Key Takeaways
- KuCoin, now the 5th ranked exchange, were valued at $10 billion following recent $150 million fundraise
- I interviewed its CEO Johnny Lyu, who asserts the European market is key for KuCoin
- Market is currently in new crypto winter but KuCoin well-placed, Lyu states
- Lyu also affirms that KuCoin has no plans to go public, focusing on innovating and reducing crypto barriers-to-entry instead
KuCoin is the fifth-ranked exchange per CoinMarketCap, with some pretty explosive growth since its launch in 2017.
Earlier this year it raised over $150 million in a pre-Series B round, placing its valuation at a lofty $10 billion. Some other announcements have recently taken my eye, too. One I particularly found interesting was the launch of a bunch of Euro trading pairs, which as a European is nice to see.
The dominance of the dollar (as well as the much-criticised dollar stablecoin USDT) as the go-to onboarding fiat currency for crypto is truly staggering, and a fact made all the more poignant as the USD continues to appreciate against other currencies (DXY index up a colossal 11% this year).
For this and other queries, including the potential to go public, the 2020 hack suffered by KuCoin, regulation, lower fees across the industry and comparables to Coinbase & Binance, I interviewed KuCoin CEO Johnny Lyu for CoinJournal.
It was a very interesting interview, particularly given we are now dealing with a bear market in crypto, with a pullback in volume across the space and free-falling prices. The full interview transcript is below.
CoinJournal (CJ): You this week launched several euro trading pairs (which was much appreciated for me, coming from the eurozone!). Why did you do this, and what do you believe is the reason that the euro has been so far behind the dollar with regards to on-ramping into crypto?
Johnny Lyu (JL): The European crypto market is one of KuCoin’s key markets, and KuCoin is committed to providing an easy-to-use crypto trading service for European investors. In March, KuCoin integrated SEPA payments, allowing users to deposit EUR into KuCoin and for following cryptocurrency purchases.
To expand fiat-to-crypto trading services, KuCoin adds EUR trading pairs that enable crypto users to make instant conversions between Euros and cryptocurrencies. By supporting these EUR-fiat trading pairs, KuCoin strengthens its presence across the European crypto market, which continues to see strong growth.
As for the reason why EUR has not fared better than the Dollar regarding on-ramping into crypto, first of all, it is because the Dollar, as a global reserve currency and is dominant in many fields.
On the other hand, the adoption metrics of crypto in the US market are much better than in the European market. According to the Into The Cryptoverse report released by KuCoin, as of March of 2022, 27% of US adults aged 18-60 are crypto investors. But in Germany, the most cryptocurrency-friendly country in Europe, the figure is only 16%.
But good things take time, and I believe as crypto adoption rises in the European market and more innovative products emerge, EUR will move fast to catch up with the Dollar with regards to on-ramping into crypto.
CJ: Your impressive fundraise in May valued KuCoin at $10 billion. Was it a relief to secure this funding and valuation just before the market commenced its most violent downturn?
JL: This financing is inspiring. The new influx of capital will allow KuCoin to go beyond centralized trading services and expand its presence in Web-3.0. Meanwhile, this funding will help us successfully navigate the downturn in the industry, even as we are well-positioned for a prolonged bear market.
CJ: How well placed are KuCoin to weather a prolonged bear market, and has volume fallen off more than you would have anticipated during this sell-off?
JL: The crypto market is in a new crypto winter, with significant declines in market capitalization and trading volume. But for KuCoin, based on our continuous business expansion and stable global layout, our trading volume and user growth in the first half of 2022 are still impressive: In the first half of 2022, KuCoin’s trading volume, including spot and futures trading, has exceeded $2 trillion, an increase of 180% compared to the same period in 2021. Looking at different markets, Europe outperformed others in terms of the speed of growth, achieving a total volume of $481 billion with 381% growth compared with the same period last year. In Latin America, and Africa & the Middle East, a total volume of $453 billion and $392 billion have been achieved, and the growth rate is 189% and 152%, respectively.
So for us, the bear market can meet more challenges. Still, with a proper direction and firm belief in development, we are 100% confident of breaking through more for users and the industry in a fantastic way.
CJ: Do you have any plans to follow Coinbase’s lead and go public? Has the downturn affected your thoughts on potential timing to go public?
JL: We are currently focusing our efforts and resources on developing innovative products to lower crypto market entry barriers for users and promote global regulation efforts of KuCoin to better serve global crypto users. So, in the short term, we have no plans of going public.
CJ: Why would you advise customers 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 every competitor. The continuous growth, breakthrough and progress in the industry, together with our competitors, has undoubtedly promoted the rapid development of the industry.
During these years of development, KuCoin has been dubbed the “People’s 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. The trading fees on KuCoin start at 0.1%, for both makers and takers. In addition, if you use KCS to pay for trading fees, you are entitled to a 20% discount.
In KuCoin, VIP users (Lv 12) can enjoy a -0.005% Maker fee and 0.02% Taker fee at the most. As a home of hidden gems, KuCoin provides users the opportunity to be the first to touch many crypto gems. We now offer over 700 digital assets. And we provide many passive earn options in KuCoin Earn, such as staking, Burning Drops and more for users to earn under low-risk, which is more convenient in the bear market.
CJ: One recent trend among exchanges has been a battle over reducing fees. What are your thoughts on this and how does KuCoin’s strategy tie in here?
JL: This is great news for users around the world. In this regard, we have always been proud to provide the lowest trading fees for global users, which is also strong proof of KuCoin’s ambition to provide services for all classes of investors and lower the industry threshold for global users.
We have been reducing trading fees for users in all aspects. For example, we currently provide new users with a newcomer gift package worth up to 500 USDT so that users can start their crypto journey smoothly. Users who hold KCS can enjoy an additional 20% trading fee discount.
Users with different VIP levels and trading volume requirements have corresponding fee discounts, etc. Trading fee rebate coupons are also frequently provided to our users with different trading preferences, thus, a better trading experience with less cost can be enjoyed from many aspects.
CJ: KuCoin suffered a hack back in 2020, yet recovered a large portion of the funds (and made customers whole for any shortfall). Should any unfortunate incident occur again, is this your practice going forward and do you think going public could help assuage concern with new customers that security may be an issue among cryptocurrency exchanges?
JL: The 2020 incident was a hard-learned lesson 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 timing and smooth process resolution lead to a great solution during a short period under the watchful eyes of the entire world.
And in our opinion, assuaging users’ concerns about security by going public is useful to some extent indeed on a psychological level. But a robust security system is more crucial. So, we are more willing to focus on the construction of a global security expert team, the continuous optimization of the system, and the indestructible security defense of the platform at all times so as to continuously bring the ultimate 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 the space?
JL: It is the responsibility and obligation of every global exchange to respect the laws, regulations, and policies of different countries and regions, to combat terrorism, and maintain anti-money laundering resolutely.
It is also vital to push the crypto industry towards growth in a better way, and this is the basement KuCoin holds and has followed from the very beginning of its establishment as well. In addition, KuCoin closed a $150 million pre-Series B fundraising round, which will support KuCoin’s global regulation efforts to better serve 18 million users in over 200 countries and regions.
In general, we will continue to be the “People’s Exchange”, just as our slogan says, which means we will evolve based on our customers’ needs.