Huobi Group, which is an exchange conglomerate based in Singapore, has an authentic growth strategy when it comes to emerging markets: partner with local entities, and then split profits 50/50.
HIZA launching in May
HIZA, which is an exchange from South Africa, is going to launch during the upcoming month, and it will join a cohort of about 150 platforms under the Huobi Cloud umbrella, according to the senior business director of Huobi Group, named David Chen.
Chen said that they are going to help them get their trading volume up, which Huobi Group will expand its business when the market will be more mature. He added that up to 80 like-minded partnerships are in the pipeline right now.
However, the expansion from recently is not authentic to Huobi. Some global exchange giants such as Binance, open independent subsidiaries in the emerging markets such as Uganda or investing in local exchanges how Bittrex did with VALR, which is an exchange from South Africa.
Similar to this, Huobi Group offers some partners such as HIZA access to its global order books from prime liquidity. One interesting thing is that the partnership approach permits Huobi to actually minimize the regulatory risks of working in some under-developed markets – where the banking relationships require local repercussions and knowledge for unintentional missteps is still uncertain.
Chen said that HIZA owns its customer data, and it is not Huobi which owns it; otherwise, it would be the responsibility of Huobi. He also added that Huobi Group earned about $1.5 million in net profit since last year in October from some Cloud partnerships which are already live.
The partnership with Nigeria-based SaBi exchange
One collaboration like this is the one with SaBi exchange, based in Nigeria, which actually facilitates almost $100,000 worth of daily volume, according to the founder of SaBi, naled Lucky Uwakwe.
Chen even said that the purpose is to actually have such partners processing the accumulative total of about $55 million daily volume by the year 2020.
Uwakwe even mentioned that in his country, his exchange has a considerable regulatory hurdle to overcome if they have some intentions to boost volumes. That is why he also said that his exchange takes a multi-pronged approach with over-the-counter or OTC and peer-to-peer or P2P services.
He also said that they are creating options to give themselves space in case the government decides to shut down their operations with the banks. They want to create opportunities for the users so that they can also do what is actually more comfortable for them.
However, none of the jurisdictions outlawed cryptocurrency as much as they have still to implement regulatory standards which are actually comparable with the Asian or the Western markets.
Faith Obafemi, a lawyer from Nigeria, said that Bitcoin trading has not been banned. But, the banks, as well as other financial institutions have been prohibited from investing in cryptocurrencies.
The proactive approach of the South African government
On the other side, the founder of HIZA, named Talha Idris, said that the government of South Africa is starting to take a more proactive approach. He said that the government seeks comments on research and is probably going to update regulations accordingly. Huobi is going to help them with all the technical aspects, particularly security, according to Idris.
This could even turn out to be a lucrative play for Huobi Group as the national survey by HootSuite in January of this year, found that about 11% of the mobile users in South Africa own some crypto.
Moreover, P2P exchanges such as Paxful already demonstrated that the demand from different markets in Africa, which include South Africa and Nigeria, grows even during broader market slumps. This is actually spurred by strict capital controls in each of those particular countries.
Uwakwe from SaBi, speaking of local demand, added that they have got the drive. Even when a lot of restrictions and bans exist, people will find ways to get these things. When talking about their daily volume, they do quite a lot, according to him.