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The Chinese government has approved a South Korean crypto exchange to operate in the country despite barring all local crypto trading services. A report unveiled this news on February 7, noting that DBX had become the first South Korean crypto exchange to establish a subsidiary dubbed Tabi in China. Reportedly, Chinese authorities granted the exchange a corporation establishment license.
According to the report, DBX got initial approval from the Chinese government on December 28, 2020. After this, the exchange received a certificate of incorporation on February 5, making things official.
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Commenting on this development, a DBX official said,
The license to establish a corporation this time received from the Chinese government is a license that was obtained from the opposition to the establishment of foreign exchanges in China, so it can give even greater meaning.
Through this license, DBX, which is part of the Korea Blockchain Coordination Association, seeks to roll out Tabi before the end of March. The exchange also plans to branch out into the US, Singapore, Indonesia, and Cambodia after setting up shop in China.
Licensed crypto exchanges set to attract bank investments
Commenting on DMX’s licensing, Adrian Pollard, the co-founder of South Korea-based exchange provider bitHolla, said China’s issuance of the license is a necessary step to slowly control the crypto sector without snuffing it out. While he reminisces on how leading South Korean exchanges such as Bithumb were massive money transfer systems for both individuals and businesses in China, Adrian believes that this is a bullish move.
He added,
In my view, this legalization is just a controlled way to open up new international business avenues while crypto exchanges become more and more useful, like a bank.
While Pollard deems DMX’s licensing a bullish step for the crypto sector, he believes that Malaysia is a better option for crypto businesses. According to him, the country has a competitive business environment backed by a large English-speaking population. Malaysia’s competition with Singapore, which is proactively working on establishing a crypto-friendly environment, would attract more banks to invest in licensed crypto exchanges based in the country.
He then pointed out that Kenanga Investment Bank’s recent investment in a crypto exchange would help attract more FinTech businesses, seeing as open-source technology significantly minimizes entry barriers.
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A gradual move toward embracing digital assets
This news comes as China continues prohibiting domestic crypto trading. The country started banning crypto activities as early as 2017 by outlawing the operations of crypto exchanges. The government soon expanded this bar to include crypto mining and trading altogether.
However, the country has been gradually warming up to digital assets. For instance, the Beijing Arbitration Commission published a document in July last year, noting that China never placed a ban on Bitcoin (BTC) as a commodity. Authored by Wang Jin, an arbitrator for the commission, the report detailed that China only prohibits the use of BTC as a currency.
Apart from this, the country has been running pilot tests on its central bank-issued digital currency (CBDC) dubbed DCEP. Beijing is currently running the most recent DCEP trial, where it seeks to offer its residents 10 million digital yuan (approximately £1.08) as they prepare to celebrate the Chinese New Year festival on Friday. Before Beijing, Shenzhen ran a similar pilot in January, distributing 20 million digital yuan (approximately £2.16 million) to its residents.
