State of Asia Exchanges- Part 2
Asia Exchanges: As you may have read in the last few weeks, we are rolling out a new post series for our Premium readers. It will feature recurring updates on the state of Asia Cryptocurrency and Blockchain. We have come up with 4 high-level topics, and every week we will be writing about one of these topics, and rotating through them in the following order.
- China (with commentary on recent regulatory trends, media sentiment, and touching on exchanges and company developments)
- Asia Countries ex-China (with commentary on regulations, media sentiments, crypto projects, exchanges, and company developments)
- Exchanges And Mining (
Binance, Huobi, Upbit, Bitmain, Canaan, etc)
- Crypto Projects and Funding Trends
Check out our previous pieces on China, Japan, Korea, Singapore, etc. This week, we are discussing Exchanges, specifically the Asian exchanges –
So many things have happened in the exchange world this past month. Since this is the first of our first monthly series on the topic, we are providing a deep-dive into Exchanges
We also recently saw great reception with our Quick Guide to Asia Market Entry – China, Korea, Japan, Singapore post, and we’ve shared a spreadsheet detailing the data here.
Check it out and let us know if it’s helpful for you. Thank you for reading.
This is part 2 of 2 of the series this week–we discussed Binance in part 1 of 2. In this second post of this week’s series, we’ll be discussing OKEx and Huobi and the exchanges in Korea and Japan.
OKEx and Huobi
OKEx and Huobi’s recent housecleaning, and their US and international strategies
What’s been happening:
Despite being ranked the top 3 exchanges by volume,
The company has also made progress in geographical expansion and product front. It has expanded in several regions in the last month including the Latin American market, with a trading platform that’s set to let users trade top cryptocurrencies against local fiat currencies. It has also built out a presence in Europe although have yet been given the green light to trade fiat. On the product front, the company announced a brand-new derivative product, Perpetual Swap, a peer-to-peer, virtual derivative developed by OKEx to enable traders to speculate the direction of the price of digital assets such as Bitcoin. OKEx’s new Piggybank product also enables customers to lend their fund as margin loans to margin traders.
Meanwhile, the company also had to deal with an ongoing PR crisis. the firm was forced to push back against allegations made by Hong-Kong based trading firm Amber AI over its early settlement of bitcoin cash futures contracts last week, right before the BCH hard fork.
As for Huobi, the exchange has also built
Despite such success, Huobi wasn’t able to get permission to setup fiat to crypto operation in Russia, similar to its US office. According to Coindesk,
“They consulted with us a lot, and in the end, I think, we made them feel disappointed,” Vladimir Demin, head of the Center of Digital Transformations at the Russian government-owned development bank Vnesheconombank (VEB), told CoinDesk. “They were interested in providing fiat operations, but we told them it’s impossible.”
In the meanwhile, the company created a new committee to work with China’s communist party, asserting that “it was necessary to implement” Communist Party principles and policies into private companies and maintain its foothold in China.”
What this means:
Despite being a relatively new entrant and underdog,
Recently CEO Star Xu was reportedly being questioned at the Chinese police station, which was then resolved when Star and team cleared himself. As for the Amber AI allegations, Amber AI is a well-funded quant fund based in China with a number of US crypto funds as LPs and has been one of the best performing quant funds this year. As such, allegations from the team there do not look great for OKEx.
Star Xu is also a highly controversial character. From people close to Star, they have described him as “not a visionary”, but someone with “unique and strong vision of his own”, and one with “steadfast mentality”. He is connected to the government and follows the rules, but I don’t think the scrutiny and the rumors are made without reason.
Unlike OKEx, Huobi is repositioning its strategy with an increasing focus on Asia. Forming a Communist government committee is not something outlandish. The Chinese government has been increasingly getting more involved in Chinese internet tech companies and wanting to work with them more closely as an increasing effort to centralize data and information. And it’s actually reported that “more Chinese technology companies have set up Community Party of China (CPC) branches lately, reflecting the importance of improving political positioning in the internet sector.” See more of what China and the internet companies are doing, and its relevance to Blockchain in my write up in China here.
Since the beginning of the year, Huobi has expanded into the US by hiring a head there and building out a team. Nevertheless, they haven’t been able to gather license to operate with a fiat to crypto model in the US. Whatever Huobi cannot compete on the
Between OKEx and Huobi, you can simply get an idea from the profile of the US head that they’ve hired to understand where their market positioning is. Frank Fu, head of Huobi US, was an international head of corp dev for one of China’s large tech companies, but his experience was limited to cross-border roles in software and consumer tech companies in Silicon Valley and Asia. OKEx US, on the other hand, is currently headed by Tim Byun, formerly serving 9 years at the Federal Reserve of San Francisco and then was Chief Risk Officer in a number of crypto-related companies since 2014.
See our post on Korea exchanges in the State of Crypto and Blockchain report on Korea here