TRON 4.0 Online Conference: Ciara Sun — Vice President of Global Business of Huobi: Thoughts on future forms of trading and strategic preparation from the exchanges’ point of view
Hi, everyone it’s great to be here, I’ll share some thoughts on the current crypto market and take a deep dive into Huobi’s fast growing business lines.
Some of you may not know that Houbi is much more than just a crypto exchange. So I’m hoping you will learn a bit more about what we do and how we’re going into the broader ecosystem. I also have some really exciting news to share with you a little bit later in the talk so stay tuned.
Before I start, I would like to talk about myself. My name is Ciara and I’m the vice president of Houbi group for global business. I started my career in New York City working in the traditional finance industry. Companies like the Boston consulting group and so on. I spent years devising banking and capital market groups for major banks, hedge funds, firms and investment management corporations. Traditional financial services is an industry I understood very well. Because I understood the space, I knew the limitations. This is routed in a very large practice and biases. Some of which have created financial ecosystem that isn’t always inclusive.
There were always a lot of inefficiency and challenges that exist in the internet finance. I now know that no industry is perfect but it left me wondering what innovations were on the horizon which is how I started getting into Blockchain and cryptocurrency. I eventually decided to take a plunge into crypto space and landed at Huobi. Having worked with some of the top financial institutions before, I wanted to join a company that was not only had a mission and the ability to innovate the finance industry but also, infrastructure to scale globally like the companies that I worked with before. So that’s why I chose to join Houbi. We move fast and we counsel in a way with Blockchain digital access but we have many of the protocol and procedures in place that gains respect from multi international corporations to help in the very instance of Houbi and we place a high value on compliance, security and customer funds and safety.
So first, I thought I would share my thoughts on where we are as an industry. This is a particularly exciting time for crypto and Blockchain. We are facing a difficult time with the whole COVID-19 situation starting in the year 2019 and coming on to 2020.
So let’s take Japan as an example. It took the country years to clearly define crypto regulations during theres no one to have one of the most requirements for the crypto exchange and assets.
But much progress has been made this year. Just this past May, Japan is that for a say, athey regular treat agency and now also oversea the crypto assets enacted new regulation to fertility the mines, compliant crypto exchanges and assets.
We have been operating a local exchange which is Huobi Japan licensed since 2018. As one of the first fields and continues to work with regulators to make sure full compliance cooperates the japan requirements. And the platform token HT just began trading a few weeks ago as one of the 26 compliant crypto assets and the first ever globally platform token that is approved in Japan.
HT can now be purchased by the Japanese currency so I was really excited about this news! HT it’s also the only global token to trade on which proves that there are opportunities, even in our regulations that are in place. Japan is just one example of the key market where crypto adoption is regulated and security enviorment which key to the industry in long term scalability.
There’s some common misconception among newer retail investors that regulation is bad. But it’s actually quite opposite. We know that regulation, we guided the right way can help drive the crypto adoption and create a safer ecosystem for the users. This is why we chose to work closely with regulators in every market that we enter and we try to be fully compliant.
We also know that in order for crypto market to expand, we need to buy in of institutional investors and traders which typically means, ensuring they have a fully regulated trading environment as they have much more strict compliance requirements then retail users.
So institutions are a key market for us in the global markets for compliance and security acquired to our business model. But taking a step back for a moment, we need to understand why crypto adoption is in the first place or at least, why now? A lot of it comes down to the current state of global economy that was driving by this global pandemic. The many parts of the world have started recovering the effects of the pandemic on the traditional markets that will be long lasting. Central banks around the world have printed an unexpected amount of fiat currencies and are officially controlled interest rates are drove down as part of using it.
These trade policy measures come with high inflation risks and there are concerns around crypto validation as a result. In this kind of macro economic environment. Crypto is a special coin. It’s merging as an alternate asset to help with inflation pressures and act as this historical value.
What positive indicator of this is the growing interest to bring institutions pronouncing more institutional investors that turn to bitcoin as a hedge against the inflations and alternative investment, traditional safe haven just like old.
Some big name investors have come out to support bitcoin and to hold one to two percent that is bitcoin in the portfolio. We’re seeing a spike in institutional trading across both our supply and our derivatives markets. So the other thing is that market volatility is going on. Due to the current events, volatility is coming in the markets. This has been a — for crypto particularly on the derivatives market was institutional triggers.
Volatile you can see is a very natural part of the market and most experienced traders would agree that it offers potential advantages, opportunity to create, advertise, so some people have become increasingly aware of how adaptable the assets are.
Early critics argue that crypto is not an ideal medium of the exchange and is not for everyone’s transaction because of the value. But Stablecoins have shown that the assets can actually play a transactional role in governments of central banks in particular, are taking a similar approach with CBCD or central banks, digital currency. The most notable is China with the DCP which plans to come out of COVID-19 with its own digital currency.
The bank of England also led collective research into digital currency allowed with some of the world’s largest central banks like the bank of Canada, Japan, European bank and the Swiss national bank.
This is going across all categories, institutional, retail, and government. There’s an search in adoption and trading. This is known as — as we’re all getting to devicism so we’re expecting a lot more activity in the second half of 2020. I’m really excited about all of that.
So at Huobi, we will be in the central decentralized economy and we see growth across all of our business units. As crypto adoption rises atten increasing rate. I have some really exciting news to share with you all. All of the growth, we’re ahead and we have been really big updates planned for the Houbi group, including our spot exchange, institutional arm, brokerage, bullet, so on and so forth. I’m excited to share an update on all of this as well as a preview of what is to come this month. So this year, we have seen over 908 million in average daily trading in our spot exchange.
26.54 percent increase compared to the same time last year. But trading volume alone isn’t what determines the success. In the past seven years, we have been around our exchange hasn’t been affected by major security ranges and we plan to keep it that way. That’s the only way that is — in the business model in the exchange world is if you lost thousands of bit coin every year, it’s just not going to be long lasting.
Just a few months ago, we launched star, an online analysis tool to monitor for bad transactions even as we see record trading volume and user activity, we continue to help our user safety and that’s always the top goal.
When there’s a large number of users, we can obtain the other major exchanges because we have been invested heavily in the back end of the infrastructure. On derivative side, we have this compared to the same time last year. The market is most active in times of extreme volatility and we can use this to further improve our users experience. In an effort to protect our assets, Huobi’s future will have a new, partial liquidation mechanism to prevent unnecessary losses in times of extreme volatility.
We know traders don’t just want to hedge risk. Thay want a way to increase it so we have followed up — which has recently topped the market in 24 hour trading volume and by quarterly futures contracts. And starting July 1st. Huobi future is conducting an option beta test in preparation for option product launching for the future. So this product has been created by all of our users and I’m really excited that using data and by the way, our beta testing is going very very well! On may 12th the coin margin trading market volume reached 5.47 U.S. billion dollars which is 4 percent more than that of BitMEX. Our most respected and biggest competitive in the same category, despite having launched their feature more than a year ago. And just in the same quarter this year, the derivative on huobi futures trading volune have reached 438 billion U.S. dollars accounting for 22 percent of the total market trading volume according to talk and insights.
Our goal is to help traders leverage any marketing environment to their advantage while minimizing the downside risk. We do this by implementing the best risk control in the industry like various hedge funds to prevent the clawbacks and we’re very happy to say there has been no claw back since day 1. These are our futures market and we’re most proud of not just the volume but we’re a facilitating . We have been able to provide users with a safe and reliable trading experience. An environment with little to no down time, industry leading, risk control, and like I said earlier, zero clawback since day one.
Like I mentioned before, Huobibi is not just an exchange. One of our top performing business units which is now the fifth largest mining pool. The 2019 was a good year for Houbi pool driven by the stronger need for performance for our stake DG mining service. Operating revenue surged 547 percent in 2019 from 53 million in 2018 to 320 million in 2019. We have continued to invest heavily in the pool ecosystem and are excited about the division traction as we’re expanding services globally this year. We’re currently preparing the Houbi pool for the ETH 2.0 staking and have a lot of exciting things planned like adding stacking and mining services for eight projects and node services for twelve more.
While growth like this is always fantastic to see, both for Houbi and the market. It is more pleasing to note that Q1 institutional trading numbers for this quarter are up 88 percent compared with Q4 2019. So we can pin down where most of our growth is coming from. Institutional traders have taken up cryptocurrency like an asset with trading because of the numbers and factors but it’s also important to look at what limitations there still are for these traders as the numbers we’re seeing are only the tip of the iceberg.
So just to share with you more data on the institutional side. We started this institutional business unit in early 2019 to better serve the institutional clients with professional customer service and professional products that best tailor their needs. And in the beginning, trading volume percentage from institutions on Huobi Global was only about 17 to 18 percent. And now, only a year later, trading volume percentage is up to 43 percent. That’s how big the increase is coming from. And that a promising area in the Huobi Ecosystem is our wallet which is joined as a piloting member in ETH 2.0 staking capability program which is our beloved and very important partner.
Honoring key areas of focus include Huobi institution, brokerage, most of which I would say is very essential to our global expansion strategy as we grow our institutional user base. There’s some big news coming soon related to a new fund management platform and custody services but we can’t get into the details of it here. So stay tuned to our announcements.
2020 is a defining year for digital assets and the entire crypto ecosystem. There’s still some things for adoption particularly as it relates to institutions, like issues of compliance and regulations but the future looks bright.
As they start recognizing the cryptocurrency, compliance is the core of our business model. So we will continue to provide users with the regulated trading environment and make it easier for institutional investors to trade and transit into crypto assets. A lot has been accomplished but there is much more ahead. I predict that within the next five years, more than 85 percent of the institutions around the world will have some exposure to the digital assets in their portfolio and I really do hope that it comes true. But in order for it to happen, there will be a need for regulatory compliance. Smaller exchanges that do not meet regulatory requirements will either shut down or be consolidated as a result which will create an even stronger ecosystem.
Huobibi was founded 7 years ago with a vision to bring digital assets and financial inclusion. We envisioned an equitable ecosystem powered by digital also sets. Our exchange now serves millions of users over 170 different countries and both are spot and future exchange top the market in terms of liquidity, trading volume, market apps, compliance, security and all of these key factors that define a safe and sustainable trading environment.
We operate localized and regulated exchanges all over the world, both with local partners and we are glad to see we have the license in Japan, in Thailand, the license in Gibraltar and we are continuing to apply for all of the licenses that are out there to provide our customers with a safe trading environment.
So that’s it for today! Thanks for joining us. If you would like to please keep in touch, feel free to follow me on Twitter as in Ciara Huobi. Thank you!