Adrian Harrison thinks that the local cryptocurrency market will finish the year with trading volumes down to about a third of last year’s $6 billion of transactions, maybe less.
Harrison, who is the chief executive of cryptocurrency exchange Huobi Australia, says: “A lot of people are under water. The market is a bit on the nose.”
Despite weak market conditions, Huobi is pushing ahead with ambitious plans for Australia. The Beijing-based company opened for business in Australia in July, with a staff of 12 in Melbourne.
It currently has what Harrison concedes is a modest offering of 10 tokens on a crypto-to-fiat platform.
The company is applying for an Australian Financial Service Licence and an Australian Markets Licence (it is already registered with anti-money laundering regulator Austrac).
When it gets all the paperwork done, it will roll out a much more extensive offering. Its plans include over-the-counter trading, token-to-token trading (trading pairs), structured products and margin loans.
Harrison says Huobi operates in a number of different markets and has 1300 people worldwide. He says Chinese companies, including Huobi, are making big investments in blockchain and artificial intelligence.
He argues that the Huobi exchange is a market leader in the quality of its interface and the security of its wallets.
Comparison site finder reviewed the platform, rating it highly for its ease of use, compliance with Australian regulations and security, while marking it down for its limited offering.
Harrison says a strength of the local market is the level of regulatory certainty, with Austrac, the Australian Securities and Investments Commission and the Australian Taxation Office “giving strong direction”.
He expects that there will be more regulation, which will shake out some of the weaker operators and give the market greater legitimacy.
Harrison noted that that the Financial Ombudsman Service reported a small but growing number of disputes involving digital currency exchanges during 2017/18. The disputes were about execution of orders, poor disclosure and contract terms and conditions.
He says good service relies on a few factors, the most important of which is compliance with regulations. “Don’t sign up with an exchange if it is not KYC compliant,’ he says.
Other critical service factors include the number of tokens available for trading, liquidity, spreads, ease of use of the interface and security of storage.