Benzinga, a media and data provider bridging the gap between retail and institutional investors, is bringing back its annual Global Fintech Awards event to New York City on Dec. 8, 2022.
Ahead of this recognition of disruptive innovators in finance and technology, Benzinga will periodically publish articles on those brands that it thinks are making a measurable impact.
Today’s conversation is with Lily Zhang, the chief financial officer of cryptocurrency exchange Huobi Global.
The following text was edited for clarity and concision.
Q: Hey Lily, nice to meet you! Huobi is a world-leading cryptocurrency exchange. Can you tell me what it takes to be a world leader?
Zhang: Essentially, it means being able to offer a quality trading platform with three major characteristics: a wide breadth of trading products and services, scale and liquidity (especially for institutional investors), as well as asset safety and security.
Are there many platforms that provide those three characteristics on a global scale?
There are very few platforms that can provide the above three on a global scale. At the end of the day, it is the case that many users want to be able to trade everything on one platform. This is our main value proposition.
On our platform, users can trade everything from Bitcoin (CRYPTO: BTC) to complex derivatives, asset management products, and more. This is in contrast to many smaller exchanges, which can only offer a handful of cryptocurrencies.
Can you talk a bit more about the core business?
Huobi's core business is running a global cryptocurrency exchange, including spot trading, derivatives trading, and asset management (staking products in the form of Huobi Earn).
Spot trading means offering trading services for cryptocurrencies such as Bitcoin and Ethereum (CRYPTO: ETH). Derivatives include coin-margined futures and swaps, USDT-margined futures and swaps, and options. At the same time, Huobi is also expanding its ecosystem of businesses and investments. Recently, we acquired Bitex, a cryptocurrency exchange with operations in Latin America.
With an exchange such as yours, scale and liquidity make it easier for institutions to access these markets quickly, right? What else is important?
Yes. If you don’t have scale and liquidity, then customers may have to sell at deep discounts to market prices. Providing asset safety and security is also a unique proposition of Huobi Global, especially during the current market turmoil, where many smaller exchanges and lending platforms are freezing user withdrawals.
We have 20,000 BTC in our security reserve for volatile situations, ensuring we are able to meet trading obligations and keep user withdrawals open. Huobi Global has never had a security incident or hack in the nine years that it has been operating, and this is a unique track record in the industry.
What other brands in the space exist and how – if any – are they solving emerging problems in crypto? How does Houbi solve the problems better?
Global exchanges include Huobi Global, Binance, and FTX. We operate across borders, in different languages, and are able to offer a large number of products across spot trading, derivatives trading, NFTs, fixed income products, etc.
Huobi’s strength is the span of products we offer, as well as the large trading volumes and liquidity, which are appealing to institutional investors.
In today’s bear market, many smaller local exchanges are in precarious situations simply because of their smaller size and limited reserves. Many have to freeze user withdrawals.
Huobi Global is a top cryptocurrency exchange by the size of trading volumes, and this deep liquidity and large scale enable us to operate normally throughout market downturns.
What are some of the difficulties in building the company at this stage of its lifecycle?
It’s a challenge trying to run a global business across many regions, countries, and languages.
At some point, one has to gradually build out local teams in certain countries and delegate decision-making responsibilities and autonomy, but it’s challenging to figure out when exactly that should happen, especially as cryptocurrency use is exploding across the world.
There are also other factors at play, such as varying degrees of regulations in different countries and language barriers.
Currently, decision-making and strategic planning are centralized by upper management across the company, with small local teams in different countries to execute plans. This ensures that we are able to move quickly, albeit with some degree of input from local teams and a centralized translation center that we operate.
Market volatility has many questioning the stability of their gateways to these emerging markets like crypto. The perception, in many cases, where platforms have failed, was that there was no counterparty risk and client funds would be safe. In what unique way is Huobi mitigating risks for its clients?
Huobi Global has not had a single major security incident in the last nine years that has resulted in the loss of users’ assets, and the exchange has continued to ensure the security of users’ assets and transactions.
Huobi Global has adopted various methods such as hot and cold wallet separation, multi-signature, professional distributed architecture, and an anti-DDoS attack system to protect user assets. Note that the funds used to support our operations are entirely separate from and isolated from user funds.
Huobi Global also holds a security reserve of 20,000 BTC to help hedge against any market downturn and ensure that we are able to meet user obligations.
Talk to me about where Huobi will be in the next 6-12 months. What are some of the most exciting things the team is working on?
We’re optimistic and bullish on Web3, the metaverse, and other related businesses.
We believe that Web3 represents the evolution and next generation of the Internet into a more intelligent, decentralized, autonomous, and open network.
Centralized exchanges such as Huobi can support users migrating to Web3, by serving as a single source of trust and security. In short, we will act as a gateway to Web3, as exchanges are one-stop marketplaces for everything blockchain- and crypto-related.
We are primarily investing in Web3 via Web3 infrastructure and listing Web3-related projects. Thus far, Huobi has invested in OptimizmPBC, zkSync, and other high-quality Layer 2 programs, to further develop the infrastructure for a Web3 future.
With Huobi’s deep expertise in blockchain technologies and extensive industry experience, we can also help Web2 companies migrate to Web3 at the investment or incubation level.
Can you comment on recent rumors concerning Huobi layoffs, among other things? How can Huobi live through this crypto winter?
Huobi was not affected by any of the crises of the past few months. It upholds customer-centricity and is firmly committed to safeguarding the rights and interests of its customers. We always adhere to our promise of paying out 100% of our obligations to customers.
This hasn’t changed despite market conditions. Through this bear market, we maintained abundant cash flows and invested more than $300 million in expansion efforts. Our team is also in talks to invest in deals worth over $6 billion.
In regards to layoffs, we have no quota. Our business continues to operate normally and, going forward, we will continue to increase our investments in growing markets around the world, recruit the right talent, and further innovate.
