China’s Ban Fails to Halt Crypto Growth
Although China outlawed crypto trading in 2021, major exchanges continue to court Chinese customers.
For example, a document submitted as part of FTX’s bankruptcy filings in November reveals that Chinese users accounted for 8% of the exchange’s customers.
Moreover, Chinese crypto firms have found a way to reinvent themselves as internationally-minded businesses.
Hong Kong Open to Virtual Assets
While mainland China may have taken a hard line on crypto, Chinese firms like Huobi have found a safe haven in Hong Kong.
There, the government’s more crypto-friendly policies and progressive regulation have helped the city emerge as one of Asia’s dominant crypto hubs.
In addition to an upcoming licensing regime for crypto service providers, the Hong Kong Monetary Authority (HKMA) has even gone as far as to ask banks to provide services to crypto firms.
For its part, Huobi has stated that it intends to be one of the first fully compliant exchanges in Hong Kong. And it is on track to receive HKMA authorization when the new licensing regime comes into effect. It has also tweeted that it is “stoked about Hong Kong’s pro-crypto policies.”
How Huobi Bypasses China’s Crypto Ban
In the wake of China’s crypto ban, Huobi’s market share plummeted. As Bloomberg reported in March, it fell from 21.6% in 2020 to just 4% in 2022. And in the months that followed the FTX bankruptcy, the company was swept up in the ensuing market turmoil.
But after taking an initial hit, Huobi has come back fighting.
In April, Huobi investor Justin Sun predicted that the business would turn a 111 million USD profit in Q2, 2023. This represents a marked turnaround from its performance in 2022. Then, the loss of Chinese customers and the costs of a major restructuring dampened profits.
What’s more, Huobi has arguably gone further than any of its competitors to accommodate Chinese crypto traders.
Beyond limiting sign-ups from IP addresses based in mainland China, Huobi does little to prevent Chinese customers from onboarding.
In a brazen show of resistance to state authorities, the exchange even directs Chinese users to apply for Dominica’s digital citizenship program as a way around the ban.
Huobi’s partnership with the Caribbean nation is part of a strategic alliance too.
Alongside TRON, and DMC Labs, Huobi has played a key role in issuing the TRC-20 token Dominica Coin (DMC). Launched in November, DMC entitles holders to Dominican digital citizenship.
A press release published upon the launch of the initiative indicates the kind of borderless digital environment Huobi is using to challenge China’s crypto ban.
By building a digital state in the Metaverse, “Dominica will go beyond the geological limitation,” the release states. It adds that it will use the program to “deeply engage in the globalization process.”
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