Main conclusions
KuCoin, now the 5th ranked exchange, is valued at $10 billion after recent $150 million fundraising I interviewed CEO Johnny Lyu, who claims that the European market is key to KuCoin , but KuCoin is well placed, claims Lyu Lyu also claims that KuCoin has no plans to go public, focusing on innovating and lowering barriers to entry for cryptocurrencies KuCoin is the fifth-ranked exchange by CoinMarketCap, with quite explosive growth since its launch in 2017. Earlier this year, it raised over $150 million in a pre-Series B round, putting its valuation at $10 billion. A few other ads recently caught my eye as well. One that I particularly found interesting was the release of a bunch of Euro trading pairs, which as a European is nice to see. The dollar’s dominance (as well as the much-criticized dollar stablecoin USDT) as the fiat currency for crypto is truly impressive, and an even more poignant fact as the dollar continues to appreciate against other currencies (DXY index a colossal 11). % this year). For this and other questions, including the potential to go public, the 2020 hack suffered by KuCoin, regulation, lower fees across the industry and comparable to Coinbase & Binance, I interviewed KuCoin CEO Johnny Lyu for the CoinJournal. It was a very interesting interview, especially as we are now dealing with a bear market in cryptocurrencies, with a pullback in volume across the space and prices plummeting. The full transcript of the interview is below.
CoinJournal (CJ): You this week released several euro trading pairs (which was very much appreciated by me coming from the eurozone!). Why did you do this and what do you think is the reason why the euro is so far behind the dollar when it comes to the rise of cryptocurrencies?
Johnny Lyu (JL): The European cryptocurrency market is one of the main markets for KuCoin, and KuCoin is committed to providing an easy-to-use cryptocurrency trading service for European investors. In March, KuCoin integrated SEPA payments, allowing users to deposit EUR into KuCoin and track cryptocurrency purchases. To expand fiat trading services for cryptocurrency, KuCoin adds EUR trading pairs that allow cryptocurrency users to make instant conversions between Euros and cryptocurrencies. By supporting these EUR-fiat trading pairs, KuCoin strengthens its presence in the European cryptocurrency market, which continues to grow strongly. As to why the EUR has not fared better than the dollar in terms of the rise of cryptocurrency in the first place, it is because the dollar, as a global reserve currency, is dominant in many fields. On the other hand, cryptocurrency adoption metrics in the American market are much better than in the European market. According to the Into The Cryptoverse report released by KuCoin, as of March 2022, 27% of American adults between the ages of 18 and 60 are cryptocurrency investors. But in Germany, Europe’s most crypto-friendly country, the figure is just 16%. But good things take time, and I believe that as cryptocurrency adoption increases in the European market and more innovative products emerge, the EUR will move quickly to catch up with the dollar as far as cryptocurrency rises.
CJ: His impressive fundraising in May valued KuCoin at $10 billion. Was it a relief to secure this funding and valuation just before the market began its most violent downturn?
JL: This funding is inspiring. The new inflow of capital will allow KuCoin to go beyond centralized trading services and expand its presence on Web-3.0. In the meantime, this funding will help us successfully navigate the industry downturn, even as we are well positioned for a prolonged bear market.
CJ: How well positioned is KuCoin to weather a prolonged bear market and volume has dropped more than you expected during this sell-off?
JL: The cryptocurrency market is in for a new crypto winter, with significant drops in market capitalization and trading volume. But for KuCoin, based on our continued business expansion and stable global layout, our trading volume and user growth in the first half of 2022 is still impressive: in the first half of 2022, the trading volume of KuCoin, including trading spot and futures surpassed US$2 trillion, up 180% over the same period in 2021. Looking at different markets, Europe outperformed others in terms of speed of growth, reaching a total volume of US$481 billion with 381% growth compared to the same period last year. In Latin America, Africa and the Middle East, a total volume of US$453 billion and US$392 billion was achieved, and the growth rate is 189% and 152%, respectively. So, for us, the bear market may face more challenges. Still, with proper direction and firm belief in development, we are 100% confident to go further for users and industry in a fantastic way.
CJ: Do you have plans to follow Coinbase’s example and go public? Has the slowdown affected your thoughts on when to go public?
JL: We are currently focusing our efforts and resources on developing innovative products to lower barriers to entry into the cryptocurrency market for users and furthering KuCoin’s global regulatory efforts to better serve global cryptocurrency users. So, in the short term, we have no plans to go public.
CJ: Why would you advise clients to trade on Kucoin as opposed to Coinbase, Binance or some of the other exchanges?
JL: For this question, the first thing I want to say is that we respect all competitors. The continuous growth, advancement and progress in the industry together with our competitors have undoubtedly promoted the rapid development of the industry. During these years of development, KuCoin has been nicknamed “People Exchange” by our users, which also shows the most important features and advantages of KuCoin. Here are just a few of them. At KuCoin, users can enjoy the lowest transaction fees in the industry. Trading fees on KuCoin start at 0.1% for both makers and takers. Also, if you use KCS to pay trading fees, you are entitled to a 20% discount. At KuCoin, VIP users (Lv 12) can enjoy a Maker fee of -0.005% and a Taker fee of 0.02% maximum. As a home of hidden gems, KuCoin offers users the opportunity to be the first to touch many crypto gems. We now offer over 700 digital assets. And we provide many passive earning options on KuCoin Earn like staking, Burning Drops and more for users to earn with low risk which is more convenient in the bear market.
CJ: A recent trend among exchanges has been a battle for fee reductions. What are your thoughts on this and how does KuCoin’s strategy fit in here?
JL: This is great news for users all over the world. In this regard, we have always prided ourselves on providing the lowest trading fees for global users, which is also strong proof of KuCoin’s ambition to provide services to all classes of investors and lower the industry threshold for global users. We have reduced trading fees for users across the board. For example, we currently provide new users with a gift package worth up to 500 USDT so that users can start their cryptocurrency journey smoothly. Users who own KCS can enjoy an additional 20% discount on the trading fee. Users with different VIP levels and trading volume requirements have corresponding fee discounts, etc. Trading Fee Discount Coupons are also often provided to our users with different trading preferences, thus better trading experience at lower cost can be enjoyed in various aspects.
CJ: KuCoin suffered a hack in 2020, but recovered a large portion of the funds (and returned to customers for any shortfalls). Should any unfortunate incidents occur again, is this your practice going forward and do you think the IPO could help alleviate the concern from new customers that security might be an issue among cryptocurrency exchanges?
JL: The 2020 incident was a lesson learned for us and the industry as well. But what matters in the end is that we were able to prove to our global users that our team’s quick reaction time and smooth process resolution lead to a great solution in a short period under the watchful eyes of the whole world. And, in our opinion, alleviating users’ concerns about security by going public is helpful to some extent on a psychological level. But a robust security system is more crucial. Therefore, we are more willing to focus on building a global team of security experts, continuously optimizing the system and defending the platform’s indestructible security at all times, to continuously deliver the best security experience to users.
CJ: Many exchanges, such as Binance, have had well-publicized battles with regulators. Do you fear or welcome increased regulatory scrutiny in space?
JL: It is the responsibility and obligation of each global exchange to respect the laws, regulations and policies of different countries and regions, fight terrorism and resolutely maintain the fight against money laundering. It is also vital to drive the cryptocurrency industry to grow in a better way, and this is the foundation that KuCoin has maintained and followed since the very beginning of its establishment. Additionally, KuCoin has closed a $150 million pre-Series B fundraising round, which will support KuCoin’s global regulatory efforts to better serve 18 million users in more than 200 countries and regions. In general, we will continue to be the “Exchange of People”, as our slogan says, which means that we will evolve according to the needs of our customers.
