Even if the bitcoin set new highs, the cryptocurrency community of China is feeling low. After the ban on their initial coin offerings, the Chinese government closed all of the local crypto exchanges last September. It effectively killed the bitcoin trading in a country that previously dominated the market.
Among the most prominent victims of the crackdown was Huobi. The Beiji-based exchange started last 2013. There was a time when it accounted for more than 60% of their global bitcoin trading because of the margin trading and zero transaction fees that lured the risk-loving retail investors of China.
By the end of September, other Chinese exchange operators including Huobi halted trading for the local customers. They followed government directives against the speculative investment tools. In the next months, Huobi’s spokesperson rejected a lot of interview requests from Quartz because of the sensitivity of discussing the business plans of the company.
Now, Huobi announced their comeback. The company said that they would set up a couple of crypto exchanges in Japan early next year with the Japanese financial group called SBI as their partners. The deal will represent a turning point for wallet services and Chinese transfers that are looking for a second life in the friendlier Asian jurisdictions like Singapore, South Korea, and Japan. Huobi will turn into the first Chinese company that will launch centralized exchange services that will allow trades between fiat and cryptocurrencies after the crackdown last September.
The former subsidiary of Softbank called SBI was one of the first batches of eleven companies that were given licenses for the operation of cryptocurrency exchanges by the financial watchdog of Japan last September while the country is aiming to establish itself as an industry hub. According to their announcement of a partnership deal, their agreement with Huobi includes the equity swap where SBI will acquire a 10% stake in the South Korean entity of Huobi and a 30% stake in the Japanese body of Huobi. In return for this, Huobi will purchase a 30% stake in the SBI Virtual Currencies based in Tokyo. It is an SBI subsidiary that dedicates itself to the crypto exchange services.
According to the announcement, in its peak, Huobi had 1.65 million user accounts, and they were able to record daily transaction volumes of more than 30 billion yuan. Huobi is also operating a peer-to-peer trading platform in Hong Kong that supports a centralized exchange service for crypto-to-crypto trades and crypto-to-fiat transactions that are important in the company’s operations since it closed its mainland trading business.
The other leading Chinese exchange called OKCoin plans to launch their crypto trading platforms in South Korea and Japan through partnerships with the local companies.
It has around thirty Chinese exchange operators. About half of the total were able to shift their activities overseas after the crackdown of the government. This information came from Du Jun who is the founder of the Beijing-based venture capital firm called Node Capital that focuses on the blockchain industry. A significant industry will not collapse because of a single country’s crackdowns. I believe that a good entrepreneur will not lose his strength because of the restrictions of the company.
In this sense, Du noted that the Chinese government was able to unwittingly prompt domestic crypto-entrepreneurs to see the bigger picture as well as shift their focus to the global markets. It is always better to serve six billion people compared to 1.3 billion people.