Chinese cryptocurrency exchange Huobi is planning to re-enter the U.S. market more than two years after it ceased operations to comply with regulations, one of the company’s co-founders told CNBC.
But the company might not launch an exchange and instead could focus on other areas such as asset management, after missteps last time around, according to Du Jun.
“In 2018, we tried to enter the U.S. market but we quickly withdrew ourselves because we didn’t have a strong commitment to the market at that time and we didn’t have a good management team in the U.S.,” Du said according to a CNBC translation of his comments in Mandarin.
“I expect asset management to be a bigger business than exchange, which echoes the traditional finance market as well,” he told CNBC, adding, “I don’t think exchange is a necessary element for entering the U.S.”
Du did not confirm which business Huobi will launch first in its re-entry to the U.S. A step back into the U.S. market could put Huobi in competition with companies like Coinbase. Huobi is one of the top 10 biggest cryptocurrency exchanges by trading volume globally, according to CoinGecko.
Huobi first launched a cryptocurrency exchange business in the U.S. in 2018. The following year, the company said it would freeze U.S. user accounts and added that it would return to the market in a “more integrated and impactful fashion.”
Huobi Group owns an exchange business and an asset management business called Huobi Tech, which is listed in Hong Kong.
The U.S. push is part of a bigger international expansion plan following several years of tighter crypto regulation in China, the market where Huobi was founded. Last year, Beijing looked to totally wipe out cryptocurrency mining in China and crack down on loopholes that allowed Chinese citizens to trade.
By the end of 2021, Huobi retired existing mainland Chinese users’ accounts and picked Singapore for its Asia headquarters.
Du said that Huobi has lost about 30% of its revenue from shutting down users in China. But that has given the company a further impetus for international expansion. It is exploring setting up a headquarters in Europe, in addition to its U.S. push.
“As for how many resources or staff we will deploy for the international market, we have no other choice but to use our full strength to go forward in our global strategy,” Du said. “In the past, we would explore a new market and we can always withdraw ourselves if it doesn’t work out. Now, Huobi has no other choice but to go global.”
Chinese regulation
Du praised China’s tight regulation on cryptocurrencies because it tackled cases of gambling and money laundering. The Huobi co-founder said that the regulation protects smaller investors. He said, however, other countries should not follow China’s approach because investors might be more mature in other markets.
“In China, when people lose in their investment, sometimes extreme people would go jump off the regulator’s building and investors are less mature. The government took a similar approach for Covid restriction. It has sensed danger and has taken measures to protect the safety of the people,” Du said.
Investors in markets outside China are more mature, says Huobi
“In other regions, we can tell the investors are more mature. They have more experience and they take responsibility in their investment decisions and therefore, governments in these markets do not need to take some strict measures.”
Global regulators are considering rules for cryptocurrency, from trading to how they should be taxed. This month, India proposed a 30% tax on any income from the transfer of digital assets. The U.S. meanwhile is still looking into how to regulate cryptocurrencies.SOURCE: CNBCIMAGE SOURCE: Pixabay
