Compiled by: CoolFish

I am very excited about three new areas.

Moderator : Over the past few days at the forum, I've felt that two distinct dialogues have been taking place. One has been about geopolitics and macroeconomics, with concerns about the fragmentation of the global trading system, debt, and the role of the dollar. These conversations have often been quite disheartening and worrying. The other focus has been on artificial intelligence, innovation, and technology. These discussions about future possibilities have been vibrant, with many exciting technological breakthroughs underway.

In today's seminar, we will take a bold step to bring together these different discussions—not only focusing on how innovation occurs and what it may bring in the future, but also considering the regulatory and geopolitical context in which these innovations take place, and how these contexts affect financial innovation.

We have invited four distinguished guests. First, we have Steven van Rijswijk, CEO of ING Group from the Netherlands. Next, we have Jayee Koffey, Chief Empowerment Officer and Global Affairs Officer of BNY Mellon . Then, we have Fred Hu, Founder, Chairman, and CEO of Primavera Capital from China. Finally, we have Changpeng Zhao, founder of Binance from the UAE —we usually call him CZ , so I don't have to struggle with that name anymore. CZ is now free to speak without any restrictions, and I'm sure he will deliver a particularly insightful presentation.

The theme of this discussion is how technology is reshaping the global financial landscape. Those who follow this field will be aware of the numerous changes currently taking place. Payment methods and monetary systems are undergoing dramatic transformations, and the underlying infrastructure for financial transactions is rapidly iterating. These changes are overwhelming. To begin the discussion, I will ask each participant in turn, in the order of their seating: What do you see as the most profound restructuring? What development direction excites you the most? This could be a specific market sector—private lending, investment, Bitcoin, stablecoins, digital currencies, etc.; it could be a technological breakthrough—Bitcoin ledger technology; or it could be an innovation at the infrastructure level. The discussion is completely open; please speak freely. Please discuss which exciting new developments you believe will have the most profound impact on the financial sector.

CZ : Absolutely. I'm focused on a very narrow area within the financial markets, mainly cryptocurrencies, blockchain, Web3, call it whatever you want. I'm convinced this technology is a game-changer, and I think we've proven it over the past 15 or 16 years.

Binance is one of the world's largest cryptocurrency exchanges.

Fred Hu : It is actually the biggest

CZ : It's the largest to date , exceeding the combined size of the top five exchanges. But look at some figures—Binance has 300 million users. It's probably larger than any bank I know. Its trading volume not only surpasses the Shanghai Stock Exchange but also exceeded the New York Stock Exchange last year. However, the truly mature industry in the crypto space currently consists of only two major sectors: exchanges and stablecoins, both of which are massive business systems .

I am very excited about three other new areas. I believe tokenization is a huge area —I am in discussions with more than a dozen governments about asset tokenization solutions, which could allow governments to realize financial benefits first, thereby promoting the upgrading of industries such as mining and trading markets.

While we've tried, we haven't truly conquered the payments field — more precisely, cryptocurrency hasn't truly entered the payments arena. We've tried, but nobody actually uses cryptocurrency for payments. However, we're now seeing traditional payment methods quietly merging with crypto technology: when consumers swipe their cards, cryptocurrency is deducted from their accounts, while merchants receive settlements in fiat currencies like USD or EUR. Once these bridges are built, the payments field will see a major breakthrough .

The third area is artificial intelligence, and the native currency of AI agents will be cryptocurrency .

Cryptographic blockchain will become the most native technological interface for AI agents . Current AI is far from being a truly intelligent agent; it can't buy you tickets or pay for your meals—but when it does, all payments will be made through cryptocurrency .

Concerns about the future in some areas

Moderator : That's the best-case scenario, the exciting part. Now I'd like to shift the topic and talk about how, whenever we go through a period of innovation and experimentation, some attempts succeed and some fail. So I'd like to explore what might not work. Ten years from now, if we were sitting on this panel in Davos, what developments being discussed today might not even be mentioned anymore? They might have been abandoned. I'll offer a few ideas to get the ball rolling. You're all very excited about AI. But some research from MIT shows that while AI can quickly complete large amounts of work, its output is rather mediocre. They call it "work slop."

You can achieve around 80% accuracy, and if that's fine with you, then AI is great. However, if you're really aiming for excellence and absolute certainty, AI may have limitations. There's also the experiment with Bitcoin. El Salvador has been pushing Bitcoin very hard. This was a good approach—El Salvador relies heavily on remittances and doesn't have its own stablecoin. Bitcoin should have been ideal for remittances, reducing transaction costs, but despite significant marketing and resources, actual adoption is near zero. These are just a few examples of potential limitations for your consideration.

Now let's continue. In the same order. What are some areas that people are excited about today, or at least some of them are passionate about—but that you think won't even be discussed ten years from now? CZ, which areas should we be wary of right now? Or rather, which areas are not worth investing in?

CZ: Of course. I think all three of my guests were very tactful and politically correct. I would give a more direct answer, which might offend more people, including those in my industry. I do agree with Stephen's point that if you had asked me this question 10 years ago, I might have said Bitcoin payments. But ten years later, we are still far from that goal. So I remain skeptical about the payments sector .

We're working on it. The entire industry is investing in numerous payment projects. But any area of innovation comes with a very high failure rate, while a few success stories will experience exponential growth, right? I also agree with Stephen's view on the metaverse. Well, we've seen NFTs become incredibly popular, but now they're quite deserted. I have a strong feeling that memes might follow a similar path. I might be wrong.

Many people in the crypto community will hate me for saying this. But, you know, there's a very high risk involved in new areas where value is highly speculative. Building use cases for these areas is difficult. Some memes have indeed survived, like Dogecoin, which has been around for about 15 years. So projects with cultural value may endure. But I don't think most memes will last . And I'd also like to add, although this might offend other industries, I think traditional banks will decrease significantly over the next 10 years .

Fred Hu : Reduce?

CZ : Yes, less. The need for people to go to physical banks will decrease significantly. I think ING pioneered online banking 25 years ago, which shows that replacing traditional industries takes a long time. But today we have cryptocurrency and blockchain technology. Electronic identity verification (eKYC) and e-everything services can meet the needs of financial transactions, and the necessity of physical banks is decreasing .

I don't believe banks will disappear. They play a vital role—in fact, multiple vital roles. But risks exist in all sectors, whether emerging or traditional. We should regularly and prudently assess market dynamics.

Fred Hu : But you've only told us what failed in the last 10 years. You haven't told us what will fail in 10 years.

CZ : Basically, you're saying that memes seem to be high-risk. Real-world banking is high-risk. I could go on, but that would offend even more people.

Guest : Yeah

How to view the risks posed by AI

Host : No, I think your last point is very important. I'd like you to talk about banks. If macroeconomists were involved in this discussion, they would be very concerned about the risks facing banks. While banks remain a key source of financing for investment and growth—especially for SMEs, particularly in Europe, and less so in other parts of the world—the role of banks may weaken as new financial models emerge, and funding channels may shift to other mechanisms. Therefore, I'd especially like to hear your further explanation of the risks.

Last week I attended a seminar on artificial intelligence and the risks of algorithmic trading in financial markets. I believe the pace of events has indeed accelerated dramatically. For me, the Silicon Valley Bank incident served as a wake-up call long before the many innovations discussed here. In the Silicon Valley Bank incident, we witnessed a bank collapse faster than ever before—even compared to the collapse of two major U.S. banks (Washington Mutual) at the height of the 2008 global financial crisis. Those two banks experienced a run of about two to three weeks before finally failing, while Silicon Valley Bank lost 80% to 90% of its deposits in just one or two days. That two- to three-week run only resulted in a loss of about 10% to 15% of deposits. Silicon Valley Bank lost 80% to 90% of its deposits in just one or two days. The pace of events far exceeds previous ones. More importantly, this crisis was not caused by emerging technologies such as artificial intelligence or Bitcoin, but simply by a new trend arising from people chatting online.

They don't all need to go to coffee shops to exchange news and rumors. And because of new technology, people can withdraw money from online accounts without even queuing. So in a sense, that's outdated technology compared to what you're talking about. However, this has fundamentally changed the speed at which bank runs occur. When you consider the impact on the broader financial markets, you'll find there's much more momentum trading. When everyone is trading using the same algorithms, with AI doing the work so that humans don't even have time to press a button, this will trigger more severe losses, more dramatic volatility, and a host of risks. How worried should we be about this? Is there any way to mitigate it?

CZ: I'd like to add a few points. I think it can be broken down into several independent points. I believe the first point is that, all other things being equal, faster and cheaper is always better. This in itself doesn't create more risk. Existing risks are simply highlighted by the increased speed. However, if banks implement a fractional-reserve system, people withdrawing funds more quickly when there's a shortage will only accelerate the exposure of problems. Slowing down doesn't solve the fundamental problem; it only leads to more consumers being unable to access their money when needed, leaving them stranded. This doesn't solve anything . Therefore, all else being equal, technologies that reduce costs and increase efficiency are always superior.

Regarding the questions surrounding Silicon Valley Bank, we sense a starkly different atmosphere in the crypto industry regarding rumors; the bank may or may not be facing difficulties. However, our impression is that this bank is very friendly towards cryptocurrencies. It may be shut down in 2023 by "Operation Choke Point 2.0".

Let me give you another example from Binance: In December 2023, after the FTX crash, the Luna and UST crashes, and essentially after the Silicon Valley Bank incident, Binance saw its largest single-day withdrawal reach the equivalent of $7 billion in assets. The system operated without disruption. In the preceding days of that week, withdrawals increased from hundreds of millions to billions, then to $7 billion, and then back to billions again. In that week, a total of $14 billion was withdrawn from the platform, and the system remained stable throughout . I don't know of any bank in the banking system that could handle such a scale of withdrawals.

The so-called "bank run" essentially stems from a design flaw in the fractional-reserve banking system. Liquidity problems arise when a fractional-reserve system is implemented. This is ultimately a system design issue, not an artificial intelligence problem . That's my point of view.

Of course, there are potential risks associated with synchronized actions by artificial intelligence. But I believe this is just the tip of the iceberg, and attributing all problems to this would be too simplistic.

Differences in regulatory policies among countries

Host : Okay, so I've gotten some different ideas. The key lies in settlement, risk management, and regulation, including reserve requirements. Some of this work needs to be done internally by companies, but government regulation and national infrastructure are equally indispensable. We are very fortunate to have such a diverse panel of experts—each of you operates globally, with your companies rooted in different countries, such as the Netherlands, the US, China, and the UAE. Could you talk about the importance of regulatory frameworks? I'll start with Fred. In particular, different countries have adopted different approaches to managing these risks. Fred, could you specifically discuss some of the different approaches taken by China and the US? How do these government approaches affect opportunities in these countries?

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CZ: I have a different perspective on this issue because we're in different industries. Personally, I think the regulations governing the banking and securities industries are highly developed, mature, and similar in many countries. Of course, differences exist, which might be a simplistic interpretation by a novice. But cryptocurrency regulation is entirely different—policies vary greatly from country to country. Frankly, Binance has about 22 or 23 licenses worldwide, but most countries in the world don't yet have a licensing system. We've seen rapid progress in the US, but it's still in progress, right?

Regarding market structure, the Genius Act was passed last year, only six or seven months ago. So it's an ongoing process. We've also seen many other countries, such as the UAE, introduce quite forward-looking regulatory policies, as well as Bahrain, Pakistan, and Kenya. We are pleased to participate in the consultation process with them, so they can at least engage in dialogue with industry players.

I served as a private advisor to some governments —though I am neither a cryptocurrency expert nor a regulatory expert. I simply spoke to them from the perspective of market participants.

Furthermore, several key differences exist in national policies during this process, particularly regarding capital controls. Many countries impose restrictions on capital outflows, with any excess constituting money laundering or substantial illegal activity (regardless of the definition). The United States does not have this issue. It does not have such controls. Tax systems also differ significantly among countries, directly impacting financial regulation—for example, should unrealized gains or realized gains be taxed when the price of Bitcoin rises after purchase? And so on.

Clearly, clearer and more unified rules would greatly improve the current situation. However, I believe a global regulatory body is difficult to achieve, although not entirely impossible at present. Different countries have different priorities, agendas, and considerations, making a unified global regulatory body quite challenging. We would very much like to see, especially if that global regulatory body could develop a proactive and relatively innovation-oriented regulatory framework. That would make the work of industry players much easier.

But frankly, logically it should be this way—after all, cryptocurrencies are essentially the same across countries. We don't want to change with each country, so there should be a best-practice framework that we can implement. I've actually spent a lot of time trying to figure out what that is and how to work with different countries.

Host : It's good to hear that, I agree. Now may not be the time to launch a new global international organization or a new global regulatory framework. That would be a tough battle. But that doesn't mean we shouldn't start thinking about what it would look like if the opportunity did arise, especially if we encounter some kind of crisis or major financial collapse. We might want to have some ideas and plans in place so that some solutions can be implemented when the time comes.

CZ : A relatively easy-to-implement regulatory passport system would be similar . It's like once you obtain a license in one country, other countries might also recognize it . This simply requires some kind of agreement between the regulatory bodies of different countries. We've already seen some discussions on this. I think this step is most likely to be implemented first. Creating new regulatory bodies or even global organizations like forums is both difficult to implement and time-consuming.

CZ: AI will make you unemployed, encryption will make you not need to work.

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