Will be tough for governments to agree on a common crypto framework, says Binance CTO Rohit Wad

Rohit Wad, CTO, Binance

It’s suddenly the year of crypto tokens. Due to the recent collapse of traditional banking institutions such as Silicon Valley Bank (SVB), Credit Suisse, and Silvergate, investors are seeking safe havens and turning to crypto. As a result of this shift, Bitcoin has seen a significant rally, reaching a 9-month high on March 21.

Closer to home, India's G20 presidency this year has placed a strong emphasis on developing common global regulations for cryptocurrencies. Additionally, the Indian government has taken steps to legitimise the industry by bringing it under the Prevention of Money Laundering Act, 2002 (PMLA).

In an interview with Moneycontrol, Rohit Wad, chief technology officer (CTO) at Binance, discussed all things crypto and Web 3, innovations the exchange is working on, GPT-4 taking on the crypto world, the WazirX issue, whether a common global regulatory framework is the best way out, and more.

Wad joined Binance last year with over three decades of experience leading engineering teams at Microsoft, Meta, and Google.

Edited Excerpts:

Binance has been writing about ChatGPT and its benefits to crypto trading. With GPT-4 coming in place, how is Binance assessing the generative AI tech, and has the company been exploring definitive use cases around it?

Absolutely. The obvious ones are for our own engineers. Their productivity increased significantly when they used tools that are similar to co-pilot tools. These are tools that help engineers write better code, faster code, and test cases for the things they are working on. Another obvious use case is providing great customer service. It turns out that AI already answers more than 75% of customer questions. So we already know the types of obvious questions people ask, and they can get instant answers from our AI system. And we will invest more in generative AI to improve the accuracy of the answers and to make it more conversational so that people can go back and forth. The bot can remember the context that was provided.

The other thing that we need to watch for is privacy. You've read articles about GPT, where it can either hallucinate or, if it's learning from a large corpus of data, give you answers based on what someone else asked and give you his or her specific details as an answer. So those are the kind of things you have to think about when dealing with a user's privacy.

How is Binance exploring the Web 3 space? Any moon-shot ideas that are in development at the moment?

Yes, a few of them. Web 3, Blockchain and AI are just a complete open ground for innovation. The first is actually quite practical; it isn't so much a moonshot as it is a very practical idea. You already know that crypto transactions are traceable, and there is a lot of interest in determining whether or not there was a scam or some kind of money laundering scheme going on. As to where did the money go? Where did it come from, etc. So, unlike many other companies, we are working on block-tracing solutions for determining the flow of funds, determining which of these firms may be potentially scamming, and so on.

We are also working on Oracles, which is a technology that can help in bringing knowledge from the outside world into the exchange for your transactions, and so on. Now, the various blockchains that we look at whether it's Ethereum or Bitcoin are self-contained. And it's hard to bring outside knowledge into the chain. And so we have built the B Oracle, short for Binance Oracle that's doing that. I believe it is very, very promising. Oracles are also needed for creating smart contracts.

WazirX has been talking about likely taking legal action against Binance. What’s your current stance and where does this end?

So the WazirX case was before my time. And that case is more related to our business operations and legal team. Since the technology team, which is what I lead doesn't interact much with those, therefore, I'm not the right guy to answer those questions.

All I can say is, instead of looking at what WazirX is saying, etc., I'm just looking at what is the best way for us to service all our users, keep them safe and to bring them innovative products, whether they are on the exchange, or they're on these exciting things like the Oracles and such.

How does Binance view the India market opportunity? How big is the user base here?

We follow all the local regulations in whichever jurisdiction that we operate in. And so, without getting into specifics, I would say that we will follow all applicable Indian laws and regulations at the country level and at the state level. And India is a big market because there's so much talent in the country. I mean, if you look at startups, if you look at in general the population, and in general the willingness of people to try and be at the forefront of various things, it is just amazing. And it doesn't just relate to us here at Binance or crypto. If you look at the speed with which the Indian population learned to use WhatsApp or the penetration of mobile phones in the country, etc, it is just an astounding market.

We have been hearing that Binance was looking to set up a dedicated India team, before the WazirX issue happened. Any update on those plans? Will you be exploring setting up R&D teams here?

I grew up in India. So I would, of course, love to set up a team there. My mother lives there, my sister lives there, and we'd love to set up a team there. We know when the time is right, we would absolutely want to go set up a team there. At the moment, we are limited to a few interns. But we'd love to set up a team when the timing is right.

Those interns are for engineering teams, and technical interns would usually be for our infrastructure teams. We have a target of onboarding up to 30 interns, though right now we don’t have as many.

Any further hiring plans for say the next couple of years in India?

Binance has been hiring people throughout the crypto downturn and even now. As a result, there was no hiring freeze or layoffs. But because our hiring is at a slower pace than it was over the last two years, we are right now concentrating on the cities where we are already present.

So, in my opinion, we should set up a location or a centre in India when we believe we will have a critical mass of employees that we can attract. So I think it's a few months out at the earliest.

In your view, what can be done better to bring crypto-friendly regulations globally and in India? The Indian government during its G20 meetings has been pushing for a common global regulatory framework, how do you assess it?

This is just my opinion. So I think there is an absence of very clear regulation. As long as the regulations or the laws are very clear, then it's easier for people to follow them. That's number one. Number two, I think it is one of the ways for us to drive crypto adoption forward for ordinary people, and help in understanding these assets and see which ones of these assets are speculative. Or which ones are less speculative. Are they the right people to be day trading? Or should they buy and hold? So, essentially, that could help in education, educating the average person.

We have made a big effort through Binance Academy. And we spend a lot of time educating people. And we frequently discourage people from becoming day traders if we believe it is not the right thing for them. As people become more educated, they will want some of these assets and will ask their governments to allow them to use them in a safe and regulated manner.

But does it help you to have a common global regulatory framework as a crypto exchange to operate?

It would certainly make my life easier. Just one law. But from a practical standpoint that might be very hard.

Because for instance, in India, we have fixed deposits that are governed by some laws. Again there is a different set of laws in India that govern mutual funds. And these Indian laws that govern fixed deposits, or mutual funds, or hedge funds are even different from the American laws that govern these same things. So having just one unified law across the entire world for a tech guy would be super straightforward and easy to implement. But I think practically speaking, that might be very tough for the governments to agree on.

If you look at even income tax rates and capital gains taxes or local taxes and so on. They are different even between states. You want them to be unified worldwide? Personally, I won't be holding my breath on that one.

With three major crypto-friendly banks Silvergate, Silicon Valley Bank and now Signature collapsing in less than two weeks what has been the impact like for Binance and its operations? How are customers reacting to it?

I can answer a part of it. I'll go back to two fundamental principles that we hold dear at all times. We always act in the user's best interest. And we follow the local regulations of whichever jurisdiction we are operating in. If you look at it and say that people who have invested money in some assets might want to convert their assets back into fiat or dollars or so on, and get their money out. Now, this is what we call the Fiat Off-Ramp, which works through existing banks, when we reach out to whichever ones these are.

If these banks are paused, sometimes it can become harder for people to get their assets out. And they have to work through other mechanisms. So that is indeed a hardship for people that we do see. And this for, for all the people who are using their assets are converting assets legitimately. There are typically ways out but they can be more cumbersome than they used to be in the past.

Not just the SVB collapse, the US government too seem to be taking a stricter view of stablecoins impacting Binance stablecoin. How is the company responding to it?

This is more of a legal question. And they consult with us on what we should do on the technology side. But I would again go back and say that the technology or our services are always compliant with the law. So, if there are some banks that we shouldn't work with, then we don't work with them. If there are some coins that shouldn't be exchanged, we don't, etc. So we just follow the guidance from both our legal team as well as from the lawyers and the jurisdictions where we operate.

Binance was also in talks to build solutions for controlling Twitter bots, what’s the update there?

If we could help Twitter control Twitter bots, with a mix of both machine learning and on-chain action, we'd be very, very open to working on that. And that project right now between the two companies is still very nascent. So there's no concrete update to share.