Editor's Note: This article comes fromStar Media STARMEDIA (ID: Star_Media1), Author: Deep Alchemy, reproduced by Odaily with authorization.

Star Media STARMEDIA (ID: Star_Media1)

, Author: Deep Alchemy, reproduced by Odaily with authorization.

After the regulation was released, the exchanges became more and more popular, and the license became a business experience.

Countries that can spend money to buy licenses include: the United States, Japan, Switzerland, Thailand, Singapore, Canada, the Philippines, Estonia, Australia, the United Kingdom, etc.

Among them, due to "good quality and low price", the most popular license is the US MSB, which only costs tens of thousands of yuan.

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Barbaric blockchain, forcing supervision to take action

The Bitcoin white paper was published in 2008. Since then, the encrypted digital currency represented by Bitcoin has fully entered the stage of history.

So far, the history of digital currency has only been more than ten years. During this period, the digital currency market experienced ups and downs and developed wildly.

Although participants are actively developing blockchain technology and exploring blockchain application scenarios, there are also market manipulation, ICO financing chaos, and fund/pyramid schemes under the banner of blockchain.

In addition, Bitcoin has the function of currency transaction settlement, bypassing banks for international payments, and money laundering, which is a subversion of the existing financial system.

Therefore, the supervision of encrypted digital currency is imminent, especially after the Political Bureau of the Central Committee of the Communist Party of China raised the development of blockchain technology to the national level in October 2019, and accelerated the development of blockchain technology and industrial innovation, supervision is particularly important.

In November 2019, supervision arrived as scheduled. Beijing, Shanghai, Shenzhen and other places have successively introduced corresponding rectification measures to provide risk warnings for virtual currency speculation and to investigate illegal companies related to the blockchain.

During the period, the market fell, and the price of BTC dropped from $10,000 to $6,500. For a while, the entire currency circle was in turmoil, and in just one month, it experienced the "two heavens of ice and fire".

Star Media believes that supervision is essential for the blockchain to move from the niche to the mainstream and promote the healthy development of the industry. Although encrypted digital currency was born in a group of geeks who advocate liberalism, there is no place outside the law in this world.

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Under the pressure of compliance, the exchange has become the hardest hit area

As an important link in the blockchain industry, encrypted digital currency exchanges not only undertake the function of transactions, but also control the right to speak in and out of fiat currency channels, digital currencies on and off shelves, and new projects (IEO). It is considered to be one of the proven money-making fields in the currency circle.

Data show that the US exchange Bitfinex had a net profit of US$326 million in 2017 and US$404 million in 2018; Coinbase’s total revenue was approximately US$520 million. Binance's net profit in 2018 was approximately US$446 million; Huobi's 2018 revenue was estimated to be approximately US$450 million based on HT repurchase data; OKEX's 2018 fee income was approximately US$424 million.

Faced with the big cake of the exchange, the country naturally cannot remain unmoved, and it is not surprising to introduce regulations on the exchange. Among them, the most stringent regulatory measures were the "Announcement on Preventing Financing Risks of Token Issuance" jointly issued by the People's Bank of China, the Central Cyberspace Administration of China, the Ministry of Industry and Information Technology, the State Administration for Industry and Commerce, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the China Insurance Regulatory Commission on September 4, 2017. ", the announcement pointed out, "No organization or individual may illegally engage in token issuance financing activities, and all types of token issuance financing activities should be stopped immediately."

As soon as this move came out, the domestic exchanges were closed again, and those going overseas, the exchange industry experienced a reshuffle. It also teaches an important lesson for exchanges - seeking compliance.

On the road to compliance, the largest exchange, Coinbase, is undoubtedly the leader. It was established in San Francisco in 2012 and is the first bitcoin exchange with a formal license in the United States. The application for a currency trading license has been approved by the US Securities Regulatory Commission (SEC) and the US Financial Industry Regulatory Authority.

In addition, mainstream exchanges Binance, Huobi, and OKEx have successively announced their respective exchange licenses. "Helen" of a financial company that develops overseas exchange license business told Star Media that "mainstream exchanges basically have two or three licenses."

In terms of geography, open countries such as the United States, Canada, and Singapore are more friendly to encrypted digital currencies. Exchanges can apply for relevant licenses to legally carry out blockchain asset trading services locally.

Therefore, even if some exchanges obtain legal licenses abroad, they are not "death-free gold medals" in China.

Then why are exchanges whose main business entities are in China keen to apply for one or more foreign licenses?

"That's true, but if you don't have anything, it's like swimming naked," Helen said. "With a license, at least you are legal in a certain country, but China doesn't allow it."

"Jiaxue", the manager of another legal company that also operates overseas license business, confirmed this point: "Chinese users still recognize licenses. You don't have a single (foreign license) in your hand, so you have nothing to say to the outside world. And the license application After coming down, doing business overseas is at least legally compliant and in compliance with supervision.”

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Help the exchange "smuggle" and earn license money

So, what is the inside story of applying for an overseas license? Star Media will take you to find out.

First of all, not all countries open cryptocurrency trading licenses, only countries that are friendly to cryptocurrency and open to blockchain technology will issue them.

According to Star Media's incomplete statistics, countries that have issued or can apply for such licenses include: the United States, Japan, Switzerland, Thailand, Singapore, Canada, the Philippines, Estonia, Australia, and the United Kingdom.

According to Helen, “The licenses currently recognized in the market are generally Estonian, because their countries recognize digital currency.”

Subsequently, Helen issued an overseas license information.

From the information, we can see that the countries that can apply for licenses include the United States, Canada, Estonia, Singapore and other countries; the period for license applications ranges from 17 working days to two months; the submitted materials include the identity information of the chairman, company name, etc. Materials that need to be submitted for basic information and country-specific regulations.

In terms of price, MSB licenses in Canada, the United States and Singapore are the cheapest - only 15,000 US dollars (equivalent to about 105,000 RMB); Estonian licenses are moderately priced at 30,000 US dollars; Australian ASIC licenses need 75,000 US dollars; The highest quotation for a Token license is USD 80,000.

Jiaxue’s company’s offer for an American license is lower, “US$12,000, let me make 80,000 RMB”, but the price for an Australian license is more than double, “Australian US$35,000”.

Due to "high quality and low price", the most popular license is the US MSB. The full name of MSB is Money Services Business. It is a type of financial license supervised and issued by Fincen (the Financial Crimes Enforcement Agency under the U.S. Department of the Treasury). The main objects of supervision are businesses and companies related to money services, including digital currency and virtual currency. Transactions, ICO issuance, foreign exchange, international remittance, etc.

Therefore, the Matcha Exchange has also obtained the US MSB license recently. According to the above quotation, it is not rigorously speculated that it will cost no more than 15,000 US dollars; previously, Matcha "successfully obtained the MTR license issued by the Estonian financial department" on December 20, 2019, and the estimated cost is about 30,000 US dollars.

An industry insider said, "Why didn't you get a license before the supervision, but only spent money to 'buy a license' at this time point? Under the heavy blow of the state, Matcha can do two "legal and contractual licenses" for less than 50,000 US dollars. Regulations' advertising, this card was played brilliantly".