Bitcoin Price: Which Countries Have the Biggest Premiums?

Bitcoin Price: Which Countries Have the Biggest Premiums?

Crypto price premiums are a thing! Which countries suffer the most and how big is the difference in price for a Bitcoin?

Up until early 2018, major cryptocurrency markets the likes of South Korea and Japan demonstrated high premiums for Bitcoin. At the 2017 peak, when the Bitcoin price was trading at around $20,000 in the U.S. spot market, Bitcoin was being traded in South Korea’s cryptocurrency exchange market for around 26,000,000 Korean won, equivalent to about $22,000. This difference is now known as the Kimchi premium.

Since then, starting with the introduction of various regulatory frameworks by South Korea to reduce regional premiums that included the prohibition of trading cryptocurrencies with foreigners in the local market, premiums in major markets have declined substantially.

Still, due to the lack of supply and the relatively high demand in some markets, Bitcoin is being traded at a premium in certain regions — some higher than most. 

Hong Kong’s OTC Bitcoin market: 2% to 4%

Following the prohibition of cryptocurrency trading by the People’s Bank of China, local banks in China were ordered not to work with local Bitcoin exchanges to prevent individuals and businesses from trading digital assets. Over time, the government of China also ordered payment processors such as AliPay to stop processing Bitcoin exchange-related transactions, according to report form Chinese blockchain publication 8BTC. 

But reportedly, individual investors have continued to invest in Bitcoin after the ban. The imposition of a ban on cryptocurrency trading by China forced investors to move over to neighboring countries like Hong Kong, essentially initiating trades in a peer-to-peer manner.

On the over-the-counter (OTC) trading platform of OKEx, for instance, investors can trade Bitcoin using Tether (USDT), a stablecoin backed by the U.S. dollar, and then sell the USDT for the Hong Kong dollar. The premium on Bitcoin emerges when investors exchange USDT that they use to buy or sell Bitcoin for HKD, similar to most peer-to-peer OTC markets. On OKEx, USDT is being traded at around $1.02 to $1.04, which indicates a premium ranging from 2% to 4%.

Japan and South Korea: 0.2%

Most fiat-to-crypto exchanges in Japan and South Korea more or less follow the price trend of the U.S. spot market for Bitcoin. On Upbit and Bithumb, two of the biggest cryptocurrency exchanges in South Korea, Bitcoin is being traded at 9,900,000 Korean won, equivalent to $8,365. On Coinbase, Gemini and Kraken, Bitcoin’s price, as of Oct. 12, 2019, is hovering at around $8,345, indicating a slight premium of less than 0.25%.

While South Korea remains a relatively small market in comparison to Japan, the U.S. and Hong Kong, the prohibition on foreigners trading cryptocurrencies has eliminated a large portion of the demand for cryptocurrencies. In the 2017 bull market, the majority of large-scale trades in the South Korean market are said to have come from Japanese and Chinese investors and miners, decreasing the supply of exchanges.

The Japanese exchange market is also showing a slight premium of 0.2% and has seen most of its premium decline in the past two years. For spot or brokerage buys, which involve a direct wire transfer or a transaction through a payment processor directly to the exchange, there is a premium of 3.59%. On BitFlyer’s brokerage, the price for Bitcoin buys is estimated to be 936,621 Japanese yen, which is equivalent to $8,635 — nearly $300 higher than the global average spot price.

Malaysia, Philippines, Thailand: 1%–3%

The cryptocurrency exchange markets of Malaysia, the Philippines and Thailand are mostly dominated by brokerages such as Coins, which is the largest exchange in the Philippines and was acquired by the largest ride hailing app in Indonesia called Go-Jek. Coins, which has more than 5 million users in the Philippines alone, enables users to buy or sell Bitcoin based on precalculated price like BitFlyer’s brokerage, which also typically sees a premium of over 3%.

On Coins.ph, the Philippines arm of Coins, Bitcoin has a buy price of 440,280 pesos, around $8,530, indicating a premium rate of 2.2%. BuyBitcoin.ph, the second most widely utilized brokerage in the Philippines, has a buy price of 443,300 pesos, showing a premium close to around 3%. On Coins.th, the Thailand arms of Coins, the buy price of Bitcoin is hovering at 256,637 baht, or $8,425, a premium of less than 1%.

Thailand had a dominant spot exchange called BX Thailand, but the local Securities and Exchange Commission (SEC)-approved exchange shut down on Sept. 30, citing a low level of volume. The closure of popular exchanges could result in a larger price discrepancy in the short term as volumes shift to brokerages. However, over the long term, the gap should close.

Chile and Brazil: 0.34%–1%

On exchanges that have been operating for years in South America, the price of Bitcoin closely matches that of the U.S. spot market, even on brokerages that have fixed buy and sell prices. On ChileBit, the Bitcoin price is being traded at around $8,374, with a 0.34% premium and on FoxBit in Brazil, the Bitcoin price is trading at $8,440, with a 1% premium. The premium of brokerages and spot exchanges in South America in general — with the exception of a few countries such as Venezuela and Argentina — is close to zero.

The low premium may indicate a low demand from local investors as Chile, Brazil and other bigger markets in South America are not known to have large-scale mining centers that provide liquidity to the global Bitcoin exchange market.

Unique markets: GBTC in the U.S., Venezuela and LocalBitcoins

Apart from small cryptocurrency exchange markets with relatively low liquidity, strictly regulated products that are often utilized by institutional and accredited investors to invest in the Bitcoin market consistently demonstrate substantially higher premiums.

The Bitcoin Investment Trust (GBTC), for instance, which oversees close to $2 billion in assets and enables institutional and accredited investors to invest in Bitcoin through a regulated OTC exchange in the U.S., has a share price of $9.81. Each share of GBTC represents 0.00097368 BTC, which would imply that around 1,200 shares are equivalent to the price of 1 Bitcoin.

Based on the $9.81 share price of GBTC, each Bitcoin bought through the Bitcoin Investment Trust would be worth more than $10,000. Based on the current price of Bitcoin at $8,300, GBTC indicates a premium of over 20%.

Investors pay higher premiums for products like GBTC and exchange-traded products (ETPs) because they rely on third parties to secure their Bitcoin holdings. In recent months, GBTC has been trying to enable users to invest in Bitcoin at face value without the substantial premium by operating a private placement window. Whether this will decrease the premium of GBTC remains uncertain.

‘Hurun China Rich List 2019’ Features 12 Crypto Magnates

‘Hurun China Rich List 2019’ Features 12 Crypto Magnates

“Hurun China Rich List 2019” published by Hurun Report, a research, media and investments firm, features 12 local crypto magnates.

“Hurun China Rich List 2019” published by Hurun Report, a research, media and investments firm, features 12 local cryptocurrency magnates.

The latest list was published on Oct. 10 and includes co-founders of mining giant Bitmain Micree Zhan and Jihan Wu, founder of major crypto exchange Binance Changpeng Zhao and founder of competing OKCoin — Star Xu. Lastly, Leon Li, founder of cryptocurrency exchange Huobi, is also on the list.

Mining hardware producers and crypto exchanges’ CEOs

Bitmain’s Zhan — with his net worth of 30 billion Chinese yuan (over $4.2 billion) — has secured for himself the 100th position on the list. Binance’s Changpeng Zhao is ranked 195th thanks to his 18 billion yuan ($2.5 billion) personal wealth. Interestingly, he moved up 35 positions compared to the 2018’s list.

Founder of OKEx Star Xu took the 398th spot on the list with 10 billion yuan ($1.4 billion). Huobi’s Li is placed 530th with 7.5 billion Chinese yuan (over $1 billion). Hu Dong, founder of mining ASICs producer Ebang, has reached the 684th place with a net worth of 6 billion Chinese yuan ($0.84 billion).

As Cointelegraph reported in September, cryptocurrency exchange Coinbase and Ripple, the blockchain startup behind XRP, have fallen out of the top 10 of this year’s business and employment-oriented service Linkedln’s “The 50 Hottest U.S. Companies to Work For” list.

Major Chinese Bank Updates Blockchain Platform After $50 B Transacted

Major Chinese Bank Updates Blockchain Platform After $50 B Transacted

One of China’s big four banks has released the second version of its blockchain trading platform following transactions exceeding $50 billion.

The China Construction Bank (CCB) officially released the second version of its blockchain trading platform, which reached 360 billion yuan ($50 billion) in cumulative transaction volume.

CCB will actively promote blockchain platform

On Oct. 9, Xinhua news agency reported that CCB, one of the big four banks in the People’s Republic of China, announced the release of “BCTrade 2.0,” a blockchain trade finance platform that digitizes trade and financial services between a reported 54 domestic and overseas CCB branches and 40 external organizations, including a number of state-owned and foreign banks.

The platform conducts trade and financing activities, such as accounts receivable and trade financing, and aims to provide a regulatory system for trade finance to enable real-time monitoring of various financial activities. Deputy governor of the Construction Bank Ji Zhihong said that the bank will actively promote the blockchain platform and invite more industry peers to join.

In March 2019 the CCB released its 2018 report showing that the blockchain trade finance platform by the end of 2018 had already transacted 200 billion yuan ($30 billion). 

Since the launch of the trading platform, cumulative transaction volume has to date reportedly exceeded 360 billion yuan ($50 billion). 

Eight Institutions to Get China’s Digital Currency

Cointelegraph reported in August that according to unconfirmed sources, the People’s Bank of China is giving its first round of central bank digital currency (CBDC) to online retail giant Alibaba, Internet giant Tencent, five banking organizations and one unknown entity.

Official: Alipay to Ban All Bitcoin-Related Transactions

Official: Alipay to Ban All Bitcoin-Related Transactions

Alipay, a digital payment arm of Chinese e-commerce giant Alibaba, declares that it will be banning any transactions related to Bitcoin or other cryptocurrencies.

Alipay, the digital payment arm of Chinese e-commerce giant Alibaba, has declared that it will be banning any transactions related to Bitcoin (BTC) and other cryptocurrencies.

Combating illicit players

On Oct. 10, Alipay reiterated its anti-crypto stance in a Twitter thread, which warned that the company is closely monitoring over-the-counter transactions to identify irregular behavior and ensure compliance with relevant regulations. Alipay wrote:

“If any transactions are identified as being related to bitcoin or other virtual currencies, @Alipay immediately stops the relevant payment services.”

This move follows various reports that Alipay is being used for BTC transactions.

Binance uses Alipay for buying crypto

On Oct. 9, major crypto exchange Binance confirmed on Twitter that it has begun accepting fiat currencies through online payment service Alipay and mobile messaging and payment app WeChat. 

Binance CEO Changpeng Zhao, also known as CZ, clarified that the exchange is not working directly with WeChat or Alipay, and users are still able to use them for peer-to-peer transactions.

This announcement followed the implementation of Binance’s peer-to-peer trading for Bitcoin, Ether (ETH) and Tether (USDT) against the Chinese yuan (CNY) earlier, as reported by Cointelegraph.

China’s CBDC plans

Originally founded in China in 2017, Binance made its first strategic investment in Beijing-based crypto and blockchain publication Mars Finance in mid-September. At the time, the crypto community was anticipating the People’s Bank of China to launch its own central bank digital currency (CBDC).

However, in late September, the bank shattered these expectations — claiming that it has no specific launch date for its CBDC and denying that the country is ready to roll out the new financial asset.

Binance Starts Accepting Fiat Currencies Through Alipay and WeChat

Binance Starts Accepting Fiat Currencies Through Alipay and WeChat

Major cryptocurrency exchange Binance has begun accepting fiat currencies through online payment service Alipay and mobile messaging and payment app WeChat.

Major cryptocurrency exchange Binance has begun accepting fiat currencies through online payment service Alipay and mobile messaging and payment app WeChat, CEO Changpeng Zhao confirmed in a tweet on Oct. 9.

Zhao was quick to clarify that Binance is not working directly with WeChat or Alipay, and users are still able to use them for peer-to-peer transactions. 

The move follows the implementation of Binance’s peer-to-peer trading for Bitcoin (BTC), Ether (ETH) and Tether (USDT) against the Chinese yuan (CNY) earlier on Oct. 9. The service will be initially available to Android users who already have Binance accounts registered for at least 30 days, with support for iOS to follow.

Binance’s active product range expansion

On Oct. 7, the exchange also announced the launch of the eighth phase of its lending product. Subscribers will be accepted on a first-come, first-served basis. The subscription period begins on Oct. 10 and ends on Nov. 10, while interest will be paid immediately after the term matures.

Binance’s new market maker program launched in late September, targeting users whose monthly trading volumes exceed 1,000 BTC — or can reach such volumes — and who also have quality market-making strategies.

That same month, the exchange rolled out a dedicated staking platform, enabling users to deposit their token holdings and earn staking rewards, but without having to set up their own nodes to fulfill minimum staking amounts and/or time lengths.

Binance Launches P2P Trading for Chinese Yuan

Binance Launches P2P Trading for Chinese Yuan

Major cryptocurrency exchange Binance launches peer-to-peer trading for Bitcoin, Ether and Tether against the Chinese yuan.

Major cryptocurrency exchange Binance has launched peer-to-peer trading for Bitcoin (BTC), Ether (ETH) and Tether (USDT) against the Chinese yuan (CNY).

In an announcement published on Oct. 9, the exchange revealed that the service will be initially available to Android users who have had Binance accounts registered for at least 30 days.

The exchange states that users should update their Binance Android app to the latest version in order to gain access to the new service and that it will slowly roll out support for iOS and web interfaces in future.

P2P functionality to expand

Binance CEO Changpeng Zhao has indicated in a tweet that Binance’s foray into P2P trading won’t stop with the Chinese market:

“P2P Trading, starting with China. Most of CT probably can’t use it yet, but 1.4 billion people can. We will expand the service to other regions soon.”

Skirting the Great Wall

As Cointelegraph previously reported, Binance also plans to launch an over-the-counter (OTC) trading platform in October — and this will also initially be exclusive to the yuan.

The exchange already runs an OTC trading desk for large-scale investors which raked in solid profits earlier this year.

Both OTC trades and P2P functionality have a particular significance in China, which takes a notoriously tough stance towards the trading and issuance of decentralized cryptocurrencies.

Meanwhile, the country is pursuing the development of a central government-backed digital currency, which is reportedly due for imminent launch by the People’s Bank of China.

In January 2018, Beijing banned fringe platforms, including P2P and OTC resources, tightening a blanket embargo on crypto-to-fiat trading and ICOs that was in place since September 2017.

In September, Binance made its first strategic Chinese investment since leaving the country in the wake of the Sept. 2017 crackdown. It reportedly participated in a $200 million funding round of Beijing-based Mars Finance, a China-based crypto and blockchain publication.

Ex-Federal Prosecutor: US Blocking Libra Has National Security Implications

Ex-Federal Prosecutor: US Blocking Libra Has National Security Implications

Andreessen Horowitz partner Katie Haun says blocking Libra will create national security implications for the U.S.

Ex-federal prosecutor and now Andreessen Horowitz partner Katie Haun has argued that the United States blocking Facebook’s Libra digital currency will have national security implications.

Haun’s comments were reported in a CNBC profile published on Oct. 6.

“Frankly a dangerous precedent” to shut Libra down

Andreessen Horowitz is a founding member of the Libra Association, the Switzerland-headquartered nonprofit consortium established to govern the Libra token. 

Speaking of the planned cryptocurrency, Haun noted that the social media titan’s project was facing “the same criticisms” and misperceptions that the asset class faces more broadly. She noted:

“They were just heightened and they got more attention because of the high-profile nature of the project and the fact that Facebook was involved. I think it would be a really dangerous thing, and frankly a dangerous precedent to start shutting down technology before it’s built.”

Haun underscored her perspective that there are national security implications if the United States falls behind in terms of cryptocurrency development, pointing to plans to launch competitors to Libra by states such as China and Russia.

As Cointelegraph reported, China has been researching its digital currency project since 2014, with development work gaining speed in 2018. In August, the People’s Bank of China (PBoC) revealed that its digital currency was almost ready to launch — significantly sooner than Libra.

A top PBoC official has indicated that the currency’s organizational structure is to some extent similar to that of Libra’s and that Facebook’s unveiled project had fed back into the currency’s original design.

From the U.S. DoJ to Andreessen Horowitz

Haun, who formerly worked at the Justice Department’s National Security Division on terrorism, mafia and other criminal cases, came to crypto gradually. At first she was investigating the use of Bitcoin (BTC) to facilitate extortion and white-collar crime during her time at the U.S. attorney’s office.

Taking the view that prosecutors’ perception of Bitcoin was misguided — their position being “akin to saying ‘let’s go prosecute cash,’” in her words — she established a task force for digital currency coordination in 2015 as a resource for prosecutors and agencies.

She began hosting regular meetings and training seminars with the U.S. Treasury, IRS and other government agencies. She also started teaching a class on cryptocurrency at Stanford Law School, where she graduated.

After choosing to leave her role in the federal government, Haun’s trajectory has led to her becoming the first female partner at major crypto VC firm Andreessen Horowitz, having meanwhile served on the board of Coinbase, where she first met Horowitz partner Chris Dixon.

Facebooks’s Libra partners waver

Recently, payment processor PayPal officially left the Libra Association.

As Cointelegraph reported on Oct. 2, other major brands such as Visa, Mastercard and Stripe have been worried that Libra could harm their relationships with regulators.

Libra has created controversy with lawmakers worldwide since its inception, with a common narrative revolving around the digital currency taking power over money away from governments.

Stripe subsequently denied it was considering a U-turn. Libra developers have also outlined a roadmap for progress, revealing that nodes were already testing communication with one another.

US Response to Facebook’s Libra Is ‘Ridiculous,’ says Coinbase CEO

US Response to Facebook’s Libra Is ‘Ridiculous,’ says Coinbase CEO

The U.S. government reacted to Facebook’s Libra “like they almost want to be left behind,” says Coinbase CEO Brian Armstrong.

Brian Armstrong, CEO and co-founder of major crypto exchange Coinbase, tweeted on Oct. 5 that he expects the United States government to react to China’s stablecoin project by reconsidering its “ridiculous” response to Facebook’s Libra digital currency.

The U.S. government wants to be left behind

In his tweet, Armstrong said he believes that “the way the U.S. government reacted it’s like they almost want to be left behind.” He also voiced overall concerns over the United States possibly becoming obsolete due to innovation obstruction in a subsequent tweet:

“The way for countries to remain relevant over the long term and continue to have high economic growth is to invest in science, technology, and innovation. If the government can help here, even better. But first it needs to do no harm.”

Special interest groups block innovation

Armstrong also explained that “innovation often looks counter-intuitive and disruptive,” but “the best first step is often just to stay out of the way.” He also noted that governments are often influenced by special interest groups which “will play on fears and try to block innovation here.”

As if echoing Armstrong’s sentiment, payment processor PayPal has recently left the Libra Association, reportedly due to concerns over potentially excessive regulatory scrutiny that could follow.

At the same time, China’s Central Bank has said — contradicting previous statements — that there is no specific launch date in mind for its digital currency. 

Still, as Cointelegraph reported on Sept. 27, Chinese Fintech Theme Index has risen over 50% in 2019, outperforming the broader market after the Chinese national digital currency was announced.

CMBI Partners With Sequoia-Backed Startup to Develop DeFi Services

CMBI Partners With Sequoia-Backed Startup to Develop DeFi Services

China Merchants Bank International is partnering with Nervos Network to jointly develop new decentralized finance applications.

China Merchants Bank International (CMBI) is partnering with Nervos Network — a Chinese blockchain startup founded by a former researcher and developer of the Ethereum Foundation.

A press release published on Oct. 3 revealed that the new partnership will focus on jointly developing decentralized finance (DeFi) applications and helping Nervos to grow its network in the financial services industry.

A shift toward decentralization in finance

Nervos Network develops a suite of protocols and public blockchain ecosystem aimed at achieving the security, immutability and permissionless possibilities exemplified by the Bitcoin (BTC) network alongside smart contract functionality, Layer-2 scaling support and token economics. 

Nervos’ Common knowledge base (CKB) is its Layer-1, proof-of-work public and permissionless protocol that will be used as the native architecture for the DeFi applications to be developed with CMBI.

Commenting on the new cooperation, Nervos Network co-founder Kevin Wang claimed:

“The recent wave of high-profile blockchain projects such as Libra and JPM Coin foreshadows a shift in the financial services industry […] our partnership with CMBI will play an important role in modelling the future of decentralized finance and accelerating mainstream blockchain adoption.”

DeFi-focused partnerships

The press release reveals that CMBI’s fund made a strategic investment in Nervos as part of the $28 million it raised in July 2018 to help develop its enterprise blockchain solutions.

The funds were raised from a number of high-profile blockchain investors, including crypto hedge fund Polychain Capital and venture capital firm Sequoia China.

CMBI will also reportedly participate in Nervos’ public token sale for the CKB protocol’s native token CKByte on Oct. 16 via CoinList.

In July 2019, Nervos partnered with major cryptocurrency exchange operator Huobi Group to jointly develop a new public blockchain for DeFi services — Huobi Finance Chain.

Employee Fined For Mining BTC on Nuclear Research Center Supercomputer

Employee Fined For Mining BTC on Nuclear Research Center Supercomputer

An employee at a nuclear research center was fined $7000 for illegally mining Bitcoin on a supercomputer.

An employee at a nuclear research center in the closed town of Sarov in Russia was fined for illegally mining Bitcoin (BTC).

Convicted to pay $7,000 fine

According to a Sept. 27 article by Russian news outlet Meduza, a man was fined 450,000 rubles ($7,000) for trying to mine Bitcoin by using a petaflop-capable supercomputer at his workplace, the All-Russian Scientific Research Institute in Sarov, Russia.

Sarov, about 230 miles east of Moscow is a closed town as it is the Russian center for nuclear weapons research. 

The court delivered the verdict on Sept. 17. The nuclear research employee was convicted of unlawful access to computer information and a violation of the rules for storing information.

Using illegal electricity to mine crypto

As Cointelegraph recently reported, an Armenian IT company was accused of illegally accessing electricity and using it to mine cryptocurrencies. The Armenian National Security Service claimed that the IT company installed cryptocurrency mining equipment inside one of its hydropower plants and as a result illegally consumed 1.5 million kilowatt-hours of electricity — worth more than $150,000, locally — over the course of 1.5 years.

In May, Cointelegrap reported that the state authorities of China’s Sichuan province were investigating local Bitcoin mining farms that allegedly been built illegally. More than 30,000 Bitcoin mining machines were reportedly constructed without official approval from the local government and were subject to further examination.

China’s Fintech Stocks Soar Over 50% in 2019 Amid CBDC Anticipation

China’s Fintech Stocks Soar Over 50% in 2019 Amid CBDC Anticipation

China Securities Index’s Fintech Theme Index has soared over 50% in 2019, outperforming the broader market in anticipation of central bank coin.

China Securities Index Co. (CSI) Fintech Theme Index has risen over 50% in 2019, outperforming the broader market.

Some stocks skyrocketing 200%

According to a Reuters report on Sept. 26, stocks of China’s fintech firms have seen a notable surge this year amid investors’ anticipation of China’s launch of its own digital currency as well as the demand it would generate for security and payment services.

As such, the CSI fintech theme index — which is composed of A-Share stocks relating to fintech, including payment and settlement, capital raising, wealth management and retail banking — has gained more than 50% so far in 2019, the report notes. Another major stock, Beijing Certificate Authority, which is focused on electronic authentication services, seen a record high this month after soaring almost 200% in 2019, according to Reuters.

No CBDC in the near future, PBoC says

Meanwhile, the People’s Bank of China (PBoC) recently denied rumors that it would launch its own digital currency in the near term as the bank reportedly claimed that it has no timetable to launch as of Sept. 24. The plans were first reported in late August 2019, when a local media outlet wrote that the PBoC was almost ready to launch its government-backed digital currency in the wake of Facebook’s introduction of Libra white paper in June.

According to a report from China-based publication the Business Times, some financial analysts were expecting that the country would launch its much-anticipated cryptocurrency on Nov. 11, which coincides with the country’s Single’s Day, one of the busiest electronic shopping events of the year.

Chinese Homecoming — Crypto Companies Make Their Way Back to Asia

Chinese Homecoming — Crypto Companies Make Their Way Back to Asia

Binance’s decision to re-enter the Chinese crypto market seems to make a lot of sense to many experts operating within this space.

In what is being considered a major step forward for Binance, CEO Changpeng Zhao (aka CZ) recently announced that his firm was all set to make its first strategic investment in China since leaving the Asian powerhouse back in 2017. 

At the time, the government had enforced a local crypto trading ban that resulted in a number of firms either shutting down completely or relocating to other, more hospitable destinations.

In regard to this latest development, Binance — one of the world’s leading cryptocurrency exchanges — recently participated in a funding round estimated to be worth $200 million hosted by Beijing-based Mars Finance, a crypto/blockchain data and news provider. Some of the other big-name players that took part in the event or have previously invested in the venture include:

  • MatrixPort — A Singapore-based project headed by former CEO of Bitmain, Jihan Wu.
  • Ceyuan Ventures — A Beijing-based venture capital firm.
  • OKCoin — A digital asset trading platform providing spot trading services founded by Star Xu.
  • Huobi — One of the world’s most-used digital currency trading platforms.
  • IDG Capital – A U.S.-based venture capital firm.

Mars Finance is the brainchild of Wang Feng, a Chinese entrepreneur who has been active in the crypto space for quite some time now. It is estimated that his digital data aggregation venture, HuoXing, attracts a total of 124,000 monthly visits and ranks at around 70,947 in terms of overall web traffic.

To gain a better understanding of why Binance is heading back to China despite the country’s vehement opposition to all things crypto, Cointelegraph reached out to Sky Guo, CEO of enterprise-focused blockchain platform Cypherium, who highlighted that, “Binance understandably left in 2017, as the Chinese regulations for global interactions proved too murky for many companies.” However, he believes that the exchange’s turnaround echoes a growth of interest toward crypto from the government:

“Through its government resources, technological talent, and special economic zones, China has announced to the world that it intends to play a role in the upcoming tidal wave of decentralization. The sheer size of their market makes China impossible to ignore for companies like Binance who wish to become global household names.”

Additionally, he also pointed out that the Chinese government makes a clear distinction when it comes to its economic policy framework and the utilization of decentralized technologies. Guo believes that China is clearly looking to harness the energy and trajectory of the upcoming decentralization wave in order to benefit its national interests. He said:

“It seems as though China is wisely looking to stake its claim in this new generation of software production. Binance and its competitors need to position themselves as trusted facilitators in this new landscape. In doing so, their businesses will expand, but more importantly, cryptocurrencies will gain their validity in the eyes of governments around the world.”

Is Binance acting in haste?

Despite the Chinese government making it abundantly clear, time and again, that it is not interested in exploring crypto-related financial avenues, Binance’s decision to make its way back into the country definitely comes as a surprise — especially given the real possibility of government intervention and potential to make life difficult for the exchange and other crypto firms, both from a logistical and economic standpoint. In a conversation with Cointelegraph, co-founder and chief marketing officer of Binance Yi He said:

“Any investment has its risks. And our investment in Mars Finance is not really a “crypto investment.”

On the subject, Aries Wang, co-founder of Bibox, a digital asset exchange deploying the latest in big data analytics and AI-enhanced algorithms that optimize trades and transactions, speculated on why Binance made the move:

“Binance is looking to recover the engagement and interest of its Chinese community. Nowadays, most mainland China crypto traders would favor other large exchanges such as Huobi so in making this move back to China, I think Binance is looking to address the fact that they’ve seen a reduction in Binance’s power and influence in the Chinese market.”

A somewhat similar sentiment is shared by Jeffery Liu Xun, CEO at XanPool. He pointed out that by gaining control of a publication that has over 100,000 visitors, Binance will be able to manipulate the narrative (at least in China) for the various coins and initial exchange offerings — or IEOs — that it plans on listing on its platform in the near future. 

Also, China seems to be in a position right now wherein it needs liquidity from outside its borders. In this regard, Xun believes that Binance is serving as a means to an end for the local government and that this entire development will turn out to be a win-win situation for all involved parties. 

Related: Binance Venus Aims to Outshine Libra and Chinese National Crypto?

From a numbers standpoint, the Chinese trading community constitutes a large proportion of the world’s crypto transaction volume, so it’s unsurprising that a major exchange may be looking to re-enter the market.

Alternatively, Kyle Asman, founding partner at BX3 Capital — a business advisory firm — gave quite a unique point of view in regard to this episode. He told Cointelegraph that he believes, “Binance is working closer with the Chinese government than anyone might imagine.” Furthermore, Binance could not have re-entered the market without approval from the Chinese government:

“China needs to develop a digital payments alternative, as the powers that be there see that trend as something the rest of the world is doing: they don’t want to be left behind and want to have a horse in the race. CZ wants to have the largest cryptocurrency exchange in the world under his thumb. He sees the opportunity to be number-one.”

China exploring CBDCs with great gusto

Even though China’s hostility toward all things crypto has been quite evident for some time, the People’s Bank of China is now reportedly looking to release its very own central bank digital currency (CBDC). To facilitate this development, the government may need the expertise of established blockchain-related firms.

Related: Chinese National Cryptocurrency Turns Out Not Being an Actual Crypto

According to various unconfirmed reports that went viral last month, China’s bank is working on the aforementioned project in conjunction with a couple of market leaders like online retail giant Alibaba, internet giant Tencent as well as five other banking organizations. 

Artem Popov, co-founder of blockchain-backed investment platform Roobee, believes that by launching a CBDC, China is trying to gain a huge amount of global financial leverage — especially amid news of Facebook planning to launch its much-hyped stablecoin offering Libra in the near future. Popov further told Cointelegraph:

“Chinese authorities want to keep a strong eye on the world money supply. One more reason is tightening control over national operations. The proposed currency is not supposed to provide society with financial freedom, like bitcoin does, but rather to give the Chinese government a perfect tool to monitor transactions.”

Earlier this month, Circle CEO Jeremy Alliare stated in an interview that no one in the world was closer to launching a CBDC than China. Similarly, Michael Yuan — founder of a new decentralized marketplace, OpenBay — shared his opinion with Cointelegraph that the People’s Bank of China, like all central banking institutions, dislikes currencies that it cannot control but has no issues with cryptocurrencies or blockchain technology that can remain under its purview at all times. He also discussed the dangers Binance is facing and trying to overcome:

“Binance operates in an unregulated financial market where they can be the exchange, the market maker, the investment bank, and the early-stage investor — all at the same time. That is the source of their enormous profits. But they cannot play this game forever. They will be regulated.”

Binance re-entering China makes sense

The Asian market is of massive significance to the crypto industry for a variety of different reasons. For starters, China houses some of the largest crypto mining farms in the world. Not only that, but a number of cryptocurrency firms and exchanges (such as OKEx, Bitfinex, KuCoin, Galaxy Digital, etc.) have also set up their bases in Singapore and Hong Kong — primarily because of the logistical and economic benefits that these regions offer. Lastly, in regard to this entire situation, Yuan told Cointelegraph:

“The company is playing the long game. Most of their users are Chinese nationals, so I think it is only natural for them to invest in Chinese projects.”

Yi He of Binance also believes that the market in Asia is growing at a fast pace, adding:

“Binance team has Asian genes, but not enough engaged in China. We hope to be more engaged in the blockchain ecosystem, and the investment helps us to better understand the Chinese market and dynamics in the industry.”

What comes next?

Despite China’s ongoing crypto ban, a lot of firms operating within this space still see immense financial potential in the country. Not only that, even the Chinese government can probably greatly benefit by partnering with some established firms to create its very own CBDC offering in the easiest manner possible.

China’s Central Bank: Digital Currency Has ‘No Timetable’ for Launch

China’s Central Bank: Digital Currency Has ‘No Timetable’ for Launch

The head of the People’s Bank of China has contradicted previous comments about the readiness of Beijing’s new token.

China has no specific launch date in mind for its digital currency, its central bank has said in fresh comments contradicting previous statements.

Central bank governor: We need time to research

As local English-language news outlet Global Times reported on Sept. 24, the People’s Bank of China (PBoC) has now denied Beijing is ready to debut its new financial asset.

According to the publication, which did not quote governor Yi Gang directly, the PBoC “needs to research, test, evaluate and prevent risks.”

“China’s research and development of digital currency has achieved positive progress, but the country has no timetable to launch a digital currency so far,” it summarized.

Conflicting official accounts 

The remarks contrast with those made by deputy director Mu Changchun in August. As Cointelegraph reported, at the time, the impression from the PBoC was that the digital currency was complete and awaiting launch. 

This, he added, could happen before the end of 2020, when Facebook plans to release its own private digital currency, Libra.

The PBoC had indicated the development of its own token had accelerated as a direct response to Libra, despite authorities eyeing a digital currency for several years. 

Earlier this month, Mu suggested it would help secure monetary sovereignty and formed part of prudent economic policy planning. 

Yi meanwhile also played down significance in that area, saying the digital currency would replace part of the yuan’s M0 money supply, rather than touch M1 or M2.