Finance us ceo, brian schroeder, explains why the exchange decided to cut bitcoin trading fees to cnbcs crypto world im, tanaya mchill major cryptocurrencies are trading flat. Today, by noon, eastern bitcoin was worth about 20 thousand dollars and ether traded just below 1100. Meanwhile, avalanches avax tokens surged today the platform added native support for bitcoin and the move caused the platforms token to pop as much as seven percent after the announcement. Okay were jumping right into our main story of the day: crypto worlds: kate, rooney, caught up with finance u.s ceo brian schroeder, to ask about the exchanges decision to cut bitcoin trading fees, his reaction to crypto winter and more finance u.s. So this is the american affiliate of the largest global crypto exchange, offering zero free trading for bitcoin hows that gon na happen. And how are you making money on this? So i think that um, you know we, since our inception have been known as the low cost leaders in the space and with this announcement, what we wanted to do is establish ourselves as the very clear world leaders in pricing and so um. You know what is, i think, completely innovative about. What were doing is its driving more value to our customers, which is precisely the people that we had in mind when we made the announcement, i think in the crypto space itself there is not a lot of user education around pricing right. So not many people know that when they trade, for example, on coinbases retail app using like a debit card or credit card to buy a bitcoin, they could be charged up to four percent for that transaction.

Uh. Now with finance us, you are charged absolutely zero. No hidden fee is just free and you know we. We feel this is a very exciting time for us to come out and put that uh message out there and to uh drive new user growth. So how is a company like coinbase been able to charge four percent? Is it because theres not other us based options um? Why would somebody pay four percent on a crypto trade, its a its a great question, i feel like most people, dont know that theyre paying four percent and i think to answer your question of uh. Why? I think you know: coinbase has been around for over 10 years uh we launched our app uh in january 2020, so were about two and a half years old uh. We also have not done any marketing. Historically, so youve never seen a binance us facebook, ad or instagram ad um, weve kind of plowed that into ensuring that we can keep our fees as low as possible and on the back end. So i know robinhood is another stock exchange, app or trading app, that um doesnt charge fees and also has the same model on crypto, but does sort of rebates on the back end? Is that the case here with finance? Are you making money back end? No so um the robin hood model is very different, because what they do is they effectively go out to the market.

They buy 98 dollars worth of bitcoin uh for themselves, and then they sell it to the retail user for 100 right. So they actually take a two dollar spread at finance us. We actually have an open order book. So if you download the binance us app and you actually look at the trading platform, you can actually see all the open, buy and sell orders and then the market price is, you know when, when the two match – and so we as finance us actually dont – get Involved in the transaction at all, so its a finance us user transacting with a finance us user and for bitcoin uh its now completely free, so you guys are sort of the matchmaker in this and you dont take any you take nothing! You take no spread here. Correct without question: we are, you know the best platform in the world to buy bitcoin. For that reason, because theres, no fees, no commission and we do not take a spread, and so are you losing money? Are you seeing this as sort of a loss leader but a way to add customers at the same time? So we we saw this as a way to you know: earn customers right uh. So by having um one coin, bitcoin the the og, the original out there at zero. We see it as an opportunity to allow users to come on our platform, get to know us better and get to see kind of all of the other points and tokens that we have on our platform.

We have over 100 trading right now and then recently were starting to expand into additional products and services. So just this month we lost uh launched our staking platform uh, which is now live with multiple assets and growing kind of every month with new ones. And so you mentioned steak and well get back to that. But i wonder if youre planning to expand this to other cryptocurrencies beyond just bitcoin, so i think that for um, for our intents and purposes, what were going to do is were going to study um. What happens were going to study what happens in the market were going to study what happens with institution as well as retail adoption and then based on what we see in the data well make decisions around whether or not we should move other assets into our zero Pricing tier got it got it and um as far as the competition here with coinbase and others. Do you expect this to put some pressure on the rest of the industry to lower fees uh? I hope so. I think that this is you know what the what we want: users in the industry, to appreciate right, and i think that by coming out there and announcing kind of our uh free, bitcoin trading, hopefully what it does is it actually encourages users to actually educate themselves. On how much they are being charged on the various uh platforms, and i would find it very hard to believe that, once you know, users educate themselves on, you know being charged up to four percent on coinbase uh and zero percent on finance us that they wouldnt Choose us over them and talk about the strategy for finance to move into the us weve seen other global crypto companies.

Crypto.Com ftx really make a play at the us base of users and traders. Why is that important to finance more broadly and talk about the competition between a lot of the global players that seem to really be spending and making an effort to get some of the us users yeah? So we as binance us are a separate legal entity from We were created. You know about two and a half years ago for the explicit purpose of being a regulated and licensed entity um here in the united states uh, we are not um a subsidiary of finance, they actually dont know any percentage of us what we share in common with Them is basically two themes, so one is a common founder, so cz is founder and ceo of cz is founder and chairman of the board, so hes, obviously running that amazing company globally uh hes involved in his a board seat, uh capacity here on our Side and then the second theme that ties us together is, you know, were at a delaware corp. Our headquarters is actually in palo alto, and so we as a corporation, have entered into a series of legal and licensing agreements with the entity. And so we have licenses for the matchbox uh platform, which is basically the where crypto buyers meet. Crypto sellers wallet, custody and then obviously the main finance here in the u.s. So have you noticed, though, more competition in the u.

s market to finance, like you said, is similar founder, not necessarily a subsidiary, but you know familiar with finance as a global company and what some of the other players out there doing. Are you seeing that, though, as far as more competition from some of the global exchanges, so i think that where we have shine is actually in the finance brand name and uh the finance technology right. So what were able to do uh through our licensing agreement is bring. You know, technology that effectively powers. You know 60 70 percent of the worlds crypto platform uh, and yet we as finance us can customize and package it uh, uniquely for american users and so uh that sort of uh brand name in the consumer space has been. You know amazing in terms of adoption, but you walk around with the finance t shirt. You find a lot of rabid fans coming up and sharing their excitement for the brand you mentioned staking um that has been, or at least some of these higher, yielding products and features on certain apps. Its been a little bit controversial lately with uh whats gone on with terra usd whats, going on with luna any worry about offering something like that to a retail user base in the u.s, based on either regulators. Looking at this and having questions or just the risk of having some of these higher yielding options where theres not always a lot of disclosure on the back end yeah, so we obviously always encourage users to do their own research and, to the extent that we can Be involved in user education and according to um, you know, facts and figures and backgrounds.

We obviously do that come to a variety of different means. What were focused on in the staking platform is ensuring that uh. You know we are offering the best yields and so um when you look at some of the assets that we currently have compared to, for example, gemini some of the assets that we are offering offer 17x the amount of yield that gemini is doing, and so again Were trying to create this brand uh promise for finance us where we are the low cost, uh high yield best consumer experience in the united states. Would you worry at all about where that yield is coming from, so each um token project right is unique in terms of its governance model in terms of its token economics in terms of how it takes, and so you actually have to look at each asset independently, Which is why we have a very robust uh listing process that starts with research. It looks at kind of all the components that go into uh those particular details, and then we ourselves right have the legal opinions, both internally and externally, for um all coins and tokens on our projects. And then, ultimately, it has to go to a committee and unanimously voted before its listed on our platform and what was the effect of um, luna and tara, and that fallout? Did you see any liquidity issues or any issues at all on finance us? As a result of that, so we never listed uh luna, so luna was not a coin or um token traded on our platform and then, when you look at kind of some of the liquidity issues that are happening in the market today with like celsius or block Five, we are not exposed to those, and that is because we never had margin trading on our platform.

We never lent out any um assets and we never took any loans, got it and youve seen people like sam bank been freed step up as sort of the lender of last resort in crypto. Is that ever something that binance would do you know step in and offer a loan or really a lifeline to some of your peers and other companies that might be in a crisis right now? So you know we just completed our capital raise uh in april um. Our c round we raised over 200 million on a 4.5 billion valuation, so we are entering this crypto winter from a position of strength, so we have a lot of fresh powder and given the market circumstances, there are many m, a opportunities that we are consistently evaluating. Several we were looking at this week. Ultimately, we want to ensure that any sort of acquisition that we do is obviously good for the company good for our users is that more of an opportunity now, as valuations, come down if youve got the cash? Is this the time to spend it yeah? Absolutely, i think that it is certainly more of an opportunity now than it was before um previously, when we were looking at acquisition targets. You know months ago, the valuations did not make sense, which is why we never pulled the trigger on anything but now its starting to become really interesting, interesting uh. What about hiring weve, seen block five that we mentioned earlier? Coinbase scaling back and in some cases, laying off a pretty big percentage of their employee base is that something finance is considering, and how are you thinking about your employee base right now? No no were were actually growing right um, so, unlike uh coinbase laying off um over a thousand workers, um gemini is going up.

Ten percent letting and more um were actually continuing to grow and hire, and so uh, as i mentioned, you know we just launched um outside our first kind of big product out of spot trading. Uh this month in staking, we will launch many more products and services over the upcoming months. In order to do that, we need really talented people, and so every day we are receiving applicants from you know the coin bases of the world, and we are interviewing them and hiring them. Uh, our product and tech team alone will double by the end of the year, so we are on an upward trajectory, wow, product and tech doubling by the end of the year yep, and what about the some of this contagion going on in crypto markets? Is there anything happening with either celsius blackfy or even the hedge funds that could affect finance us, and that has you worried going forward uh so were pretty protected as our own business from kind of the contagion. Obviously, we are very concerned about our users who still have assets on those on those platforms, but i think that overall, when you reflect back on this period of time, i think that um, it will be seen as a period of time when effectively excess was removed From the market uh and it allows kind of the real competitors to emerge – and those are the ones that are focusing on delivering value to customers in a sustainable way, and so that is what were focused on is were focused on building a really great long, lasting Business if prices dont recover, is there a thought that retail activity trading activity, which is really the bread and butter for a lot of these crypto exchanges that that could pull back and affect your business? I think that um, you know crypto is a cyclical industry and so um we have been through many crypto winters before we will be through many crypto interests in the future, so its just um, you know riding out this duration and were taking this quiet time to Do everything right, in terms of obviously changing our pricing model, to give more value back to our users, making our platform more attractive were investing heavily in customer support resources and building an infrastructure that is scalable such that when the crypto bull market starts again that we Will be uniquely positioned to take advantage of it.

We are very confident that theres no way that we would uh emerge from this crypto winner in a not stronger position. What do you think needs to happen in order for markets to recover here? It seems to be very macro, related whats happening with the fed anything in particular that you think could shake markets out of this downturn right now, yeah yeah, so um. I i agree with you that you know it is um uh, very macro related um, and so i think that we collectively equities crypto. Everyone are kind of in this together, um and uh uh. I im not paid for pronunciating um uh, but uh. What were doing is doing all the right things that, when it happens, when the bull market recovers that were going to be ready to ride in again and does finance u.s, you mentioned some of the leverage thats out there. Do you guys offer any sort of margin, or how do you think about that in terms of investor protection uh, we do not uh, we do not um offer any margins. So what what the other firms had have done? Is they basically took user assets and then they lent them out to others and then passed on a portion of that fee, uh to the users the assets that our users bring to our platform? We just custody for them, so we keep it for them. Safe uh and do not lend it out got it and they cannot take on margin themselves individually.

Is that right, correct? We do we do not uh currently offer margin products on our platform. Is there? What do you think about that? As uh, i mean a policy. Obviously, finance us hasnt gone that direction. The global exchanges have and do tend to offer that um is that a risk? You know in a downturn for a lot of traders who may be relatively new to crypto markets and to trading in general. How have you thought about that in terms of what it means for the overall risk in crypto i mean certainly – and you see the the outcomes of that risk playing out right in real time right now. I think that where we are interested in um experimenting is perhaps in some future state on institutional investors um, so that would be kind of where we would start if we were to ever get into margin trading. About 70 of our volume today actually comes from institutions, and that is actually a growth area for us last month. We had our all time high in terms of new institutions, uh coming on board the platform, and we are consistently seeing some very big names out. Uh. Many actually from traditional finance that are joining our platform now, and i think that post this um zero bitcoin trading option were going to have another record month for institutional adoption. Are you seeing new institutions, or is it institutions leaving existing platforms and moving over to finance uh its both um uh, its both? So we definitely have institutions that are taking a better understanding of their fiduciary um responsibilities and comparing finance us with a coin based platform and from a fiduciary perspective.

Obviously we are the the right choice and then we are seeing traditional finance institutions, um uh, coming on our platform as well uh, so some key brand names uh, which is obviously very exciting, to see because it kind of strengthens the narrative around broader crypto adoption. Any plans to go public finance u.s. What should we expect in the next? You know 12 18 months here yeah. So we were um. You know pretty clear with our investors that we have a time horizon of about two to three years: um uh for ipo, and so that is kind of what were sticking to and everything is going uh well in that direction. Is it a benefit right now to be a private company and not have to watch the stock price and a lot of these other crypto and high growth tech companies are getting hit? Lately uh, i think theres theres absolute benefits uh to to being a private company. It allows us to move quicker, uh, take advantage of things, um not have to respond to kind of everything that we do with some analyst um backups but um. Obviously, there are tremendous benefits of being a publicly traded company as well, and so we look forward to growing up and uh and getting there okay thats all for today. But you can find that full interview and more over at cnbc.