Friday, October 27, 2017

Chinese Cryptocurrency Exchanges Looks to Migrate to Other Countries

Due to the Chinese government's crackdown last month, bitcoin exchanges in China are looking to continue their businesses in cryptocurrency-friendly countries. Nineteen Chinese companies are said to be applying for a license to operate in Japan, while others are considering Singapore, Hong Kong, and South Korea.

These cryptocurrency exchanges are reportedly seeking to migrate their operations to other Asian countries that are more cryptocurrency-friendly, following China’s clampdown on crypto trading and initial coin offerings (ICOs). According to Bloomberg:
They’re applying for licenses in Japan — solo or via partners — setting up over-the-counter shops in Hong Kong, or laying the groundwork to operate from Singapore and South Korea.

Hong Kong-based Lennix Lai, the financial market director for Okex exchange, believes that there is enough demand. He said, “as formerly one of the biggest operators in China, we think we have a good chance of competing globally.”

Licenses and Partners in Japan

Japan has already legalized bitcoin as a method of payment in April this year. As a consequence of this legalization, cryptocurrency exchanges are required to register with the country’s Financial Services Agency (FSA). The agency granted licenses to eleven bitcoin exchanges in Japan for the first time last month. Out of the Chinese exchange seeking to operate in Japan, Bloomberg noted:
There’re at least 19 companies applying for a Japanese license.

While some are applying for a Japanese license, others are looking for local partners. For example, the Hong Kong-based exchange, Binance, is looking for local partners and also considering acquiring an operational exchange, CEO Zhao Changpeng revealed. Beijing-based exchange Bixin has also expressed interest, the news outlet detailed.

Mike Kayamori is Head of Quoine, the Singapore-based exchange with a strong presence in Japan. He commented, “we’re talking to almost all of those guys. They’re all desperate now.” He expects to sign a deal with a Chinese partner by the end of this year, the publication noted, and quoted him saying:
There’s a lot of Chinese retail people reaching out to us, but we can’t handle it. So if a Chinese partner can handle all of those and they connect to us, that will be much easier.

Early this month, ECNC reported that one of Japan’s largest bitcoin exchanges, Coincheck, had received many requests from Chinese companies to list tokens on its exchange following China’s ICO crackdown.

“We are receiving hundreds of requests from Chinese startups and startups around the world asking us to list their tokens, after the Chinese government banned ICOs,” Kagayaki Kawabata, International Business Developer at Coincheck told Global Times. While he said Coincheck is careful about listing ICO tokens, he noted that “if Chinese tokens can meet the criteria that exchanges will set, Japan will be a great place to list tokens.”

Other Friendly Shores

Japan is not the only contender for Chinese exchanges to flee to. Some Chinese investors have “resorted to peer-to-peer trading over messaging apps like Telegram since the clampdown: basically Chinese investors can still buy from individuals who’ve access to overseas markets,” Bloomberg described.

To capture this market, bitcoin exchange Okex is setting up its own over-the-counter trading platform in Hong Kong, which Lai expects to attract customers primarily from China, Russia and the U.K. “They’re now trying to recruit people to act as third-party market makers, who’ll chaperone deals, make money off a spread and then split the revenue with Okex,” the publication detailed.

Additionally, some Chinese exchanges are turning to Singapore as a backup option. Recently, the managing director of the Monetary Authority of Singapore (MAS), Ravi Menon, said the central bank has no plans to regulate cryptocurrencies. The country is working on formalizing the payment services regulation which will affect some activities relating to digital currencies.

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Lebanon's Central Bank Governor Disses Bitcoin at Digital Currency Launch

The bank that prints the money used today in Lebanon plans to launch its own digital currency.

Announced Thursday by Riad Salameh, the governor of the Banque du Liban, Lebanon's central bank, it's not yet clear if the project will be based on blockchain technology, though the idea appears to have been addressed in conversation.

According to local news source The Daily Star, Salameh used the opportunity to underscore why cryptocurrencies, which utilize blockchain, were ineffective in serving as national currencies. The comments were made at the 7th Corporate Social Responsibility Lebanon Forum, as part of the conference's opening ceremony.

Salame told attendees:
"These [bitcoin] are not currencies but rather a commodity whose prices rise and fall without any justification. For this reason, BDL has banned the use of this currency in the Lebanese market.

Elsewhere, he dismissed the cryptocurrency as "unregulated," while reportedly referring to the technology as a threat to current payment systems.

However, Salame was bullish on the idea that money will eventually be digitized.
"We understand that electronic currency will play a prominent role in the future. But BDL must first make the necessary arrangement before taking this step and develop [a] protection system from cybercrime," he said.

No further details nor timeline were reported, and as such, it's possible that Banque du Liban will use other forms of technology to create a centralized digital currency.

Such an option has been pursued in countries like Ecuador and Sweden, though other countries, such as China, are exploring the use of blockchain.

Still, more details should be forthcoming about Lebanon's plans, that is if a proposed timeline is any indication.

According to the report, Salameh said the digital currency will "be available in the next few years."

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