an app on your Android or iOS device. It’s also a website if you prefer to use a desktop or a laptop. It’s just www.binance.us. We are rolling out...a series for education. On our blog we are going to be doing a 101 series, walking people through the steps. We’ve got videos that walk you through the verification process, what it entails, what you will be able to do once you get through certain levels of verification which we do have for those to protect people that are trying to use dollars or stay in the digital realm. We’ll have an education series up, one of several series where we walk through and explain things that might have been overlooked. The other beautiful thing about digital assets is that it does not require private training in a school or a degree. Most of the information that you can find about Bitcoin and digital assets is all available on the Internet...A barrier to entry that has been lowered by digital assets is the ability to learn more and we do our part to be able to produce that content. There is a great aspect called Binance Academy and that walks through the 101 of understanding how the platform works as well as token economics and many of the futures that people see in digital assets. They may not have Twitter, but you can follow us on Twitter at Binance America...The other aspects we are trying to communicate [about] us you can read about...through your articles in Forbes....We’re trying to lower [the barrier to entry]...but it does take a willingness to want to be part of the next wave of finance.
Jason Brett: Is Binance.US an independent company of Binance or are they the same company?
Catherine Coley: BAM Trading Services Inc. (“BAM Trading”), which operates as Binance.US, is a separate company that operates independently of Binance. BAM Trading licenses matching engine technology from Binance.
Jason Brett: Why did Binance move from China and Japan to Malta?
Catherine Coley: Since BAM Trading is a distinct entity that operates independently of Binance, I can’t speak to this question. What I can say is that BAM Trading has always been and always will be headquartered in the U.S.
Jason Brett: Is Binance Charity a Malta-based non-profit?
Catherine Coley: Since BAM Trading is a distinct entity that operates independently of Binance, I can’t speak to this question — but you can learn more about Binance Charity (online).
Jason Brett: How is Binance Charity providing transparency of how the donations are used in #CryptoAgainstCOVID?
Catherine Coley: Since BAM Trading is a distinct entity that operates independently of Binance, I can’t speak to this question.
Jason Brett: Why was Binance.US established?
Catherine Coley: BAM Trading was established to bring more Americans into digital asset trading on their unique paths to financial freedom. We built BAM Trading specifically to give U.S. customers a safe, secure, regulatory compliant way to trade digital assets that suits U.S. market requirements and realities. With its background in traditional finance, our team is well positioned to offer an app Americans can trust and call their home for digital asset trading.
Jason Brett: Does Binance.US engage in any direct lobbying activities of public policy officials in the U.S.?
Catherine Coley: No. BAM Trading does not currently engage in lobbying activities.
Jason Brett: Do you report to Changpeng Zhao, CEO of Binance? How has his support been for U.S. citizens during the coronavirus crisis?
Catherine Coley: As the CEO of BAM Trading Services, I report to the company’s Board of Directors.
Jason Brett: Do you think it makes sense that an exchange with origins in China design a U.S. digital dollar?
Catherine Coley: BAM Trading has its origins in the U.S. — we were born and bred here, and we tirelessly work to serve this market. My recent op-ed regarding the digital dollar was in no way a recommendation that BAM Trading or any private entity “design” a digital dollar.
Jason Brett: Does Binance have any investments in or controlling interests in Binance.US?
Catherine Coley: Binance has no ownership interest in BAM Trading.
Jason Brett: What state is Binance.US incorporated in and what is it’s legal structure?
Catherine Coley: BAM Trading was incorporated in Delaware as a corporation.
Jason Brett: Who sits on the Board of Directors of BAM Trading Inc. that oversees the CEO of Binance.US?
Catherine Coley: BAM Trading’s Board of Directors consist of three members: CZ, Catherine Coley, and Wei Zhou.
Jason Brett: Does Changpeng Zhao, CEO of Binance, have any ownership interests in BAM Trading?
We don’t comment on ownership interests in BAM trading.
Read the full article on Forbes: