Can Huobi Strengthen Canada’s Local Blockchain Industry? Ross Zhang Sees Value in Centralized Exchanges

Ross Zhang, CEO of Huobi Canada, recently spoke at the Futurist Conference in Toronto, sharing his vision for the local blockchain market.

Asurveypublished by the Bank of Canada in July showed Bitcoin ownership in the country to have nearly doubled, leaving no doubt there is ample local demand for cryptocurrency exchanges with strong backbones.

Having noticed this demand, Huobi - the world’s third-largest cryptocurrency exchange by adjusted trading volume - made a decision to expand into the country.

Ross Zhang, CEO of Huobi Canada, indicated as much during a panel at the Blockchain Futurist Conference in Toronto.

“We already have global operations in South Korea, Japan, Australia, the UK, and now in Canada,” he said.

But can the exchange match the needs of the potential customer base it can reach?

The markets of each country have specific needs and rules, but cryptocurrencies are not subject to the complexities arising from the local status quo. According to Zhang, customers around the world have two concerns: liquidity and safety.

“The global perspective that we have is, first of all, we think about our customers and what they want. They want more liquidity and deeper market depth so that their crypto to crypto trade can be settled instantaneously at cheaper price. Actually, we are one of the top liquidity providers for smaller exchanges. Secondly, customers want security and investor protection from an exchange. Huobi is one of the most secure exchanges. We also have an investor protection fund that Huobi buys back Huobi Tokens from circulation and put into an investor protection fund in case of incidents. Also Huobi OTC provides a convenient way for users to buy crypto using fiat currencies with zero transaction fee. So, I’m really looking forward to bring [Huobi’s] global experiences and global technologies to the Canadian market, and to serve the Canadian consumers better,” he said.

The lack of liquidity in an exchange can kill its reputation as a reliable provider of FX services. It could lead to significant delays in transaction processing as the company seeks funding sources or outright rejections to process anything, much like an online store failing to deliver a product that is out of stock. The former can leave users of a platform feeling robbed of their money because their transfers are not being executed in a timely manner.

Looking at exchanges in Canada, it is clear that liquidity is somewhat of an issue in general. At the time of writing, Canadian Bitcoins is selling BTC at $6,515, a slight premium on the current global average price of $6,308.

QuickBT, a large Canadian exchange allowing users to buy BTC with their phones, sells the cryptocurrency at $6,740. Ottawa-based MyBTC currently offers the closest price to the world average, with a BTC/USD rate of $6,316.66.

None of these exchanges offers the advanced trading tools or the level of liquidity that Huobi can, which gives the Singapore-based a significant advantage when setting up shop in Canada. In addition, Huobi Cloud can provide smaller exchanges in the country with a white-label service, offering a powerful back-end for their platforms, as it didin many countrieswithout a strong cryptocurrency trading infrastructure.

What about decentralized exchanges?

During the panel, one of the speakers exhibited remarkable optimism about decentralized exchanges after being asked what made him most excited regarding the future of the cryptocurrency exchange ecosystem.

The ultimate goal of cryptocurrencies has always been the decentralization of money. This is seen as a way of attracting more privacy-minded individuals and laying the foundations of a future where people can engage in commerce with far greater ease due to avoiding the need to deal with banks.

There is, however, a chokepoint in all of this at the exchange level. Since the vast majority of exchanges have a physical presence with a postal address, governments can regulate their local cryptocurrency markets and sometimes make coins almost inaccessible by going after the very places where people buy and sell them.

“In the short term, we see decentralized exchanges [and other] different models for exchanges. But still, I would believe that centralized exchanges—especially the big ones like Huobi—continue to create value for their customers because they have the liquidity advantage and superior transaction speed that customers want, especially API users. In the short term, I think this will be a time in which the centralized exchanges will [continue to] dominate,” he said.

This is not to say Zhang is entirely shrugging off the idea. Currently, decentralized exchanges do experience certain limitations when it comes to liquidity, but this may not always be the case.

We are even witnessing OTC fiat-to-crypto trades on exchanges like Bisq, which does not rely on a central server for its platform. Zhang believes that current developments might provide us with a perspective on the long-term fate of this phenomenon.

Over the next year or so, Huobi is building its own ecosystem, which may offer a boost to what he calls “public blockchain” exchanges. Zhang also revealed this was something his company was currently working on.

“In the far future, a lot of businesses are going to [move to] the public blockchain once the speed and security and overall regulatory issues are resolved. We can see that a lot of businesses are already moving to the public chain space. That’s why we’re building our own public chain called Huobi Chain. It’s how we see things in the future,” he said.

All in all, Canada’s demand for cryptocurrencies coupled with its need for more liquidity creates the perfect vacuum for Huobi to fill and take charge of the local market. If decentralized exchanges start gaining ground, they could very well find Huobi offering a b