Like BitMEX “moved” to the Seychelles, Binance to Malta, and FTX to the Bahamas, China’s gigantic crypto exchange Huobi is “moving” to island tax haven Gibraltar.
Gibraltar Financial Services Commission (GFSC) recently approved Huobi Group’s application to begin transferring its spot trading operations to its affiliate, Huobi Technology (Gibraltar) Co.
This will enable Huobi Group to continue offering spot trading services to the world through Huobi Gibraltar, an exchange registered with the GFSC.
In its press release, Huobi Group said it was relocating operations to Gibraltar to meet the demand of “institutional clients, many of whom require strict compliance with regulatory requirements,” our emphasis.
In response, Huobi’s founders and investors voted unanimously to suspend operations in China and relocate.
Huobi co-founder Du Jun said that the Chinese ban cost the exchange 30% of its revenue.
Huobi needs European currency
“We are very comfortable in Asia, and we are the leader here, but … we need to go global,” said Jun to the Financial Times.
So, Huobi has ramped up efforts to grow its international operations, including targeting large investors in Europe and the US.
On October 22, Huobi announced that users could buy crypto with a Visa or Mastercard credit card issued in the European Economic Area with only a 1% fee.
On November 4, it introduced a curiously generous Tether-based (USDT) coupon. Exclusive to European residents depositing EUR, GBP, or USDT into a Huobi Earn account, the coupon adds a staggering 50% APY to new deposits below certain thresholds.
This indicates Huobi could be struggling with Euro-centric liquidity in the aftermath of China’s crackdown.
Huobi generates the vast majority of its revenue from operations at its centralized exchange. It did previously back decentralized exchange CoFix in a funding round led by Coinbase Ventures.
The push into decentralized exchanges may be Huobi’s way of justifying its claims of not needing a headquarters (and distract regulators).
Crypto exchanges are fleeing to tax havens
In 2018, Binance allegedly moved its headquarters to Malta in pursuit of the European market. Chief exec Changpeng Zhao claimed to have formed a banking relationship in Malta.
Regulatory crackdowns in Japan and China sparked Binance’s move.
The Malta Financial Services Authority (MFSA) then issued several statements denying that Binance was licensed to operate in the Mediterranean tax haven.
In reality, the move was a necessary flight from Xi Jinping’s encroachment into Hong Kong.
BitMEX, which has operated substantially all of its business from California, similarly “moved” to the Seychelles in 2014.
In 2019, BitMEX had to suspend trading in countries that hosted offices belonging to its parent company, HDR Global Trading Limited (the Seychelles, Hong Kong, and Bermuda).
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