Crypto Giant Binance Starts Yuan Trading in China Homecoming

Zheping Huang

10 Oct 2019, 08:19 AM IST

(Bloomberg) -- Binance Holdings Ltd. was quick to leave China after regulators started to crack down on digital currencies. Now, the exchange behemoth has returned to its lucrative home market to host over-the-counter yuan trade.

The startup launched a peer-to-peer trading platform that lets users trade Bitcoin, Ether and Tether against the Chinese currency. Founder and Chief Executive Officer Zhao Changpeng said in a tweet the P2P service will start with China, then expand into other regions.

The platform marks a homecoming for a startup that quit the country two years ago, when regulators ordered local crypto-exchanges to stop targeting domestic clients for fear of stoking financial speculation. Binance blocked Chinese Internet Protocol addresses, moved its offices to places like Japan and Taiwan, and incorporated on the Mediterranean island of Malta.

Yet crypto-trading has flourished in China through OTC platforms, which host direct broker-dealer transactions versus trades on a centralized exchange. OTC platforms run by Chinese operators Huobi and OKCoin are now among the most popular vehicles for local traders to exchange yuan for digital coins. Wallet apps operated by Alibaba Group Holding Ltd. and Tencent Holdings Ltd. are used in OTC trading though the central bank has warned against it.

Binance’s OTC service also represents its latest foray into the world of fiat money. Founded two years ago, the startup gained momentum by handling crypto only, which allowed it to grow rapidly without dealing with banks and regulators. But more recently, Binance has set up regulatory-compliant exchanges in jurisdictions like Singapore to appeal to a larger user base. In August, it announced a so-called stable coin to rival Facebook Inc.’s controversial Libra currency. Both are intended to be used for everyday transactions across the globe.

In September, Binance made its first strategic investment in China, joining a financing round that valued crypto-data site Mars Finance at about $200 million.

To contact the reporter on this story: Zheping Huang in Hong Kong at zhuang245@bloomberg.net

To contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Joanna Ossinger