Hit by cryptocurrency curbs, Chinese fund managers eye HK, SG markets

REUTERS/Dado Ruvic

As the price of bitcoin soars, Chinese cryptocurrency asset managers are looking to expand in places such as Hong Kong and Singapore, skirting an intensified crackdown at home.

Cryptocurrency-focused hedge funds have grown assets under management and registered hefty gains this year thanks to bitcoin’s recent surge to over $18,000, close to its 2017 high.

At the same time, Beijing has been tightening already strict scrutiny over cryptocurrencies as the People’s Bank of China (PBOC) prepares to launch its own digital currency, partly a response to the threat from currencies like bitcoin, officials say.

Beijing banned virtual currency trading in 2017, stopping a free-wheeling emerging crypto industry, and causing China’s share of global bitcoin trading to slump to less than 4%, from nearly 17% in 2017, according to CoinShare, Europe’s biggest digital asset manager.

Consequently, Chinese businessmen are looking elsewhere to raise crypto-focused funds, following the path of some of the world’s largest crypto trading platforms which were founded in China but moved overseas in 2017.

This month, Babel Finance, a Hong Kong-based cryptocurrency financial services provider founded by Chinese entrepreneur Flex Yang, applied for an asset management license in the city, Yang said.

A license in the Asian financial hub would help Babel become a “gateway” between traditional financial institutions and crypto investing, said Yang, who dreams of creating “the JPMorgan in the field of cryptocurrency.”

If Babel receives a licence, Yang hopes to raise $1 billion, dwarfing existing funds in the city licenced under special rules for crypto-focused asset managers.

Gordon Chen, a former bitcoin trader in Beijing co-founded cryptocurrency asset manager GMR in Singapore last year, betting on growing demand from high-net-worth individuals and institutional investors.

Chen, who currently manages over $20 million of bitcoin assets, said he chose Singapore because of its regulatory structure. “Whether it’s in the US, or Singapore, digital currency business is being increasingly regulated.”

Singapore-based Onchain Custodian, which counts Chinese conglomerate Fosun as an investor is expanding too – even in China.

The company, which safeguards digital assets for institutional clients, plans to open an office in China to initially provide consultancy services in blockchain technology

However, activities onshore are still limited by regulation.

In October, the PBOC outlawed private issuance of digital currencies, and Malta-headquartered exchange OKEX was forced to suspend cryptocurrency withdrawals for a month because an executive was assisting Chinese law enforcement with their enquiries.

GMR’s Chen lamented that China has lost its global pricing power, as well as its role as a key hub for bitcoin trading and mining: “China’s first-mover advantage has vanished.”

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.