Hard landing in Japan

Five and a half months after withdrawing from the Japanese exchange market, Huobi once again tried to squeeze into the Japanese market. Li Lin suddenly announced the news in Moments, "Huobi Japan, the No. 007 exchange license of the Japanese Financial Services Agency, the system has been audited, and it provides fully compliant digital currency trading services for Japanese users."

However, according to a relevant person in charge of Huobi told odaily: "At present, we are still pre-registered and have not carried out transactions. In view of the requirements of the Financial Services Agency, we do not want to be too high-profile at present."

Three months ago, Huobi announced the successful acquisition of the licensed exchange Bittrade. In the previous seven months, Huobi Japan has successively acquired Bittrade through direct or indirect acquisitions, and finally realized a wholly-owned holding of Bittrade.

As one of the three major exchanges in China, Huobi is currently the only Chinese company that has a legal Japanese digital currency exchange license in the process of entering the Japanese digital currency exchange market.

Nine months ago, the Financial Services Agency of Japan issued a "customer removal order" to Binance.

At present, although Japan is a "bitcoin legalized" country, given Japan's relatively strict digital policies, it is not easy to successfully obtain an exchange license issued by the Japanese Financial Services Agency.

In fact, Japan strictly restricts the issuance of financial licenses for digital currency exchanges. The real reason is that in January this year, Coincheck was attacked by hackers on a large scale, which led to two waves of purging orders issued by the Financial Services Agency. Many digital currency exchanges were required to rectify. Three exchanges were cleared, and then Binance and BigONE were also included in the list of exchanges that were cleared.

Odaily learned that Japan’s control of digital currency exchanges is mainly based on the following three aspects: preventing illegal money laundering; hacking exchanges; terrorist ICO.

Taking BitFlyer, which ranks first in trading volume in Japan, as an example, the Japan Financial Services Agency or the Kanto Local Finance Bureau issued business improvement orders to it many times, and required the submission of a business rectification report every month. According to public information, Kano Yuzo, the vice president of the Japan Digital Currency Traders Association, resigned angrily because he could not bear the strict and cumbersome rectification requirements of the regulators on BitFlyer, which shows the strictness of the Japan Financial Services Agency’s supervision of exchanges.

After the Coincheck hacking incident, in addition to the 16 exchanges that hold quasi-licenses, there are more than 160 exchanges waiting for the license approval of the Financial Services Agency. Even Coinbase has not made substantial progress in entering Japan so far. The e-commerce giant Rakuten entered the Japanese domestic market by acquiring Everyone', a poorly managed digital currency exchange.

Among the 16 quasi-exchanges in Japan, Bittrade currently ranks 7th and 8th in terms of trading volume. Huobi was able to fully control Bittrade at a total cost of about 61 million yuan.

For more details of Huobi’s acquisition of Bittrade, Odaily contacted Huobi’s relevant staff on December 8. The staff said: “After two months of review, it is still in a sensitive period, so it is not convenient to explain too much.”

However, Yu Yang (pseudonym), the former director of a certain department of Huobi, told Odaily: "In order to get this matter done, Huobi's public relations have worked hard in Japan."

Regarding the launch of the Huobi Exchange in Japan, a person in the exchange industry who is also seeking to land in Japan said that the process is definitely not easy, because although Japan will issue licenses to the exchange, the Japanese government does not want foreign capital to come to Japan to "cut leeks" ", Japan's local exchanges also reject foreign exchanges, so I am very worried about the development of Huobi in Japan.

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Game with policy

Whether a digital currency exchange chooses to settle in the country or expand overseas, it is essentially a game with the policies and capital markets of various countries.

Before the "94" last year, Bitcoin China, Huobi.com and OKcoin were three pillars. After "94", Huobi closed its domestic website, OKcoin introduced users to the new digital trading platform OKEx, and Binance chose to leave Japan, which is "policy-friendly". At the beginning of 2018, as a currency-only transaction, Binance became one of the top three domestic exchanges in just a few months.

The hacking of Coincheck and Binance attracted strong supervision from Japan’s Financial Services Agency. Binance failed to communicate with the Financial Services Agency and was issued an “exit order”. In March, Binance retreated to the European island country of Malta. At this time, it has been a month since Zhao Changpeng entered the Forbes rich list. Later, the outside world once ridiculed "Binance" and "exile" together, and even called Binance an "island strategy."

On March 23, Changpeng Zhao wrote on Twitter: "Don't worry. In the long run, the result of some negative news is positive. There is a proverb in Chinese about this, in times of change, new opportunities (often better opportunities) always arise in times of change.”

The cooperation with Malta not only brought about a turning point for Binance, but also allowed Binance to clarify its encryption business roadmap. With the experience of "stepping on the pit" in Japan, Zhao Changpeng has demonstrated excellent "diplomatic" ability, and has successively established contacts with political leaders in Uganda, Jersey, Liechtenstein, Singapore and other countries.

Interestingly, after Binance left Japan, its purpose was questioned by the outside world for donating 1 million US dollars to Japan. After leaving Malta, Binance rarely talked about Japan publicly.

To a certain extent, the personal style of the head of the "three major exchanges" will determine the style and strategic direction of the exchange.

An industry observer told Odaily that Li Lin, who is known for his steady personality, has built Huobi more like a traditional company. And this "aircraft carrier" that may have financial attributes will be difficult to sail in the ocean of digital currency if it does not actively wave to the commander waving the red triangular flag at the port.

Li Lin said in an internal sharing meeting: "Don't have too many expectations for the compliance of domestic policies in the short term. For the blockchain industry, the most important policy support is not to disturb normal business operations and stable policies. environment.” Embracing regulation, Li Lin is sincere and has put it into practice.

When Hainan Ecological Software Park was officially awarded as a blockchain pilot zone, Huobi China headquarters also moved into Hainan Ecological Software Park on October 8.

Xu Mingxing said twice that OK can be handed over to the country at any time; He Yi said that Binance is a nationalized company and will actively cooperate with domestic policies; Li Lin directly established a party branch.

According to Yu Yang, as early as a year ago, Huobi wanted to benchmark against the US dollar, Japanese yen, Korean won and Australian dollar, using the United States, Japan, South Korea and Australia as strategic fortresses to conquer overseas. More importantly, in the process of seeking legalization of digital currency, Huobi will give priority to these countries that do not reject digital currency but have a relatively complete regulatory system. However, in the Southeast Asian market, which is more open to digital currency policies, Huobi will not. urgent.

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respective strategies

To a certain extent, the game of the three major exchanges is also a thinking game between Li Lin, Zhao Changpeng, and Xu Mingxing. The game usually uses the necessity and differentiation of business models to compete for traffic to occupy the market.

Among the three major exchanges, Binance was the first to launch the platform token BNB in ​​July last year. One of the functions of BNB is that users can reduce half of the transaction fee when using BNB, which has attracted a lot of traffic for Binance. Subsequently, Huobi launched the platform token HT in January this year, which was used to vote for the listing of the currency. OKEx followed closely and listed OKB in the form of proportional dividends.

In June, OKEx and Binance successively launched the "Digital Asset Alliance Program" and "Digital Asset Exchange Open Alliance Program", and Huobi also launched Huobi Cloud, which provides one-stop services.

Previously, Binance launched a public chain plan for the generation, circulation, notarization and confirmation of tokens in the future trading system. Subsequently, Huobi and OKEx also announced their respective public chain plans.

These projects can be summed up in one sentence, Huobi does not have to do what Binance has to do, but OK cannot be left behind.

Binance was the first to discover Malta, known as the "heart of the Mediterranean", and then OK also took a fancy to it. After three months of preparation, OKEx announced on July 2 that it would change its registration to Malta, and OK Capital, a subsidiary of OK Group, established its cornerstone RnF Finance Limited (RnF) in Malta this month.

Li Lin is nicknamed "The King of Huobi Forest". According to Li Lin’s disclosure in his internal sharing meeting, the core of Huobi’s future will be in the layout of exchanges, wallets and IM, focusing on building a global industrial chain. At the same time, Li Lin believes: "Regulatory policies are becoming stricter, the trend of compliant operations is becoming clearer, and the risk of non-compliant operations is getting higher and higher. Huobi insists on business compliance as a strategic direction."

The difference from Huobi is that Binance focuses on the global layout of the entire industry chain, from exchanges, wallets, incubation, etc., to open up the entire upstream and downstream ecology. Perhaps, for Changpeng Zhao, who "will not sell bitcoins and only keep money for food", the future financial world will be dominated by cryptocurrencies, not US dollars or gold.

Over the past year, people in the circle have discovered that the two main heads of Binance, Zhao Changpeng and He Yi, are running around the world, one is in charge of global strategy, and the other is in charge of global user operations and marketing.

He Keren, head of Binance’s market, told Odaily: “Google started with search, but it’s not limited to search. It’s the same for Binance. Binance hopes to open 1-2 fiat currency exchanges on every continent in the world. At the same time, we It will also build an ecosystem for the entire industry.”

As far as expanding the overseas digital currency trading market is concerned, Binance, Huobi, and OK have different focuses. In addition to promoting the legal currency exchanges that it lacks in regions such as Malta, Uganda, and Jersey, Binance also focuses on promoting decentralization. Decentralized exchanges, since all transactions in decentralized exchanges are carried out on the chain, in countries like Japan that have strict KYC scrutiny, they will face compliance issues.

For Binance, Uganda, which is economically backward, is more suitable for the implementation of basic blockchain application scenarios due to the lack of traditional Internet barriers. Singapore, where capitalism is relatively developed, has detailed digital currency regulatory measures, which is more suitable for Binance to expand its blockchain business here.

The pace of overseas expansion of the OK Group is also significantly different from that of Binance and Huobi. OK, which focuses on the output ratio, is obviously more cautious in its overseas layout, and under the continuation of the style of bulk traders, exchanges that provide high-risk leverage and futures contracts have absolute strategic significance in OK's overseas layout. At present, exchanges have been opened in South Korea, Hong Kong, the United States and other places, and local licenses have been obtained in the Philippines.

It has been a year since "94". In more than a year, the domestic exchange market has formed a "new big three" dominated by Huobi, Binance, and OKEx. In the past six months, digital currencies have fallen into the abyss of a "bear market", and global transaction volume has dropped sharply. Under such circumstances, every time a new battlefield is opened up, its significance is self-evident.