CZ and Cathie Wood’s First Conversation: CEOs Who Don’t Understand Blockchain Must Be Eliminated; BTC Will Break the Four-Year Cycle in 2026

Original link: ARK INVEST: From Binance To Beyond: CZ Predicts Crypto’s Next Phase

Compiled by: CryptoLeo (@LeoAndCrypto)

CZ and Cathie Wood don't cross paths often, but whenever they do, it sends ripples through the industry. The only link between them is the crypto industry: Cathie Wood is a long-term bull on Bitcoin, and her Ark Invest has repeatedly published reports assessing Bitcoin's future potential; CZ, the founder of the industry's leading exchange, also holds a long-term optimistic view on Bitcoin.

Recently, CZ appeared for the first time on Cathie Wood's Ark Invest FYI podcast (click to watch). CZ shared his thoughts on Binance and his views on the crypto industry; Cathie Wood also recommended CZ's new book, "The Binance Life," to the audience, calling his story truly inspiring. Furthermore, at the end of the podcast, Cathie Wood mentioned the "1011" market event, clarifying that it wasn't Binance that triggered the crash, but rather tariff-related panic. The following is a concise summary by Odaily.

Traditional Finance Propels Bitcoin, AI, Stablecoins, and Tokenization

Cathie Wood: Which areas do you think have developed slower/faster than you expected?

CZ: First, I thought crypto payments would have taken off by now, but they haven't. Most people aren't using crypto for payments, and many merchants don't understand the convenience of crypto payments, which are just like Visa or Mastercard.

Over the past year, the pace of US institutional involvement in crypto has been very fast. The Biden administration hindered crypto innovation; many builders of large crypto projects were sued by the SEC, leading people to turn to Meme coins, while truly practical applications were rarely developed. But I don't think crypto development is in a vacuum right now; it's just much slower than I anticipated. I hope pro-crypto regulations in the US pass quickly so we can see more of this development and innovation.

A lot of things haven't gone as I expected, but over time, we'll fill the gaps and continue to grow.

Secondly, the rise of stablecoins and the popularity of AI Agents. I think AI will help in many ways. First, the trading volume of AI Agents is far higher than humans, and AI will use cryptocurrencies. They won't use traditional financial systems for payments; crypto is more convenient. Additionally, I think AI will increase development speed. AI Coding can significantly speed up code writing, though it's not fully automated yet (maybe it will be soon). AI can also help people build applications faster, like more user-friendly wallets, more secure wallets, and faster chains.

The development of stablecoins has also exceeded my expectations. Back in 2014 when Tether was just starting, or even in 2017 when Binance listed USDT, I thought stablecoins were just a temporary measure for holding fiat-pegged value during market downturns. Another interesting thing is that I didn't expect gold trading to be so active in the crypto industry. I recall Binance only listed a gold token about two months ago, and now it's the largest gold trading venue outside traditional markets, with gold accounting for up to 10% of futures trading volume. Crazy! And Binance recently launched oil trading. We're seeing the convergence of traditional assets and crypto, a trend that originally stemmed from the tokenization of assets like stocks.

Cathie Wood: Larry Fink foresaw asset tokenization maybe two or three years ago, which also provided ideas for traditional finance. (Even during the Biden administration) Why have these traditional assets gained such massive volume in the crypto industry in such a short time?

CZ: I think Larry certainly has his network, especially in traditional financial markets. The messages Larry conveys are seen as top-tier information by global leaders, other financial institutions, and traditional institutional investors. He has established connections with global leaders. Moreover, he is forward-looking, believing everything will be tokenized and will have sufficient trading volume. Frankly, even though I worked in traditional finance before, my understanding of the money market isn't as deep as Larry's. I was more of a technical person. His understanding of the industry and his support have greatly boosted asset tokenization. What I didn't expect is that Binance now has over 300 million users who actually have demand. As I mentioned earlier, the crypto space currently lacks quality assets. In the past four years, there haven't been many good projects, so people can only trade Meme coins, which is just one category. Now, when tokenized assets like gold and oil become available for global crypto investors to trade, especially with geopolitical tensions causing high asset volatility, the trading volume of quality assets like gold and oil will increase. It's just a matter of time.

Cathie Wood: Do you think traditional finance is embracing crypto because they believe it will reduce costs and eliminate friction? Or is it because they see this technology will stimulate more financial activity?

CZ: That's a very good question. I think they see the potential of crypto. The trading volume on Binance or other crypto exchanges/chains is there. The potential is huge, so they have to seize the trend. On the other hand, this new technology will also reduce fees and costs. So short-term profits might decrease, but trading volume will increase. Ideally, if you cut fees by 50%, your volume could be 2x, 5x, or even 10x. As this technology evolves, fees will get lower and lower. If you don't lower fees, you lose market share. Traditional finance has realized this, and it's another factor driving their rush to adopt crypto: charging customers less to attract more customers.

Cathie Wood: Yes, during a technology-driven disruptive period, the traditional world usually fights it. But now they seem to be embracing the new tech. Maybe, as you said, it's because not doing so would mean losing a lot of market share. But comparatively, crypto-native players are more likely to be winners because they aren't as constrained. What do you think?

CZ: I think there's a very delicate balance. Some CEOs of large traditional finance companies might think, "I won't be at this company for long, so I'll just maintain the status quo." They just want to do their job adequately. But the next CEO might think, "I'll be here for five or ten years, and I want the company to have a long-term vision." Furthermore, public companies usually have a short time horizon; they need to report earnings every quarter. So, there's always a balance between short-term and long-term thinking. But if a company focuses only on short-term thinking and doesn't adopt long-term strategies, they will suffer.

As you said, native crypto companies don't have that burden; they are startups. They will adopt innovative strategies. Private companies usually have a longer-term outlook than public ones. So, adopting crypto might be disadvantageous for public companies in the short term, but in the long run, the trend of crypto adoption will continue. Whoever adopts the better technology that saves costs and improves efficiency will win, and those who don't will be negatively impacted. So, even if a CEO of a large traditional financial company doesn't change in the next two years, they will eventually lose significant business and be forced to change.

Blockchain technology and AI are rapidly merging, and AI is developing faster than any other technology we've seen, providing quicker feedback. A CEO might think, if they don't use AI and blockchain, they could be fired within a year. In the internet era, if a CIO of a financial company didn't consider cloud computing, they got fired. If a CTO doesn't consider AI, they'll be fired soon. If a CEO doesn't consider blockchain, they might also get phased out. Perhaps we will reach that stage soon.

Everything Exchange: Stay open, embrace all integration

Cathie Wood: Regarding Binance, with so many competitors out there who also have vast resources, I'm curious how you've managed to stay number one in the industry for so many years?

CZ: There are several different reasons. First, we always prioritize protecting users, above our profits. So whenever there's an emergency, we protect users first. The users know this too. Second, we were lucky that our business has a broader reach. Over the past decade, regulatory uncertainty has been quite severe. Some trading platforms are more or less constrained by their home country. If that country supports crypto, they do well; if the country opposes crypto, they don't do so well.

Binance goes where it's supported. Binance attracts a small portion of users from each country or those that support crypto. These small portions add up to a large number, and a large number gives us the best liquidity. And when you have the best liquidity, users choose you. This creates a network effect. So far, we've kept the company's costs very low. Binance has a few offices, all small ones, and we don't waste much money. Our remote work culture also keeps costs low. And I really hope Binance can maintain that startup feel, even though it's a huge team now.

Furthermore, there are trust issues in the crypto industry, especially for CEXs. We've been number one for a long time, we have huge trading volumes, and we've always been very secure. This builds trust. Some comparable companies in the US have very high costs and fees, but US users have no choice but to use those platforms, creating almost a monopoly in their own market. I think the US should open up to global competition; prices will come down. Consumers would have more choices, which would also increase crypto penetration in the US, benefiting current US companies.

Cathie Wood: How do you see the future of crypto exchanges like Binance and Coinbase? We've discussed other asset classes coming on-chain. Do you think the "everything exchange" we often hear about, like Coinbase, will really trade all asset classes? For instance, prediction markets like Kalshi and Polymarket are emerging now. How do you see the future development of these exchanges?

CZ: The industry might evolve in a few different ways. Everyone wants to be the everything exchange and trade everything. This will largely happen. Binance now trades oil and gold, something I couldn't even imagine a year ago. Coinbase will likely do the same, and other exchanges will follow. Binance recently integrated with prediction markets too, and I believe other exchanges will do similar things. Some exchanges might even launch their own prediction markets if they get licensed.

With the advent of new technology, a single platform can't completely exclude middle players. You don't need that many different platforms. We don't like using the word "centralization," but this is centralization/concentration driven by network effects. At the same time, there are geographic and user differences. For example, when non-technical users enter the crypto space, they might prefer CEXs over DEXs. But once technology becomes more advanced and tools for self-custody wallets become easier and safer for ordinary people (non-technical users), they might shift to DEXs. So, it depends on which front develops faster. If 10% or 20% of the global population suddenly turns to crypto, CEXs will scale up rapidly, while DEXs will remain stable for a while. But if people gradually and increasingly move to DEXs, we might see DEX growth outpace CEXs. Currently, using a DEX still requires handling wallets, addresses, etc., which might be complicated for some. Most non-technical people don't want to deal with this. So it's hard to say which direction it will go.

I think with the SEC announcing a positive and encouraging regulatory stance towards DEXs, the US might ease up on policies and trading categories. Furthermore, the CFTC seems very supportive of the derivatives market.

Exchanges need to think about how to integrate with this, or simply launch derivative markets themselves. I think all of this might happen. The US currently has a regulatory policy advantage, and we might see exchanges in one region develop faster than the rest of the world under favorable regulations. It's hard to say, but for Binance, I encourage them to keep an open mind and be open to all open places.

Coinbase has a great opportunity. You invested in Coinbase. They've done an outstanding job over the past 14, 15 years, and they've weathered all the regulatory issues in the US. I think for a long time to come, there will be multiple exchanges coexisting.

The Stablecoin Landscape May See a Blossom of Many Players

Cathie Wood: Regarding regulation and the US, we are still waiting for more clarity, especially regarding stablecoin yields. What are your thoughts on this? I know you and Tether, or Binance and Tether, have had a very close relationship for years. We know Tether is unlikely to offer interest in the short term. How do you see this situation?

CZ: A small correction here. Binance and Tether actually have no relationship. Binance listed USDT early on, which helped Tether grow, but we have no business relationship – no equity, no revenue sharing, not even a commercial contract.

Personally, I believe stablecoins should generate yield for users, but Tether won't do this in the short term. As the early stablecoin giant, they've already become dominant without doing it. But they also leave room for competition because other newer stablecoins are offering yields.

Regarding stablecoin yield, there are different ways to do it. I think it's meaningless to say they can't benefit users right now. Regulations might say stablecoins can't offer yields, but people will find other ways. There have been discussions, like activity-based rewards? You can set up different types of accounts, different activities, different staking methods. There are always many different ways to pay people returns. If you are a business wanting to reward users, there are many different ways to do it.

I don't know how one can completely restrict yield. A business offering zero-fee trading is, in a way, providing benefits to users. At the same time, I realize we want to integrate with traditional finance, but we don't want to completely destroy or disrupt them. So we need to give them time to react and decide on regulations.

But soon, in the US or elsewhere, there will be stablecoins that offer good yields to users while being convenient for trading. Those stablecoins will win. Currently, Tether dominates, but USDC is not small, and USD1 is growing quite fast. We also see other stablecoins outside the US growing quickly. So I think the stablecoin sector is a crucial part of crypto. Whether it's low fees, user rewards, or any other business that provides better returns to users, they have a significant advantage. Competition will be fierce. If the US doesn't allow stablecoin yields, international stablecoins might stand out in the short term.

Cathie Wood: Interesting. I've discussed this issue before. For instance, people worry about traditional institutional deposits flowing into stablecoins. Do you think this concern is reasonable, or is it more like banks spreading fear?

CZ: I think this concern has some validity. On one hand, we just place assets in a relatively safe place that generates interest; it's one way. But once you enter the interest rate path, people will demand higher rates. The way to offer higher rates is to put assets into riskier investments. Compared to banks, which operate on a fractional reserve system, banks invest a large portion of funds elsewhere. They might not be able to recover funds in time, so bank runs are terrifying for them.

So far, crypto exchanges and even stablecoin issuers mostly maintain a 1:1 reserve of customer funds, and some top exchanges are undergoing audits. So, my personal view is that we shouldn't break this tradition in crypto. This tradition is worth preserving, a situation that doesn't exist in traditional finance. Crypto exchanges and stablecoin issuers should maintain a 1:1 peg and hold 100% reserves. Of course, they can also generate income through other means. For the yields we generate, if the law permits, I actually encourage companies to pass them on to users. And globally, more and more people are likely to use these stablecoins, unless they are prohibited from holding them. Fundamentally, users will consider stablecoins with good rewards, economic benefits, ease of use, and security.

Cathie Wood: When it comes to the stablecoin and crypto ecosystem, is there a conflict, where only a few major stablecoin issuers will win? You also mentioned earlier that in the early stages, we will see many stablecoins. What do you think the final outcome will be? Winner-takes-all or the opposite?

CZ: Could be winner-takes-all. But in the short term, we will see more competition than consolidation. Historically, issuing stablecoins has been quite difficult. Before the Trump administration, governments worldwide were quite hostile to crypto. For years, whenever Tether disclosed its bank accounts, those accounts were shut down. So the fact that Tether managed to maintain a bank account with massive assets while the US government tried to shut them down is like a very hard-to-master skill. To this day, I don't know how they did it. Maybe that's why they are so large. Now I think that barrier is gone. Anyone can issue a stablecoin. You can open a bank account, get a bank to support you, get audited, get 1: