The sweeping set of bans that the Chinese government placed on the cryptocurrency industry in late 2017 became an important part of a story that is still unfolding two years later.
Now, in 2019, the actions that the Chinese government is taking are still having a profound effect on the cryptocurrency industry around the world.
Recently, Finance Magnates spoke to Marie Tatibouet, Chief Marketing Officer at Gate.io, about the experience of navigating regulation in China as an exchange that was originally headquartered there, as well as the exchange’s plans for the future and strategy in Asian markets.
What is Gate.io?
“The most important thing to know about Gate.io is that we really started off serving just retail traders, and we’re focused on bringing an easy-to-use user experience,” Tatibouet said, adding that once the exchange had created its product and amassed 2 million users, “[that’s when] we decided to build out all of our features. That’s when we added margin trading, perpetual contracts, margin borrowing.”
Now, Tatibouet says, the exchange is set to hit 3 million users by the end of this year.
Additionally, Gate.io held a $64 million sale for GT, its native cryptocurrency, in April of this year. GT will launch on “GateChain”, its own public blockchain, in December.
Tatibouet explained that the coin was designed to address two specific issues within the cryptocurrency industry: hacking and user error.
Gate.io has been hacked in the past. When the exchange was founded in 2013, it was originally known as Bter; in 2015, Bter was hacked for nearly 7,000 Bitcoins. The exchange rebranded to Gate.io in 2017, following the Chinese governments’ sweeping set of bans on ICOs, fiat-to-crypto trading, and other aspects of the cryptocurrency industry.
Then, Gate.io was hacked again in January of this year for roughly $271,500 worth of Ethereum classic tokens. The hacker allegedly returned at least $100,000 of the tokens the following week.
But Tatibouet said that “anytime we’ve had issues, we’ve always reimbursed the user.”
The recent ETC 51% hacker has returned $100k worth of ETC back to https://t.co/8kWqgDWNXb on the 10th of January. We have raised the ETC confirmation number to 4000 and launched a strict 51% detection for enhanced protection.
— Gate.io Exchange (@gate_io) January 12, 2019
Tatibouet explained that the method behind this new mechanism is through the creation of temporary accounts on the GateChain: “if you have a problem, then you can inform the platform, and the funds will automatically be put into a temporary account, and then you will be able to retrieve them.”
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She added that this mechanism does make it possible for funds to be retrieved without the exchange having access to its users’ private keys. “Most users don’t want the platform to have access to their private keys,” she said. “[So] we transfer funds to a temporary account, and you put your own password there. And because we’ve done KYC, we can make sure that it goes only to you.”
Tatibouet continued to say that Gate.io’s decentralized exchange will be launched alongside GateChain in December. GT will be used as gas on the exchange.
Centralized exchanges “don’t want to control [your] funds”
“One of the things that we’ve really explored–and one of the biggest misunderstands I see in the industry–is that users feel like centralized exchanges are trying to control their funds.” However, “For any quality exchange, that couldn’t be further from the truth, because if you don’t [control] your funds, they fall upon our responsibility.”
Tatibouet explained that Gate.io makes an effort to encourage users not to store their funds on the exchange unless they need them to be traded there: “we really remind them a lot about that,” she said. “Anytime we’ve suffered issues, we’ve always reimbursed the user. And we’re really proud of the fact that we’ve always been able to do that.”
“We wouldn’t want to get to the point where we’re not able to do that,” she added. “So, making sure that users are taking responsibility for their funds is really important.”
“There have been a lot of exchanges that have been really scammy,” she continued. “But I think in general, with centralized exchanges that are reputable–they’re not looking to control your funds at all. And any big centralized exchange is launching a decentralized exchange to help all of their users go over to the decentralized exchange.”
“The only issue, of course, is that until this year, decentralized exchanges were very poor in terms of technical capabilities; the matching was difficult and you don’t get all of the features (like margin trading) on decentralized exchanges,” she said, adding that “technical capabilities are changing and advancing.”
“If you know anything about China, you’ll know that a lot of the regulation that comes through is always very much open to interpretation, especially when it comes to enforcement.”
We also asked Tatibouet about how Gate.io managed to navigate the sweeping set of bans restricting the cryptocurrency industry that came from the Chinese government in 2017. While the exchange is no longer headquartered in China, it still serves Chinese users and has offices in the country, as well as Canada and South Korea.
She started off by saying that things may look a bit different from the inside than the outside: “the ban is open to interpretation,” she said. “If you know anything about China, you’ll know that a lot of the regulation that comes through is always very much open to interpretation, especially when it comes to enforcement.”
Nevertheless, “we’ve been very careful,” Tatibouet continued. “We don’t do any outward promotion on the Chinese market.”
Still, “we’ve really continued to grow on the Chinese market thanks to word of mouth. We’ve done studies, and when we check the number of page views that we have versus the number of logins, we have a very high retention rate, and we have very loyal [Chinese] users.”
“I think that [although] we’ve been through major challenges, but especially when it comes to hacking, we’ve always reimbursed users…and that’s only increased their trust of us.”
Strategy in Asian markets
Gate.io’s presence in South Korea and China has given the company a window into Asian crypto culture that most cryptocurrency exchanges based in western countries don’t have access to.
“In Asian markets, there are a lot of people who are interested in cryptocurrency. Asia has a lot of young people, and I think they’re also very technically savvy–more so than in other emerging markets. They’re also having access to funds more and more quickly.”
“So, we’re onboarding a lot of users who are quite young,” she said. “Our bet is that in the future, they’ll be more interested.”
“One of the other things that we’ve seen, for example…is that a lot of the funds and cryptocurrency that we’ve seen go through the Philippines are for remittance.”
This was an excerpt. To hear the full interview with Marie Tatibouet, visit us on Soundcloud or Youtube.