Bybit's growth strategy to become the world's No. 1 exchange —— An interview with Ben Chou, co-founder and CEO

I've been writing the Crypto Journey series for about three years now, and have attended many conferences, both large and small, but for me, TOKEN2049 in Singapore is a special event. I'm sure there are many people in the industry who make it a routine to stay in Singapore for a week in mid-September every year.

Interestingly, I learn, harvest, and meet new people every year, and it's a great opportunity to confirm my current location and lock on to the future. In the first place, this event itself has been growing year by year, so there is no doubt that a large number of resources are gathering from all over the world.

This year, the number of booths has clearly increased dramatically from last year. You can see this from the fact that the area was expanded by one floor of the Marina Bay Sands Convention Center. The fact that there are many exhibitors at such events is also proof that the industry is vibrant.

The Japanese speakers at this year's talk session were Arisa Toyosaki of Cega Finance, who I had previously interviewed in this magazine. Their project, which leads the industry in DeFi lending, has further increased TVL.

I also had the opportunity to meet her at a cafe at the right time, so I asked her about her recent activities, and it was an exciting time that I learned a lot. In addition to her, Sota Watanabe of Stake Technologies, who is well known for Astar, also spoke at the event, as he did last year.

This kind of event is not only for people in the industry. Anyone can participate as long as they buy a ticket. Crypto lovers who believe in the future of crypto should definitely come.

Side events will also be held in various places during the event, so you can have an exciting crypto tourism experience. You may even meet Vitalik, the founder of Ethereum, at the venue. He is much taller than you might think.

Now, the person I had the opportunity to interview this time was Ben, the founder of Bybit, which is famous as one of the top two exchanges in the world. It's an emotional feeling to see that Crypto Journey has finally reached the big names in the industry.

How did they establish themselves as one of the world's top cryptocurrency exchanges in such a short time, after being founded in 2018 among the plethora of cryptocurrency exchanges? And what does the future hold for them? I hope you enjoy this article.

Nagatomo: To begin with, please tell us about your background. What inspired you to start Bybit?

Ben: I was very lucky. Before founding Bybit, I worked at a foreign exchange called XM. It is now a famous company, but when I joined in 2010, it was still in its early stages and was not well-known. I joined as the seventh or eighth staff member and worked there as general manager for China for six to seven years.

In 2017, I learned about crypto assets due to the ICO bubble and other factors, and I was sure that this industry would become even bigger in the future.

The big reason I decided to start Bybit after that was my experience as a crypto asset trader. At the time, there were several exchanges, but there was little choice, and no exchange offered a user-friendly system. The system often stopped every time the market moved or BTC moved significantly.

I founded Bybit simply because I wanted to provide customers (users) with a better trading experience. At the time, things that were commonplace in foreign exchange trading were not possible in crypto asset trading.

I was able to use my experience at XM to establish a new exchange and solve the trading experience problems that crypto asset exchanges had at the time.

Nagatomo: As the manager of one of the world's top exchanges, you must be extremely busy, flying all over the world, but how do you spend your days off?

Ben: I play sports and go to the gym. I also play tennis, and in the winter I take my family to Niseko to ski and snowboard. On weekends, clients come to visit us, so we often go out for meals and drinks.

Nagatomo: What are your hobbies, Ben? What are you into lately?

Ben: I've been into wakeboarding for the past few years. There are no rivers in Singapore, so I basically enjoy the sea. There's a good spot on the border with Malaysia, so I often go out on a boat on the weekends and have fun with friends.

Nagatomo: What was the biggest turning point that led Bybit to grow so much?

Ben: I think the end of 2021 was the turning point. From 2018 to 2021, we operated an exchange that specialized in derivatives. Perpetual contracts and inverse contracts. Japanese people also like leveraged trading. At the end of 2021, a new term and concept called web3 emerged, and we realized that crypto assets are not just digital currencies. Every day, my team and I thought about how we could make Bybit grow even bigger. For example, if there are 100 new users who enter a cryptocurrency exchange, about five of them will be traders. The majority of people prefer spot trading and other things. In order for us to continue to expand as an exchange, we needed to build a service that could provide a good experience to users other than traders. Spot, Fiat, Earn, Bybit Card, etc., which we currently offer, were additional services that we decided on at the end of 2021.

This was a very big decision and a difficult one. However, I believe that this decision has led to Bybit's current growth.

Nagatomo: Please tell us if there are any strategies or points of differentiation that you particularly emphasize in order to establish your position as the world's top exchange.

Ben: The number one thing is the power of execution and efficiency. We are a very fast organization that makes decisions and executes them. Even when I hear feedback from senior managers who have newly joined Bybit from other exchanges, they are amazed at how quickly Bybit executes. It's so fast that what we decide today starts tomorrow. It usually takes 2-3 weeks for a new product to be discussed by the team and released online. The cryptocurrency industry is still growing rapidly, and new things are happening one after another. Recently, meme coins became popular. Before that, NFTs became popular. As the world's top exchange, we are always required to be the first to catch up on what is the most talked about in the industry. I believe that it is because we execute various ideas with a sense of speed that users gather. In terms of strategy, KOL marketing is also part of it. We are sponsoring Red Bull Racing (F1) and taking other initiatives, but in the end, the most important thing is the team's quick movement.

▶Source: Digital PR Platform

Nagatomo: Next, let's talk about regulations. Bybit is currently licensed in Lithuania, Cyprus, Australia, New Zealand, Kazakhstan, UAE, Netherlands, Mauritius, and Cayman Islands. Which countries are you aiming to expand to in the future?

Ben: In the future, we will be obtaining licenses in Europe, India, South Africa, Malaysia, Nigeria, Indonesia, and Hong Kong and Taiwan.

Nagatomo: Which of these regions are you particularly interested in?

Ben: Our biggest focus right now is Europe. Europe is a very large market for any exchange in the world. That's why we are currently working on obtaining licenses such as MiCA and MiFID, which are European cryptocurrency regulations.

Nagatomo: Why do you want to obtain licenses in other European countries even though you have already obtained licenses in several European countries?

Ben: We want to obtain the MiCA license quickly, so when choosing a regulator, the minimum requirement is that the team and infrastructure are in place.

The faster we can obtain a license, the more we can differentiate ourselves from our rivals. We had many discussions with regulators (MiCA teams) from various countries.

The reason is that some countries have large teams but poor infrastructure, while others have well-developed infrastructure but few teams. There is no point in applying for a MiCA license if the entire process is slow.

Nagatomo: In Europe, MiCA, the market regulations for crypto assets, will be gradually implemented. What impact do you think this regulatory movement will have on the industry?

Ben: I think this will have a huge impact. Because until now, it was very difficult to create websites that were in line with the regulations of each European country and operate in accordance with the rules. However, if everything is unified under the MiCA license, the rules will be unified in every country, making it much easier to operate.

In addition, if you obtain a MiCA license, you will be able to connect to banks, so more users will flow in from across countries. In our case, being able to centrally manage everything on "Bybit.eu" is a big advantage.

There are good and bad aspects to this, but one thing we can say for sure is that it will allow many users to onboard.

Nagatomo: Japan is not on Bybit's list of countries where we plan to expand. What do you think about the Japanese market, Ben?

Ben: Japan is a very interesting market. As you can see from the current data, Japan is a derivatives-centered market. Of course, if we obtain a license in Japan, we can also handle fiat deposits and withdrawals and spot markets. Bybit derivative products has been always global number two, and with the recent product portfolios provided, all traders do love it.

Of course, we are working with Japanese agents and discussing obtaining a license, but we are still in the middle of seeing what the results will be.

Nagatomo: Currently, it is said that cryptocurrency users in Japan are less than 5% of the population, which I think is a very small number.

Ben: Forex trading is very active in Japan, so in that sense I think Japan is a strong market.

Nagatomo: Recently, traditional finance such as BlackRock has entered the cryptocurrency market, and existing players are also desperate to get traditional finance involved in the cryptocurrency market. In that sense, is there a possibility that Bybit will enter into a business partnership with a traditional finance company in the future?

Ben: We are already working with institutional investors to do business. They place orders for BTC and ETH directly on Bybit and buy them. One of the reasons for Bybit's growth is that we have many institutional investors. Thanks to that, we have been able to maintain abundant liquidity.

From January of this year to the present, we have been in a bull market, and we can see that this is being driven by institutional investors. In the bull market in 2021, altcoins rose first and Bitcoin followed, but this year Bitcoin has risen first and altcoins have followed. This is evidence that demand and funds are coming from institutional investors.

We are directly onboarding very large institutional investors around the world, but at the same time, there are also brokers who take orders from institutional investors like BlackRock and distribute them to exchanges. It is now easier to see market movements and capital flows than before, and I think this trend is very good. Because anyone can easily invest in the cryptocurrency market by buying ETFs.

Nagatomo: The world's top exchanges, such as Binance's CEFU and Coinbase's Coinbase Custody Trust Company, offer their own custody services. Why doesn't Bybit offer its own custody service?

Ben: For example, if we started a custodian, would users who don't trust Bybit feel safe? Binance is No. 1 in the industry, and if you want to trade with them, you have no choice but to use their custodian.

This is not a matter of trust, but of scale and earlier presence. The same goes for Coinbase. They provide investors with custody, which gives them peace of mind. However, I think that custodians have to be third-party to make sense.

Think third-party custody will become mainstream in the future. In the case of Bybit, we use third-party custodians such as Copper and Fireblocks.

Nagatomo: What is your definition of the world's No. 1 exchange? For example, the number of users, liquidity, number of stocks, etc.

Ben: I think the number of users is the most important thing. The position of an exchange in the Web3 area and the cryptocurrency industry is to be a gateway to Web3. What I always tell my team is how many people we are onboarding to Web3 and helping them start holding cryptocurrency.

Nagatomo: What ideas and strategies do you have to become the world's No.1 exchange?

Ben: Our goal is to have the largest number of users in the world. We have clearly defined our role as an exchange.

For example, we think that our role is to develop infrastructure that connects to cities such as London, Shanghai, New York, and Tokyo and lead people there. We are not going to become these cities ourselves.

Here, cities such as London and Shanghai refer to projects such as TON and Solana. People gather because there is an ecosystem and a community.

Our role is to bring people there. That's why we always work closely with projects and actively communicate with the community.

Other exchanges are trying to build cities in addition to providing infrastructure, but if they do that, there is a risk that everything will be concentrated in the exchange, which could lead to some kind of constraints. That's how small the Web3 industry is. It's not good for exchanges to play an overly large role in the current situation.

We don't issue stable coins ourselves. For example, we work with necessary providers such as Copper and Fireblocks for custody and Moonpay for settlement, and Bybit as an exchange is focused solely on developing infrastructure.

In the future, we believe that exchanges themselves should not stand out, like the Tokyo Stock Exchange. The projects and tokens listed should be exciting, and we hope that the exchange itself will become so exciting that users are not even aware of its existence.

Providing a good product is essential in terms of acquiring users. We hold AMAs (Ask Me Anything) every month and conduct product reviews every six months. We have been doing this since the company's founding, and we believe that trust in the product leads to user support. As I mentioned earlier, ultimately, we want to make this product so that users can get what they need without even thinking about Bybit.

Nagatomo: Please tell us about Bybit's future vision.

Ben: What we are aiming for is for Bybit to become a super app that becomes a part of users' daily lives in the cryptocurrency space. Cryptocurrency has the potential to change people's lives for the better. For example, we want it to be integrated into people's lives through various uses such as paying with the Bybit card, asset management, and purchasing new tokens. Our goal is for Bybit to be the first thing that comes to mind when people come into contact with cryptocurrency.

Nagatomo: Do you have any message to your Japanese users?

Ben: We are truly grateful for the support we have received from the Japanese people over the years. Japan is an important market for us through reverse solicitation.  Although Bybit does not directly market to the Japanese market, clients can on board on a reverse solicitation basis.

The recently announced MT5 (Meta Trader 5) also reflects feedback from the Japanese people on the product. In the future, we would like to hold more product and education workshops, collaborate with universities and research institutions, hold hackathons, and plan events that will contribute to the Japanese people. Please look forward to it.

Profile

◉ Ben Zhou

Co-founder and CEO of Bybit

Since its establishment in 2018, Bybit has grown significantly to become one of the top three cryptocurrency exchanges in terms of trading volume. Ben Zhou has experience as General Manager of Greater China at the foreign exchange exchange XM, and he co-founded Bybit in early 2018, leveraging his knowledge of traditional financial markets and expertise in the global cryptocurrency market.

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