Caixin
Nov 08, 2021 08:28 PM
FINANCE

Chinese Cryptocurrency Exchange Huobi Ramps Up Global Expansion Amid Domestic Crackdown

China announced in September that all crypto-related transactions will be considered illicit financial activity, including services provided by offshore exchanges. Photo: VCG
China announced in September that all crypto-related transactions will be considered illicit financial activity, including services provided by offshore exchanges. Photo: VCG

Cryptocurrency exchange Huobi Global expects to lose half of its users and see a 30% drop in revenue this year, as a result of China’s ban on crypto-related transactions.

Huobi is on track to close all of its existing China-based accounts by the end of the year in compliance with government regulations, Jeff Mei, director of global strategy at Huobi Group, the parent of the exchange, told Caixin in an interview.

The exchange has already shut down derivatives functions for Chinese users, Mei added.

To ease the impact on its bottom line, the exchange is ramping up efforts to attract retail clients in overseas markets including Ukraine, Russia, Southeast Asia, Latin America, Europe and the Middle East.

It will also target institutional investors in London, the Cayman Islands, Switzerland, the Netherlands and other financial centers.

“These are areas with high crypto adoption, high amount of user education with crypto uses and high trading volumes,” Mei said.

The company, which is marking its eighth anniversary this month, is also accelerating the development of other business streams, including research, decentralized finance products, asset management and cloud mining. It will also be rolling out more derivative products in the near future.

China announced in September that all crypto-related transactions will be considered illicit financial activity, including services provided by offshore exchanges. Chinese nationals who work at offshore virtual currency exchanges and organizations that provide promotional, payment and technical support to them will be investigated.

The notice — released by 10 government agencies including the central bank, the top court and the market and cyberspace regulators — is the most detailed and toughest blow dealt to the industry by authorities thus far.

Virtual currency exchanges such as Binance, Huobi and OKEx had previously served Chinese mainland customers whose transactions were routed through their banks or fintech platforms that offered nonbank payment services such as Alipay.

Contact reporter Kelsey Cheng (kelseycheng@caixin.com) and editor Bertrand Teo (bertrandteo@caixin.com) 

Download our app to receive breaking news alerts and read the news on the go.

Get our weekly free Must-Read newsletter.

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code