CNBC talks to Du Jun: Huobi loses 30% of revenue due to exit from the mainland market and will return to the U.S. market

Original Title: “Chinese cryptocurrency exchange Huobi plans to re-enter U.S. market, but with asset management focus”

Compiled by: Chain Catcher

Key Information:

• Du Jun stated that Huobi lost about 30% of its revenue due to its exit from the mainland China market.
• Huobi will re-enter the U.S. market, focusing on asset management and other businesses rather than exchanges.
• In addition to re-entering the U.S. market, Huobi is also exploring the establishment of a headquarters in Europe.
• Du Jun praised China's strict regulatory policies on cryptocurrencies, as "it protects a smaller portion of investors."

Huobi co-founder Du Jun told CNBC that the Chinese cryptocurrency exchange Huobi plans to re-enter the U.S. market after ceasing operations to comply with regulations for more than two years.

However, Du Jun indicated that after the previous misstep, Huobi may not launch an exchange but instead focus on asset management and other areas.

"In 2018, we tried to enter the U.S. market but quickly exited because we did not have a firm commitment to the market at that time, and we did not have a good management team in the U.S.," Du Jun said.

"I expect asset management to become a bigger business than exchanges, which also resonates with traditional financial markets," Du Jun told CNBC, adding that he does not believe an exchange is a necessary factor for entering the U.S. market.

Du Jun did not disclose which services Huobi would initially launch upon its return to the U.S. market. Re-entering the U.S. market could position Huobi to compete with companies like Coinbase. According to CoinGecko, Huobi is one of the top ten cryptocurrency exchanges by trading volume globally.

As early as 2018, Huobi first launched cryptocurrency trading services in the U.S. The following year, the company announced it would freeze U.S. user accounts, stating that it would return to the market in a "more integrated and influential manner" in the future.
Currently, in addition to its exchange business, Huobi Group also has an asset management business operated by Huobi Technology, which is a publicly listed company in Hong Kong.

The decision for Huobi to re-enter the U.S. market is part of its larger international expansion plan. Last year, the Chinese government implemented policies to completely ban cryptocurrency mining and crack down on regulatory loopholes that allowed mainland users to trade.

Huobi chose to exit the mainland China market. By the end of 2021, it had closed all existing accounts of mainland Chinese users and selected Singapore as its Asian headquarters.

Du Jun stated that Huobi lost about 30% of its revenue due to its exit from the mainland China market.

However, this has provided further impetus for the company's international expansion. In addition to re-entering the U.S. market, it is also exploring the establishment of a headquarters in Europe.
"As for how many resources or personnel we will deploy for the international market, we have no choice but to go all out and advance our global strategy," Du Jun said. "In the past, we would explore a new market, and if it was unsuccessful, we could always exit. Now, Huobi has no choice but to go out."

Praising the Mainland's Crypto Regulatory Policies, Other Regions Should Not Follow Suit

Du Jun praised China's strict regulations on cryptocurrencies for cracking down on gambling and money laundering cases. Du Jun stated that China's crackdown policies on crypto protect a smaller portion of investors. However, he also mentioned that other countries should not emulate China's approach, as investors in other markets may be more mature.

"In China, when people fail in their investments, sometimes extreme individuals jump from the buildings of regulatory agencies; investors are not mature enough. The government has also taken similar actions regarding travel restrictions under the COVID-19 pandemic. The government feels the danger and takes measures to protect people's safety," Du Jun said.

"In other regions, we can find that investors there are more mature. They have more experience and take responsibility for their investment decisions, so governments in those markets do not need to take some strict measures."

Currently, global regulators are considering regulatory rules for cryptocurrencies, including trading, taxation, and more. This month, India proposed a 30% tax on any income from the transfer of digital assets. Meanwhile, the U.S. is still studying how to regulate cryptocurrencies.