Huobi Global is a major player in the global cryptocurrency trading market. The company was founded in 2013 in China and has since grown to become one of the largest digital asset exchanges in the world, with offices in countries all around the globe.
In late 2020, Huobi announced that it will leave its office and operations in Singapore, citing regulations and restrictions as a main factor behind withdrawing.
In this guide, we’ll explore what led Huobi Global to make this decision, why it’s important for crypto-focused companies today, and what may happen next for Huobi going forward.
Overview of Huobi Global
Huobi Global is one of the world’s leading crypto exchanges, and it recently announced its decision to leave Singapore and form a new local entity. However, before we look at the reasons that led to this decision, let’s take a quick look at Huobi Global’s history and business model.
The company has become a preferred trading venue for traders worldwide, and its services have expanded to include a wide range of financial services, including cryptocurrency trading, mining, and more.
History
Huobi Global was founded in 2013 as a “digital currency trading platform.” However, the exchange grew quickly, especially in China and other Asian countries. As of 2020, Huobi is the third-largest exchange in the world by traded value.
Initially, Huobi operated a full-featured spot order system and began to explore the development of derivative contracts based on digital currency later that year. In August 2014, it launched a cloud-based trading system dubbed “HT Trader” allowing users to trade directly from their browser window. On February 15th 2015, Huobi created Huobi Fund (H Fund), which allows clients to invest in various education programs related to digital currency and blockchain technology. Furthermore, they are largely credited with creating the first Initial Coin Offering (ICO) in China on January 8th 2017.
Huobi also opened several offices across Asia including Beijing, Shenzhen, Shanghai, Hong Kong and Singapore until November 2019 when they announced their decision to close down their Singapore office due to regulatory concerns involving low volume activity in Singapore and higher fees charged by local banks there. Despite this setback they have continued to expand across 10 countries holding offices in London (UK), Korea (South Korea) and San Francisco (United States).
Business Model
Huobi Global is a blockchain and cryptocurrency services leader, established in 2013. It offers trading options for over 140 tokens and fiat currencies across over 130 markets. In addition, hedging services and access to OTC desks for high volume traders are also available on Huobi Global’s digital platform.
In addition to its strong presence in the digital asset space, Huobi Global emphasizes customer education and its technical support team provides around-the-clock service to clients. The team offers personalized mentorship, various educational materials, events such as sponsored meetups, and 24/7 customer support. Huobi Global has offices in multiple locations spread across the globe, extending its reach beyond Singapore, where it was originally based.
Huobi Global’s business model relies heavily on revenues generated through trading commissions. To ensure timely execution of transactions across all markets it supports, Huobi also charges fees associated with withdrawals and listings while leveraging technologies such as Blockchain as a Service (BaaS) to offer faster settlement times and additional security measures. To diversify revenue streams further, Huobi has begun dabbling in other areas such as cryptocurrency lending and providing full-stack asset management solutions targeted at larger financial institutions seeking higher control over their activities.
However, recently due to regulatory pressure from the Monetary Authority in Singapore and additional scrutiny placed upon crypto exchanges globally caused by an escalating “good-vs.-bad” challenge with regulators; Huobi had no choice but to restructure their business model towards more compliant models within more acceptable jurisdictions that met their needs both functionally and ethically for being forward thinking within the industry between local rules – at least until regulations change still further over time.
Regulatory Environment in Singapore
Huobi Global announced its exit from Singapore in December of 2021 to form a new local entity, signaling a major shift for the cryptocurrency exchange. It was primarily due to the regulatory environment in Singapore that the exchange decided to move out.
This article will examine what regulatory environment in Singapore has led to Huobi Global’s decision to leave the country and form a new local entity.
Overview of Singapore’s Regulatory Environment
Singapore is one of the world’s most open and innovative financial markets, with amenable policies and regulations that attract leading innovators in a range of industries. In the case of digital asset and cryptocurrency exchanges, several especially attractive features have led many firms to set up operations in Singapore.
The Monetary Authority of Singapore (MAS) regulates the country’s capital markets and payment services. This includes regulatory oversight for cryptocurrency exchanges operating in Singapore. The MAS has consistently taken an amenable approach to new industries, which is certainly true regarding its regulation of crypto-related activities.
The MAS allows cryptocurrency exchanges to operate in Singapore if they qualify for a recognized market operator license (also known as the CMS license). These are granted through assessments by private entities, who must satisfy certain criteria to adequately protect investors’ funds within pre-specified limits and maintain checks against money laundering / terrorist financing risks. In addition, as part of the licensing process, these firms must adhere to an extensive set of regulations covering every aspect, from risk management procedures to proper customer management protocols.
These stringent requirements have made it difficult for crypto exchanges such as Huobi Global, specializing in crypto-to-crypto transactions rather than fiat currency trading pairs, to meet these standards while allowing them diverse options available on their platforms. Huobi Global had therefore decided it best to focus on other markets rather than continue their operations within Singapore’s regulated environment due its nature business model.
Challenges for Crypto Exchanges in Singapore
Singapore’s regulatory environment for Cryptocurrency exchanges has become increasingly difficult regarding compliance, fees, and capital requirements. On June 30th, 2020, Huobi Global Relocated to Mauritius to benefit from its simplified rules and regulations.
Singapore’s current legal framework is relatively restrictive with regards to cryptocurrency activity. The Monetary Authority of Singapore (MAS) has implemented several key restrictions on the operations of digital asset exchanges. These include a cap on the amount that can be withdrawn without KYC/AML compliance procedures, requiring exchange operators to declare any business activities related to money-laundering or terrorist financing risk factors, an obligation on companies operating digital asset exchanges to be licensed by the MAS with a minimum capital requirement of SGD 250K and various additional documentation requirements.
Furthermore, the Monetary Authority requires that crypto businesses dedicate resources or personnel devoted exclusively for anti-money laundering purposes and employ appropriate internal controls and security measures to ensure protection against cybercrime. Additionally, platform operators must strictly follow certain reporting obligations.
In conclusion, there are various difficulties associated with doing business as a cryptocurrency exchange in Singapore due to its stringent regulations which have been put into place by the Monetary Authority. Unsurprisingly, Huobi Global elected Mauritius as its new home due to its simpler legal framework and less stringent compliance requirements.
Huobi Global exits Singapore to form new local entity
Huobi Global’s decision to leave Singapore and to instead form a local entity in the country is a move that has been met with mixed reactions.
The decision follows a clarification from the Monetary Authority of Singapore (MAS) that digital tokens offered by overseas platforms, such as Huobi Global, can only be traded in the city-state by accredited investors.
In this article, we will explore the reasons behind Huobi Global’s decision to exit Singapore and how it is affecting the local cryptocurrency community.
Reasons for the Decision
Huobi Global’s decision to leave Singapore was prompted by several factors that emerged over the last year. The Singaporean government’s regulatory stance towards the cryptocurrency industry was one of the primary contributors to Huobi’s decision.
The Monetary Authority of Singapore (MAS) has been very clear in its stance on cryptocurrencies and related activities, implementing stringent regulations to ensure investor safety and reduce potential market manipulation. This includes stipulations such as requiring all investors trading in cryptocurrency assets to be at least 18 years of age, or for individuals dealing with digital assets to apply for an Inland Revenue Authority of Singapore (IRAS) license.
Furthermore, MAS has been implementing additional measures such as requiring local crypto exchanges to adopt anti-money laundering (AML), counter-terrorism financing regulations, and a Know Your Customer (KYC) mechanism. These new regulations have made it more difficult for overseas entities such as Huobi Global to operate within the country, prompting their decision to leave voluntarily. Due to these stringent regulation requirements, various blockchain projects have also ceased operations inside Singapore.
This increased scrutiny from regular authorities and rising operational costs were some of the major contributing factors that led Huobi Global to decide. Ultimately, the change in jurisdiction will enable them to abide by local jurisdiction laws while allowing them freedom from overbearing regulations placed on crypto enterprises within Singapore.
Impact of the Decision
Huobi’s decision to leave Singapore had a significant impact on the crypto trading industry in the Asian country. The departure of Huobi Global, one of the leading digital trading platforms, has sent shockwaves throughout the local crypto scene.
The move is a major blow to Singapore’s vibrant digital asset marketplace, which has been seen as a hub for cryptocurrency traders in Southeast Asia. It further strains a sector already beleaguered by regulatory uncertainty and poor market liquidity. Furthermore, it will likely pressure other digital asset platforms operating within the country to follow suit and relocate out of Singapore or face an intense regulatory climate.
In addition, Huobi Global’s exit represents a notable blow to Singapore’s reputation as an international financial center. It signifies that the city-state does not offer as favorable an environment for cryptos as other jurisdictions in Southeast Asia such as Thailand and Malaysia that have moved forward with more progressive cryptocurrency regulations. Moreover, this could discourage international companies from entering Singapore’s virtual asset sector due to concerns about its ability to provide fair regulatory oversight and investor protections.
Ultimately, Huobi Global’s departure from Singapore serves as another reminder of how geopolitical factors can shape the developments with this nascent asset class and its ecosystem; these events underline the need for jurisdictions across Southeast Asia and beyond to create competitive legal frameworks that can foster transparent and orderly markets for cryptocurrencies going forward.
Conclusion
In conclusion, Huobi Global leaving Singapore is largely attributed to its desire for a better regulatory environment. The exchange cited “the difficulty in obtaining a payment services license” and the need for more favorable digital asset trading rules in its explanation for leaving the market.
Furthermore, the company also expressed interest in pursuing international opportunities in other unregulated jurisdictions that could provide clear cryptocurrency regulations.
This decision is part of Huobi’s ongoing strategy of expanding into more international markets and finding new opportunities to improve its business model while maintaining compliance with local regulations. Additionally, regulators have yet to firmly establish cryptocurrency guidelines in many markets worldwide – making them attractive locations for exchanges like Huobi Global that are seeking greater access to global capital markets. With this news, it will be interesting to see what other areas will be chosen by Huobi as potential international expansion locations going forward.
