Huobi relocates spot-trading business to crypto-friendly Gibraltar
Huobi, a former ‘big three’ platform in China, is moving its spot-trading business to Gibraltar as it takes steps to leave the mainland, where the country’s regulators intensified a crackdown on cryptocurrencies.
Gibraltar’s financial services watchdog has already awarded the Seychelles-based company its bespoke license for blockchain firms using distributed ledger technology. According to a report by Bloomberg, Huobi’s co-founder Du Jun now confirms that its Gibraltar affiliate has secured the required approval to host its spot-trading operations.
“The global cryptocurrency industry is moving toward compliant growth and we recognize the need to align our business with this trend,” he said in a statement.
The British overseas territory has instituted its crypto regulatory framework since 2018. The Gibraltar Financial Services Commission (GFSC) requires licensed firms to demonstrate they have adequate financial resources, IT systems, and controls to comply with anti-money laundering and terrorist financing rules.
As such, engaging in business with a company approved by the GFSC offers clients several guarantees regarding the safety of their funds, and the trustworthiness of the service with which they are working.
With this in mind, the regulatory body makes a point that these are not rigid rules as a flexible, adaptive approach is required in the case of novel business activities, products, and business models.
Attracting blockchain startups is seen as one way of bolstering Gibraltar’s thriving financial services industry after the self-governing territory, along with the UK, leaves the EU.
Huobi is anticipating a 30% revenue plunge after it has completely shut down its derivatives trading for mainland investors.
In September, Huobi said it would close Chinese users’ accounts by December 31, 2021. Binance and OKEx, which have wide Chinese user bases, also discontinued operations for mainland citizens and are no longer accepting user sign-ups with Chinese phone numbers, citing renewed regulatory guidelines in the country.
Huobi, one of the world’s biggest cryptocurrency exchanges, had a shareholder meeting on September 24. After the meeting, it was announced that the shareholders of the company had unanimously decided to scale back its operations and product offerings in China.
Huobi also suspended Bitcoin mining services and sales of mining equipment in the Chinese mainland in June. The company said it will focus on expanding its business overseas.
One of the co-founders of the company said that in the past they actively communicated with the country’s regulators to find ways to still legally offer trading services in the country. However, he said that this time, there was no other way and no place for discussions.
Months before China’s latest crackdown, the exchange had already relocated substantial parts of its operations and staff out of the country. Huobi has been expanding aggressively into trading services in many other jurisdictions around the world, including Malaysia, Argentina, Russia, Korea as well as setting up an office in London.