Thread by @DoveyWan

My counter arguments with cross-boarder bias. Thread👇🏻

1. “Regulation Arbitrage” is an over-simplified western fairy dust.

Most Asian exchanges, compliant or not, are doing what Binance is doing: aggressively listing new assets with minimal KYC, such as Huobi, KuCoin, Upbit

https://twitter.com/ntmoney/status/1113929659488411648

2. you need to achieve ONLY 3 competitive advantages to make a successful ex- security, liquidity and cost of trading. Binance has the best liquidity with lowest trading fee, so far no major security breach. Reg-arb alone can’t magically get you depth on book or robust backend

3. Reg-arb is not how Binance made it - when it started in mid 2017, Huobi, Okex, Yunbi (Yunbi’s vol = all others combined back then) were the leading ones. All of them “reg-arb” in the western term, leaving no room for another exchange if reg arb is the only advantage 🙃🙃🙃

4. Binance success was largely due to 1) first to distribute NEO gas when no one else can. Attracted lots of NEO holders 2) got the gut to keep it running when all others were chicken out during the major China crypto ban in 2017 Sep, the 3 months afterwards were “Golden Vacuum”

5. Its post 2018 success I would attribute to 1) world class customer support 2) real trading depth when all others wash trade for vanity metrics on CMC 3) decent technical API and eng support in mainnet swap. “Does not enable anything new” is unfair.

6. It’s a centralized play, BNB’s success ultimately depend on the people behind it.

To many BNB holders the conviction comes from centralized trust on @cz_binance + his team. This is the same as $TSLA holder trusting Elon Musk. I see no problem with that rationale

7. @cz_binance and @heyibinance are the one and ONLY one dual of serial crypto exchange entrepreneurs, with proven track record building two biggest ex in a row

If I have to pick one ex coin, $BNB seems to be the most reasonable bet. Avg ppl won’t have access to Bakkt stock

8. Binance adopted a famous strategy of Mao, which is how he could win the China civil war with extreme inferiority

“农村包围城市” use rural areas to encircle cities, which is the biggest miss of many “compliant” exchanges when they are busy lobbying SEC or making legal filling

9. Its countless effort in area like Turkey, Uganda, Argentina and other states where sound money is mostly needed is huge

In most part of world easy access to crypto is missing, especially in area where fiat is a real shit.

this is exactly how “农村包围城市” will win

10. Unlike conventional business, Binance is not a ONE company, it’s MANY nested companies

For Binance to maintain its market share, it’s adding fiat on-ramp such as its Singapore exchange with institution backing, and many more too come

The brand is what means something

11. With 300employees and no HQ, execs teams fully decentralized and almost no VC funding, this alone is a top business and organizational innovation

Its capital efficiency maybe unreal in western world, but there are other recent China tech IPO $QTT $PDD at the same level

12. Banks are prone to new business and profits, if Tether can get a bank account, I see no problem for Binance gain decent Banking relationship down the road

institutional money? Its Singapore exchange is backed by Vertex, the venture arm of Singapore sorvegin fund 👌🏻

Finally, “regulatory arbitrage” is not arbitrage but a outcome of the game theoretical dynamics of different countries’ attitude towards crypto. Like when China bans it I found it extremely bullish as it means US will never ban it

Same thing apply to Japan, Korea, Singapore etc

There is always somewhere in the world welcome a certain policy, a certain business, a certain social institution (gay marriage, polygamy), a certain ritual

I’m always confused what defines “arbitrage”. It is a mutual choice of both sides, it’s what makes human society liquid