Home Articles Edward Chen, Huobi: “Cryptocurrency has come to set up better rules”

Edward Chen, Huobi: “Cryptocurrency has come to set up better rules”

BitNovosti approached Edward Chen, Senior Director of Huobi Global, with a few questions concerning stablecoins, the exchange’s activity in Russia and its presumable cooperation with the country’s authorities in the field of cryptocurrency market regulation.

BN: You’ve been active in Russia in recent months. In particular, Huobi launched the exchange in Russia, and collaborated with VEB on business services like Huobi Cloud and the OTC desk. Are the any first results of this collaboration on the Russian market? Could you also disclose some details about the collaboration with VEB, and Huobi’s expectations in general?

EC: This is basically an important market and a good one. We found a good partner here. As you know, we have a global Huobi Cloud program, which we use to attract hundreds of partners all over the world. That’s our plan. So, in Russia we were very lucky to find VEB. They are keen to cooperate with us.

BN: Why OTC desk?

EC: This is a very basic need for users, traders, and investors. First and foremost, one needs to be able to buy a new tokens or other assets. So OTC is a very fundamental solution. With us, you get a comfortable peer-to-peer trading area, where users who have the money and cryptocurrency can deal with each other.

BN: Have you ever made any research on a prospective demand for the OTC service in Russia?

EC: There’s a huge demand.

BN: Can you provide some figures?

EC: We don’t have numbers, but OTC is a very common-sense service here in Russia. Many Russians are interested in crypto, but due to the regulatory situation, they can’t buy it with fiat easily. The OTC provides that currency exchange solution. You can transfer fiat funds to the exchange, then our exchange delivers money to the recipient, giving you cryptocurrency in return.

Our advantage is that Huobi guarantees the deal as a third party. We can track the entire process between two parties to make sure nobody cheats. And Huobi charges zero commission fees. So this is the service where literally everybody can buy cryptocurrency.

BN: There’s one thing that comes to my mind here. There was strange news about a month ago about the meeting of Huobi’s founder Leon Li and the Russian President’s  advisor Sergey Glazyev. What was the purpose of that meeting?

EC: That’s correct. They met because Huobi is one the most regulated exchanges in the world. We try to cooperate with different governments. That’s why we are licensed in many countries so far, such as Australia and Japan.

BN: Alright. During the meeting, Sergey Glazyev said that Russian authorities may apply Huobi’s experience in regulation to the Russian legislation. Do you cooperate with the Russian government on this issue?

EC: I can’t say anything about thisat the moment.

BN: But you don’t deny it, right? Can you either deny or confirm this information?

EC: Yes. We are a regulated exchange and we work closely with governments across the globe. So if we want to provide a qualified service, we are definitely going to reach out to them for any sort of guidance. That’s why the meeting took place.

BN: Can you disclose some details about the number of Russian users, about their trading volume?

EC: No, we don’t disclose this.

BN: Do you have any plans to expand into Russia’s neighboring countries like, for example, Ukraine?

EC: When we talk about launching the operation in Russia, we mean that we’ve started providing our services to the entire Russian-speaking region.

BN: In August, Huobi began testing its new service for institutional investors, including, I quote, a «regulated trading channel», and a custody service. Have you managed to finish the testing already? What are the results?

EC: We have already finished it. The results are perfect. Lots of our VIP clients participated in the experiment, and they liked it. We have already attracted few hundred institutional clients from around the world.

BN: What is this service about?

EC: First of all, in order to use this service, our clients have to be eligible entities so that they could pass our KYC procedure for institutions. If you are a really a legal and formal investment organization, you’ll definitely pass it. After the KYC, our manager contacts the representative for the conclusive interview, and then opens an account.

The «institutional» level of account allows splitting the parental accounts into different sub-accounts, which reflect certain trading strategies. It looks like nothing but an investment portfolio. Then there are increased storage and transaction volume limits. In addition, a company gets a personal manager and an IT-support engineering team from Huobi.

BN: In your opinion, doesn’t the institutional investors’ activity contradict the very concept of cryptocurrency, which is designed to eliminate traditional financial institutions?

EC: I don’t see any controversy here. What does the blockchain do? Its purpose is to decentralize everything. Decentralization doesn’t mean the old world dies.Firstly, it means that you are your own authority, and, secondly, that you have an opportunity to join the decision-making process. university, there is usually a management team to make decisions, other teachers have no voice in these matters. In a decentralized system everybody can contribute to resolving general issues. That’s the key idea. Speaking about big institutions, you can still have a digital asset bank, which operates in a decentralized manner. Any individual may choose not to engage with those organizations and keep his assets in a wallet instead.

BN: Yet, originally cryptocurrency was designed to avoid general regulation. But we see that it becomes more and more regulated – a part of the legal framework. Do you agree with that?

EC: Cryptocurrency is not about avoiding rules. In fact, it has come to set up better rules. Nobody can live without rules. Look at blockchain committees in different countries, they are gathering to work out some self-regulation.

BN: Cryptocurrencies have much to do with anonymity. Could this trend for regulation exclude this approach eventually?

EC: I don’t think so. For instance, the KYC procedure is conducted to make sure you’re a good guy. After you pass KYC, nobody can get information about your account, it’s private.

BN: And what if a state body requests some information about a certain user?

EC: Then they need to prove a reason for their interest. That user needs to be a really bad guy, to do something wrong.

BN: What if we speak about political persecution or about the cases when a user’s guilt is not that evident?

EC: This is very special case. We can discuss it when we face it.So far we haven’t.

BN: Okay, now let’s talk about stablecoins. You’ve listed four such tokens at once: Circle’s USDC, TrustToken’s TUSD, Paxos’ PAX, and Gemini’s GUSD…

EC: And we have also introduced our own stablecoin solution called HUSD to protect clients. You know, currently we can’t say, which coin is most trustworthy, so we decided to create a security tool. HUSD is 1:1 rate for every government regulated stablecoin we listed, so HUSD holders don’t need to worry about sudden fluctuations.

BN: Why is the demand stablecoins so highat the moment?

EC: First, for the liquidity reasons. Second, it fits well the trading process. Finally, for some people, there could be an issue exchanging crypto into fiat due to poor regulation, so the stable crypto becomes a great option.

BN: Before listing a stablecoin, do you check whether it is backed by any asset or not? For instance, Tether is seemingly not doing well right now in terms of fiat reserves…

EC: Sure, we conduct a proprietary auditing process.

BN: Got it. How does Huobi feel about this long-lasting bearish trends on the crypto market? Is crypto trading losing the global popularity?

EC: Huobi will be there no matter what the current market trend is and for however long it lasts. I can assure you, the number of our users is growing steadily throughout the year.

BN: A few days ago, a cybersecurity company Group-IB has published a report on crypto exchanges’ security. Huobi Pro, along with CoinCheck and OKEx turned out to be the “least” protected. Do you face any security issues?

EC: I don’t know why we were ranked that way. We have a sophisticated security system. Still, we don’t know who they are, and they have never contacted us. We would like to discuss the ranking with them. Maybe they will change their opinion after all.

BN: Can you imagine Huobi having any problems with security, or is it protected well enough?

EC: We cannot say any system is perfectly protected, because technologies are changing every day. We do take security very seriously, however, and we take every opportunity to make sure our users are protected.

BN: Lastly, let’s dream a little bit about the future of crypto exchanges. What could be the distinctive features that would make future trading platforms differ from what we have today?

EC: What we are dreaming about is becoming the «ecosystem» for the industry. We can see that the industry is being built up actively. We try to make financial operations more transparent and to protect the assets of our users. And what we can do to make that dream a reality is to support the industry in every single way, delivering new technologies and services.