Chinese Bitcoin exchange Huobi has announced its launching of a new service, Caimao, which allows you to use your bitcoins as collateral for trading on the Shanghai Stock Exchange.
2015 has been a much quieter year for bitcoin exchanges relative to last, when new venues and features were common- still riding the wake of multifold rises in crypto prices in late 2013. China was at the center of the speculative craze. With the speculative bubble well behind us and prices not really moving much these days, it seems that trader interest may be waning, particularly in China.
Indeed, Huobi acknowledges that the business environment for exchanges has become difficult. In a sense, the Shanghai Stock Exchange has functioned like a crypto exchange during the past year, its composite index rising by 125%. The resurgence of volatility on it- today saw the composite drop by a cool 4.06%, a figure unheard of from most world indices since the great financial crisis- has attracted Chinese traders in droves.
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Thus, Huobi has come to cater to this demand with Caimao. The offering allows you to supply the yuan-equivalent value of your bitcoins, and borrow an additional 60%, to trade on the exchange. Deposited bitcoins are only liquidated if account equity falls below pre-defined margin levels. Interest is charged on borrowed amounts, and withdrawable bitcoin balances are adjusted based on overall profits/losses.
In a possible shift, Huobi says that its long-term vision is “a world in which anyone anywhere can invest in anything.” Bitcoin, it says, has provided the foundation to make this possible.
A Huobi representative told Finance Magnates that its partner, Wanlian Securities, is handling the trade execution.