Huobi’s co-founder and CMO, Du Jun, did a recent AMA (ask me anything, or in Chinese, everyone ask everyone) covering a range of Huobi topics of interest on BTCside, a Chinese Bitcoin news site.
One of the more recent developments of interest was a reported loss on Huobi’s futures and margin trading platform, BitVC. A trader was on the wrong side of a very large leveraged position during a fast market, and the exchange was unable to close out the position in time before losing some of its own capital.
At the time, controversy arose when the exchange apparently covered the losses with trader profits. The move was defended as an appropriate measure when dealing with counterparty risk, as found in conventional futures trading. The exchange later credited the amounts in the form of waived trading fees.
To further mitigate risk, leverage on weekly contracts has been reduced from 20x to 10x. This was made even more necessary by the relatively low liquidity in these markets, which can amplify volatility. Jun acknowledged that being the first in China with such offerings means that it inevitably is the first to encounter such unknowns and hiccups.
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Also discussed was Apple Pay. In short, he doesn’t view Apple Pay as a threat to Bitcoin. It is built upon the existing financial system which still entails foreign conversion fees, interchange fees and slow settlement times. If anything, Apple Pay may enhance Bitcoin one day if it supports it. Even now, it is helping consumers get accustomed to digital payments. The assessment echoes that of Pantera Capital and others.
In terms of the state of Bitcoin in China vis-a-vis government policy, Jun said that nothing has really changed since December 5th, nearly one year ago. In the meantime, the industry has thrived in the country.
Finally, Dogecoin asked if it will be incorporated into the exchange. Jun replied that he is impressed by the community’s passion, but it needs more time to prove itself and withstand scrutiny before making it onto the exchange, as is the case for all altcoins.
In an interview with Forex Magnates in February, CEO Leon Li made a similar assessment–but also indicated plans for Litecoin.