Within the span of two weeks, three major crypto exchanges – Binance, FTX and Huobi – have signed separate MoUs with the Busan City Government to drive the development of South Korea’s blockchain infrastructure.
With the country constantly at the forefront of the global crypto space, the announcements of the various partnerships mark a breakthrough for South Korea’s blockchain endeavors. Taking place amid the crypto winter, the partnerships will add new momentum to the development of the country’s blockchain infrastructure and raise the game for the entire industry.
Reasons behind the success of Binance, FTX and Huobi
There are various factors that have contributed to the success of the three crypto exchanges in cracking the Korean blockchain market. Starting with Binance – the world’s largest crypto exchange – its size and strength make it well-placed to contribute wherever it wants to be. Attracting an industry leader such as Binance will bring Busan even closer to its goal of becoming a blockchain-specialized city and a global digital finance hub.
As for FTX, it is a dark horse that is relatively new to the market, having been established only in 2019. Nonetheless, it now ranks among the leading exchanges whether by spot or derivatives trading volume, and its charismatic founder Sam Bankman-Fried has gained an even higher profile after the crypto market crash for bailing out numerous insolvent companies.
Founded in 2013, Huobi is one of the first cryptocurrency exchanges to operate on a truly global scale, at one point even laying claim to the highest trading volume. It is also among the first few digital exchanges to internationalize, pursuing compliant growth across the world by obtaining licences in many places it operates. Having already established an office in South Korea under a licence obtained from the Korean Financial Services Commission (FIU) last December, Huobi enjoys broad recognition from the market, consumers as well as regulators.
Huobi’s first-mover advantages
Huobi’s physical presence in South Korea places it at a distinct advantage compared with the other two exchanges which also signed an MoU with Busan. This effectively makes it the only digital asset exchange with a local compliance platform in South Korea. Compared with Huobi, Binance’s and FTX’s partnerships with Busan go only as far as setting up an office in the city, coordinating the rollout of the Busan Blockchain 2022 Week, or providing blockchain education.
Apart from already having an office in South Korea, Huobi has cultivated strong relationships with major local groups in the development of its own blockchain business, with close ties to the Korean blockchain industry. Its local entity Huobi Korea has also explored innovative business ventures with other companies in Korea, under an approach that emphasizes mutual benefits. Compared with the other two exchanges, Huobi’s deep cultivation and understanding of the Korean market will put more wind in its sails for the development of the blockchain business in Busan.
Additionally, Huobi will provide R&D, technology and funding for the Busan Digital Currency Exchange, and recruit technical talent to support the Busan local exchange’s technological innovation efforts.
Over the past five years, Busan has established various initiatives and partnerships to position itself as South Korea’s pre-eminent blockchain hub. The country has some of the world’s strictest crypto regulations, banning private wallet transactions and mandating the reporting of transactions that exceed a stipulated amount, with local exchanges subject to strict privacy laws. In spite of these measures, South Korea’s cryptocurrency market was worth $45.9 billion as at end 2021 with a total of 15.3 million registered users. The nation has already launched a proprietary blockchain-based ID system, as well as a blockchain-powered driver’s license platform.
According to Coindesk Korea, Busan city has intricate plans for the launch of a digital asset exchange. These include building an ecosystem for securities token-based digital asset transactions, and introducing a business model for digital assets focused on promoting regional industries.
Who’s best-placed to help Busan build a sound blockchain ecosystem?
There is no lack of strong contenders to drive Busan’s blockchain infrastructure, as shown by the recent spate of MoUs signed with the three exchanges. As the world’s leading blockchain ecosystem with a vast portfolio of products and offerings, Binance has a clear edge against the competition. On the other hand, while Huobi trails Binance on many counts it is an undisputed pioneer and leader in blockchain applications. Since its establishment, Huobi has been fully committed to building robust blockchain infrastructure, with a view to empowering the development of the industry in the digital era. Huobi has invested in high-quality Layer 2 projects such as OptimismPBC and zkSync, and is keen to partner with high-potential project teams to address pressing challenges.
In contrast to FTX whose user base is mainly in the U.S., Huobi has a considerable user base and high brand awareness in Asia, with its 2021 trading volume ranked among the top three exchanges in the world. In establishing the Busan Digital Asset Exchange, Huobi’s risk management, technological prowess and financial clout have placed it in a position of strength which few other exchanges can match.
Huobi’s exchange platform also has a strong track record of dealing decisively with market crises. During times of volatility in the bull-to-bear market when many large platforms were facing a liquidity crisis or suspending deposits and withdrawals, Huobi continued to operate normally. It maintained a sound financial position, met all user obligations as well as safeguarded user rights and asset security. The conclusion to be drawn is that Huobi has a well-honed crisis response mechanism which has been stress-tested across market cycles. This valuable “combat” experience will be useful for setting up the operations of the Busan Digital Asset Exchange.
Further, among the three exchanges Huobi offers the most breadth and depth in its knowledge of Asian markets as well as its services there. These considerations confer a strong advantage to Huobi in partnering with Busan to promote local blockchain development and user services.
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