Elaine Sun, Compliance Director of digital assets firm Huobi Technology, recently noted that the traditional financial infrastructure and the idea or concept of money are “changing before our eyes.”
Sun adds that the concept of “store of value” has mostly been associated or tied to the physical, such as gold, or “faith-based” systems backed by world governments, like fiat currencies. But “like many outdated beliefs of eras past, this narrow definition no longer holds true,” Sun claims.
“Today, we’re witnessing the rise of digital assets. Though they share many of the same characteristics as traditional assets like liquidity and exchange value, digital assets offer unique advantages. Many are decentralized, meaning no single governing body or entity controls it; the supply is often finite, something that can’t be said about fiat currencies; and its digital nature makes it much more easily accessible, especially to underserved populations.”
According to Sun, these significant benefits and new value propositions haven’t “gone unnoticed.” She reveals that people from across the globe have “flocked” to digital assets such as Bitcoin (BTC), Ethereum (ETH), and many others. She confirms that retail investors are now buying up digital currencies at “unprecedented” levels.
She further notes that institutions (traditional and digitally native) have started “embracing” digital assets. Sun also mentions that publicly-listed firms such as Tesla, Square, and Microstrategy have been diversifying their balance sheets with Bitcoin, while incumbents including Goldman Sachs and JP Morgan are beginning to introduce crypto products to their wealth management clients.
“It’s clear that we’re now at a tipping point and mainstream adoption is not only inevitable, but it’s nearly here. But as we enter this next stage of global adoption, the future of the digital asset landscape looks very different than in the years prior, particularly as it relates to regulatory compliance.”
She claims that this is because crypto-asset regulation in the past had been “murky to say the least.” Regulators had been struggling to define and classify this nascent asset class and had also been rushing to get a better understanding of how these financial instruments actually work, Sun explained.
She pointed out that many institutions “sat on the sidelines while awaiting regulatory guidance.” However, regulators across the globe are “now catching up to the demand for digital assets and moving quickly to establish clear requirements and guidelines for digital assets,” Sun claims while adding that “with these better defined regulations, institutions are no longer on the sidelines.”
“If the digital asset ecosystem of the past was defined by exponential growth, the next stage of this ecosystem will be driven by sustainable growth–one in which regulatory compliance plays a key role in global adoption. We’re now entering the golden age of digital assets as the asset class gains recognition from regulators, investors and institutions alike. And contrary to popular belief, regulation is good for the industry; it will make digital assets more appealing by helping ensure assets and users are safe, something we prioritize at Huobi.”
She further noted that if regulatory compliance is actually the future of crypto-assets, then we would require all industry participants to “act in a compliant manner.” She also mentioned that as “one of the leaders in this emerging industry, we see it as our responsibility to pave that path toward compliance for others by fully embracing digital asset regulations, which includes having open conversations with regulators, attaining all the proper licenses to operate in each jurisdiction, and helping develop regulatory compliant industry standards. ”
Sun believes that by embracing regulation, Huobi can help with bridging “the traditional and decentralized finance industries.” She added that in response to this industry shift, they have taken several measures to ensure regulatory compliance “even when it’s difficult to achieve. ” Sun revealed that this includes their “entity structure.”
“Huobi Technology, a company publicly-listed on the Hong Kong Stock Exchange, provides digital assets and traditional financial products and services to institutions and qualified investors. Earlier in the month (of March 2021), Huobi Asset Management (Hongkong) Limited, a wholly-owned subsidiary of Huobi Technology, was approved to launch a fund that consists 100% of virtual assets. In addition, Huobi Technology is also working to develop blockchain technology solutions.”
She further explained that their international compliance strategy is spread across several different countries and regions. In Hong Kong, for example, they acquired License No. 4 (for advising on securities), License No. 9 (for providing asset management), and the Hong Kong Trust and Company Service Provider License, Sun confirmed.
She further noted that they managed to acquire the Nevada Trust License in December of last year. Huobi Group “possesses licenses to operate legally in Japan, South Korea, Thailand, Gibraltar,” Sun added.
She also mentioned:
“Our conversations with regulators have helped us better understand their concerns, some of which have influenced the development of new security and compliance features. These conversations have also helped regulators understand the nuances of digital assets.”
“As part of our global expansion strategy, we at Huobi plan to continue evolving our operations to meet the requirements of the regulatory environment. Compliance will be crucial in the development of the blockchain industry, so we sincerely urge others to do the same.”