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In 2019, the Singapore-based exchange conglomerate Huobi Group is prioritizing Wall Street partnerships for the first time.
Since it was founded six years ago, Huobi Group has come to dominate several global crypto exchange markets, thanks in part to its popularity among deep-pocketed Chinese traders. According to company officials, Huobi Group has managed $1 trillion in accumulative turnover, or annual net sales.
Now the U.S.-based sister exchange HBUS – a separate entity primarily funded by Huobi Global CEO Leon Li – is leveraging its global network for an unprecedented push into North America that’s beginning with a partnership with Prime Trust, a Nevada trust company, that will provide fiat deposit and withdrawal services for its exchange users.
As part of the effort, Huobi will now allow USD-to-crypto trading for bitcoin, ethereum and the dollar-pegged stablecoin tether, with a $100 minimum.
“Huobi’s launch is very exciting,” Prime Trust CEO Scott Purcell told CoinDesk. “They are a great company and we are thrilled to work with them.”
Huobi CEO Frank Fu told CoinDesk this is only the beginning of Huobi’s U.S. partnerships, with others in the works. Fu said:
“Once we establish partnerships with our institutional clients and put in place the required regulatory and compliance structure, we should be able to offer innovative products and financial services to larger audiences, such as … potential ETFs and derivatives.”Even if those partnerships don’t pan out, diverse crypto options with fiat liquidity could be a game-changer for Huobi, which Fu said has roughly 60,000 U.S.-based account holders, in addition to a few dozen Chinese users on-boarded through a partnership with Huobi Global.
Speaking to the dozens of cryptocurrencies under consideration beyond the current offerings, which include bitcoin, litecoin, ethereum, ethereum classic, bitcoin cash and tether, Huobi’s U.S.-based chief compliance officer, Megan Monroe-Coleman, told CoinDesk:
“We developed a comprehensive due-diligence process to review new token projects. … We’re really excited to increase both the volume of tokens and the uniqueness of those assets.”Monroe-Coleman says the company documents the process thoroughly to avoid listing “any token projects that could possibly be classified as a security under U.S. securities laws.”
As it gears up to add new trading pairs, Huobi is also busy updating its onboarding process for Chinese users, with features like Chinese-language know-your-customer (KYC) procedures.
“We could be a distribution channel, the gateway connecting the West to the East,” Fu told CoinDesk. “A lot of the U.S. financial products and services are highly regarded, so we want to be able to be able to offer those products and services to our investors globally as we’re able to set up the right compliance processes.”
Compliance challengesHuobi’s new global asset flows could indirectly give Chinese traders the ability to convert yuan for cryptocurrency through Huobi Global’s OTC desk, then send the cryptocurrency to the U.S.-based exchange to cash out in USD.
Lester Li, Huobi Global’s head of London operations, told CoinDesk he estimates between 50 and 200 of the global platform’s institutional clients are companies run by Chinese founders but based abroad in order to avoid China’s stringent compliance standards and capital controls.
According to Canadian attorney Christine Duhaime, who specializes in anti-money-laundering law and blockchain technologies, China’s regulations forbid its citizens from moving more than $50,000 annually per person, without seeking special permission. She told CoinDesk:
“If you’re a company trying to take out bitcoin, you can take out no amount without getting permission from the government.”In order to navigate this complex regulatory landscape, Huobi plans to triple its employee count to around 150 in 2019, with an emphasis on compliance and teams focused on institutional partnerships.
Huobi Global already has a banking partner in Australia, Goldfields Money. Fred Schebesta, a major shareholder in Goldfields, told CoinDesk that the institution deals with such China-specific compliance issues by only serving Chinese expats, not current residents subject to Chinese capital controls.
Plus, Huobi’s Monroe-Coleman told CoinDesk that institutional accounts undergo rigorous KYC checks, including all individuals who own more than 25 percent of that entity, in accordance with the Bank Secrecy Act.
Huobi’s partner, Prime Trust, is not itself a bank, but it has previously said it has relationships with FDIC-insured institutions such as U.S. Bank and Pacific Mercantile Bank. (This is clearly a sector Prime Trustintends to expand, given how the trust recently eliminated custody fees for digital assets.)
Separately, Huobi’s OTC desk works with Signature Bank in New York, but the relationship is strictly at the wholesale level, as the institution did not want to handle the exchange’s retail customers, a person familiar with the situation said.
Beyond Chinese users, the U.S.-based exchange aims to be a compliance-centric portal for Huobi Global’s estimated 13 million users worldwide.
“We will start from the U.S. but our vision is to provide a global services platform,” Fu said. “A lot of the U.S. financial products and services are highly regarded, so we want to be able to be able to offer those products and services to our investors globally as we’re able to set up the right compliance processes.”
Ian Allison contributed reporting.
HBUS team in San Francisco image courtesy of Huobi
Einstein, based in Vancouver, is trying to obtain lists of wallet addresses associated with fentanyl arrests and indictments, said Christine Duhaime, the firm’s chief anti-money-laundering officer. Duhaime ist Partner bei Duhaime Law und spezialisiert auf Finanzkriminalität und Anti-Geldwäsche. Sie berät Klienten in den Bereichen der Finanzregulierung und der Finanzkriminalität. Krypto Rechtssprechung “Ich bin ganz heiss darauf die Möglichkeit zu haben, ein Gesetzbuch über den Bitcoin und andere aufstrebende digitale Währungen zu schreiben,” sagt sie und fügt hinzu: Christine Duhaime is a financial crime attorney and the founder of the Digital Finance Institute, where she advises digital currency companies, and the co-founder of Chatbo, an AML chatbot solution for screening and onboarding. The following article is an exclusive contribution to CoinDesk’s 2017 in Review. All technological advances have a good and a bad […] According to Canadian attorney Christine Duhaime, who specializes in anti-money-laundering law and blockchain technologies, China’s regulations forbid its citizens from moving more than $50,000 ... A lawyer from Canada, Christine Duhaime, is going to write first in the world law book covering bitcoin and other cryptocurrencies. To proceed with this sophisticated task, Christine Duhaime, has gathered a team of contributors, including financial crime experts, legal experts and economists. The purpose of the book is to give guidance and perception on the emerging domain of digital ...
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