Bybit CEO Ben Zhou reveals the management strategy of the "second offshore CEX"

How did Bybit establish itself as the second-largest player in the cryptocurrency exchange industry? The answer lies in CEO Ben Zhou’s unique strategic thinking and deep understanding of the industry. In an interview in Singapore, Ben Zhou shared in detail his personal background, the evolution of Bybit from its founding to the present, how the company responds to market competition, and its strategic choices regarding the regulatory environment.

From Personal Background to the Founding of Bybit

Ben Zhou’s career began outside the crypto industry. At age 11, he moved to New Zealand, and after graduating from university in the United States, he worked at a major company in New York. Later, he was dispatched to Suzhou to work on aerospace projects, but eventually grew bored with this work.

The turning point came in the foreign exchange market. Through a Japanese classmate, Ben Zhou joined a small forex company, gaining practical experience in the industry for seven to eight years. This experience became a crucial asset for the later founding of Bybit. “Among many CEX founders, I am truly the only one with retail exchange experience. This gave us a significant advantage,” Zhou points out.

In 2015, when China tightened foreign exchange regulations, Ben Zhou began seeking new opportunities. Between 2016 and 2017, as the crypto industry grew rapidly, he was dissatisfied with frequent downtimes on existing platforms like BitMEX and OKX. In 2018, he founded Bybit with a clear vision to build a better derivatives trading platform.

Strategic Turning Point: From Derivatives to Diversification and a Return to Specialization

Bybit’s development can be divided into three phases. The first phase was when it expanded market share by surpassing BitMEX in product experience and offering no-KYC services. The second phase was during the previous bull market, characterized by aggressive business expansion.

In 2021, Zhou faced a problem. Despite high-quality derivative products and positive user feedback, conversion rates were extremely low. “Out of 100 crypto users, only about five might trade derivatives,” he realized. Recognizing this market reality, Zhou decided to diversify the business. He recruited the Huobi team and launched a spot trading division.

This strategic diversification brought short-term success, but Zhou admits honestly, “We grew very quickly during the last bull run, but some aspects of our system were still not sufficient. The appearance was good, but internally, optimization was needed.”

Currently, Bybit is shifting towards a new strategy: a return to specialization. “The core advantages of centralized exchanges in the future will be liquidity and product specialization,” Zhou states. As global compliance requirements tighten, simply offering broad services will diminish competitiveness. Instead, having a core team with advanced technology and expertise to build optimized systems like UTA (Unified Trading Account) is crucial.

Customer Acquisition Strategy: Focus on Project Partnerships

Zhou emphasizes that Bybit’s customer acquisition strategy differs significantly from other major exchanges. “Our approach is different; we act more like an infrastructure provider, with the projects themselves as the main players.”

Specifically, Bybit prioritizes direct cooperation with projects and communities over relying on KOLs or agents. It has partnered with key infrastructure companies like Circle (USDC), Copper, and Fireblocks, and was among the first exchanges to collaborate directly with certain projects.

This approach contrasts with Binance’s strategy, which centers around its own ecosystem (like BNB) and limits cooperation with external projects. Bybit, on the other hand, provides resources to projects and supports their development. “We are the ones creating the road, not the stars of the nightlife in the city. We guide customers toward projects, and how those projects develop is up to them,” Zhou explains.

The TON Ecosystem and the Reality of New User Acquisition

Bybit’s investment in TON was part of a recent round about six months ago. Zhou explains, “When we first engaged with TON, they hadn’t yet found a clear development path. They had a huge user base, but converting those users into ecosystem users was always a challenge.”

However, TON’s combination of gamification and token rewards dramatically boosted new user acquisition. A single token brought in millions of registered users, with about 400,000 to 500,000 depositing users. Most new users came from Eastern Europe, Africa, South Asia, especially Nigeria, India, and major European cities.

But Zhou warns, “This model is starting to be abused, and the effectiveness of new user acquisition is waning. Multiple projects are attracting the same users repeatedly. I believe the next token projects (like Hamster) will see even less impact, and subsequent projects will follow this trend.”

Competitive Strategy Against Large Exchanges: Focus on Liquidity and Specialization

Asked about competition with Binance, Zhou gave an interesting answer. “Since the beginning of this year, I haven’t paid much attention to market share. We are more focused on optimizing our products.”

Despite temporarily ranking second in spot trading volume this year, Zhou prioritizes product quality over market share growth, mainly due to the rapidly changing regulatory environment.

“As compliance requirements increase worldwide, many countries are pushing exchanges to exit or lower leverage, which could lead to a gradual outflow of high-quality customers,” Zhou explains. As a result, the competitive landscape for offshore exchanges is likely to fundamentally change.

Institutional clients and experienced traders will find ways to adapt to new compliance standards. That’s why Bybit focuses on specialized products and high liquidity for this segment. The introduction of UTA (Unified Trading Account), which allows more efficient management of multiple margin accounts, exemplifies this strategic focus.

Web3 Wallet Strategy: Preparing for a New Era

Amid rising regulatory pressures, Zhou notes, “Web3 is for the compliance market, and many users can no longer trade on global centralized exchanges.”

When a market tightens compliance, the products that centralized exchanges can offer become limited. Under such circumstances, demand for DEX (decentralized exchanges) and Web3 wallets increases.

Bybit’s approach is “not doing everything ourselves but acting as a broker.” Through partnerships with projects like MetaMask, it aims to build a liquidity-based profit model. “In the decentralized space, liquidity is shared among everyone, but centralized exchanges already have brand advantages. Users who have used your product before might choose your wallet,” Zhou explains.

The wallet itself doesn’t need to be complex. The key is to provide users with small ongoing incentives that create a sense of benefit, gradually building loyalty.

Corporate Culture Focused on Execution and Speed

Zhou emphasizes that “execution” and “speed” are at the core of Bybit’s philosophy. “Often, the problem is that some employees can’t keep up with our pace.”

With about 1,600 employees, Bybit is relatively small compared to industry giants. “This means we need to iterate products quickly.” Rapid progress can sometimes lead to imperfect products, but Zhou sees this as a strategic choice.

“In this industry, moving too slowly incurs high opportunity costs. Waiting for everything to be perfect means others will have already moved ahead and missed the chance.”

On personnel management, Zhou adopts a relatively humane approach. When reducing staff, he offers generous compensation and emphasizes maintaining good relationships within the offshore community. “Especially in this industry, it’s a small circle, and everyone will meet again in the future,” he says.

Distance Strategy from U.S. Regulations: Not Hiring Green Card Holders

One of Bybit’s boldest regulatory strategies is to completely distance itself from the U.S. market. “We have 1,600 employees, but none are from the U.S., not even green card holders,” Zhou states.

Having studied in the U.S. and understanding the regulatory environment deeply, Zhou explains, “I know U.S. regulations are very strict, and once you attract attention, it’s hard to get out.” As a result, Bybit has strategically avoided entering the U.S. market from the start.

This view is supported by recent moves by OKX and Binance. “I also noticed that their expansion speeds have clearly slowed down, largely due to increased U.S. regulatory pressure,” Zhou notes.

Expanding in other countries is relatively easier—hiring local staff to handle compliance can work well in Indonesia, Europe, and elsewhere. But in the U.S., top-tier personnel are often linked to political factors, making Zhou’s judgment clear: “I believe the risks in the U.S. market are very high, and it’s not worth touching.”

Dubai and MiCA: Long-term Licensing Strategy

The reason for relocating Bybit’s headquarters to Dubai is to engage with regulators and find “a truly welcoming place” for the industry. The UAE as a whole views the crypto industry as an “opportunity,” with government departments providing substantial policy support.

“This is completely different from other regions. Dubai not only offers support but also provides visas and other conveniences, making us feel welcomed,” Zhou explains.

Regarding Europe’s MiCA regulation, Zhou offers a nuanced view. As offshore exchanges grow, regulatory pressure may force some to exit the market, creating opportunities for smaller exchanges. “I think you’ll see a brutal reality this year. The top three exchanges will likely withdraw from the European market, especially in derivatives,” he predicts.

However, Bybit plans a different approach. “Yes, we will definitely obtain licenses because we intend to develop long-term in Europe,” Zhou affirms. This long-term commitment aims to transform Bybit from a “refuge” exchange into a truly institutional-grade international exchange.