Bobby Lee, chief executive officer of BTCC, shares the developments happening in its bitcoin business and how the company maintains a good relationship with Chinese regulators.
Here is the transcript of the video:
Emmanuel Daniel (ED): Hi, Bobby. Good to see you. Good to be here at your office. 100 employees doing different things. How have you diversified your bitcoin business so far?
Bobby Lee (BL): Yeah. So, we started – we’ve been running for close to six years now. BTCC started as BTC China. We were the very first bitcoin exchange in China. We were the first to get VC funding. So, we started in 2011, and we started our first business in bitcoin exchange, which is basically allowing people to buy and sell bitcoin in China, in the Chinese market, using Chinese currency, the RMB.
ED: Okay. So, how many activities are you in right now?
BL: After the Bitcoin exchange, we started doing mining pool service, which allows people to mine profitably. The third is a wallet service, allowing people to store wallets. We launched our first-generation wallet about four years ago – actually, three and a half years ago – and just this past week, we launched a new wallet called Moby. Moby is a new, global, multicurrency wallet, and it allows people to hold and transfer the bitcoin in all currencies. We support over 100 currencies. As you can see, I have a lot of bitcoin in here, but I have a lot of currencies. You can look at all the currencies in here.
ED: Right. But, the operating currency is still bitcoin, right?
BL: Yeah, it’s still bitcoin.
ED: It’s just that you can have it exhibited in any currency.
ED: So, this is global; this is not Chinese?
BL: Correct, it’s global. We serve mobile phone numbers anywhere in the world, so this means that with Moby, once you put your bitcoin and money in here, you can send money to anywhere in the world, including the whole universe of Twitter. We support Twitter accounts. So, 320 million Twitter accounts and mobile numbers.
ED: Okay. How many members do you have?
BL: We don’t disclose that publicly, but we’ve only launched since January 1st. We’ve been in beta since January, and we launched –
ED: And you’ve said that you have members from about 130 –
BL: Yeah, 100-plus countries. And then, you can use Moby to hold your Bitcoins. So, what we have here is the very first Bitcoin ATM machine in China. We’ve had this for a few years now. This can allow us to buy Bitcoin. So, we can set it up to do a demo of that.
ED: Okay. How is your relationship with the regulator at the moment?
BL: It’s good. So, the People’s Bank of China (PBOC) started investigating Bitcoin exchange in January. They’re deciding what to do and how to regulate Bitcoin exchanges. What happened in early March, favourably, is that they decided that they want to keep Bitcoin exchanges operating in China. They will institute new rules about KYC-AML to prevent terrorist financing, to prevent suspicious activities, and so on and so forth.
ED: So, what about foreign exchange and concern about money –
BL: So, also that – foreign exchange rules and stuff like that. Bitcoin exchanges in China – the licensing regime will not start right away, but they will have very clear rules coming down from the PBOC – the central bank – for how Bitcoin trading platforms should be operating. So, we’re very excited. We think it’s going to be coming very soon. Bitcoin exchanges like us – BTC China – will be running in compliance with that.
ED: Okay. There’s no concern about leakage and money laundering – not money laundering, but more like FX losses and stuff?
BL: There’s always a risk, but Bitcoin exchanges – if we run in compliance with those rules, then we’ll be held to a much higher level.
ED: Quick question – I always thought that the price of Bitcoin at the moment is being held up because of Chinese investors more than anything else. How true do you think that is?
BL: I think that’s not so true. I think China is a big part of the Bitcoin ecosystem, but the reality is it’s truly a global digital asset class. So, people in China, South America, North America, Europe, Africa – everyone’s looking at Bitcoin. Everyone’s holding Bitcoin. It’s a global base of consumers and users holding in only Bitcoin. So, Bitcoin has surged to its all-time high this year. So, it’s crossed – right now, it’s about $1,000.00. It’s crossed $1,300.00, and I think the price is yet to come. It’s going to go much higher over the next few years.
ED: Right. And, how’s business?
BL: These are lines of physical Bitcoins. This is the largest Bitcoin block – the 25 BTC. These are smaller. This is the largest coin – the five Bitcoin. It comes in a double and single. These are one Bitcoin. These started selling last May – the one Bitcoin. This is the half Bitcoin, and these are the chips – the smaller units.
ED: Why do they have to be physical?
BL: The idea of the Bitcoin chip is that the value is in the Bitcoin chip – it’s behind a sticker. There’s a tamper-evident holographic sticker. Each one is uniquely coded. It’s got its private key printed there, along with a QR code.
ED: But, who issues this?
BL: We make it. It’s like a harder wallet. This is made by BTCC.
ED: So, it’s accepted? It’s respected by BTCC? You can come in here and exchange it?
BL: The reality is that we don’t have to – there’s no counter-party risk other than the fact that you trust that we made this. In here, it’s got the private key. So, behind the hologram sticker, it’s got a unique CR number on it, and there’s a private key. As you know, Bitcoins exist in Bitcoin accounts – Bitcoin addresses. So, this has a private key for the account that holds 1,000 bits. This is 1,000 bits. The other units here – if you look at the other ones here, you’ve got the red chips, the blue, the green – 25k – the black is 100,000 bits. The blue is 500,000 bits. So, blue is equivalent to half a Bitcoin. The black chip is equivalent to 1/10 of a Bitcoin, which would be over $100.00. That’s worth over $100.00.
ED: Yeah, but you issued it, so…
BL: We issued it in the sense that we make it.
ED: Yeah, but are you allowed by regulators to do that?
BL: It’s a wallet. It’s no different than printing out a QR code for a Bitcoin address. We happen to have some Bitcoins in it. So, it’s not legal tender. It’s not real money, per se. It’s digital currency.
ED: When it’s bought, there’s a fee element involved in it.
BL: When you buy this? Yeah, we charge a small manufacturing cost on top of the actual bits.
ED: So, you’ve got little bits of different things on which you make small amounts of fees, basically.
BL: Yes, exactly.
ED: Is it profitable?
BL: Yes. So, last year, we had our first year of full profitability.
ED: If I were to ask you – with the new models coming up, Iridium –
BL: Ethereum, yes.
ED: Is there a temptation to go into that?
BL: Yeah, we’re looking into it actively. We have a variety
ED: But, why would you go into –
BL: No, we would offer additional currencies, additional assets. Bitcoin was the very first digital currency available in the world – a true digital asset – and since then, we’ve had Litecoin, Guldencoin, Ethereum, and many others. So, we’re going to look at it to see what makes sense to add to our portfolio of services.
ED: But, do each of these models or coins have a community around them?
BL: Absolutely, they do.
ED: They’ve got the diehard fans.
BL: That’s right.
ED: So, you’ve got to start all over again to start a new community if you went into –
BL: Well, it’s all – I mean, broadly speaking, bitcoin is the largest community. All of the other asset classes are smaller subcommunities within the bitcoin digital currency community.
ED: But, they serve different needs, right?
BL: Sort of.
ED: So, you’ve got to look for those needs and those ways.
BL: Yes. It’s about different blockchain technologies, private blockchain, and all the best digital assets and ledgers.
ED: It’s kind of a very slow way to become rich –
BL: We’ll see.
ED: – unless you have bitcoins themselves.
BL: Yeah, we’ll see. But, with the Moby business, we think we can take this to a much broader – a worldwide acceptance.
ED: That should give you a temptation to start a mall, you know? To start buying –
BL: Commerce shops? Yeah, we could do that, but we’re focused on Moby being a global money platform with payments inherently, with cross-border payments, with people storing their money, converting whatever currencies… Early Bitcoin adopters like you – your Bitcoins have gone up 3x, 5x –
ED: I’m quite happy about that.
ED: And, what are the next steps for you?
BL: The next steps are we’re going to expand this and make it truly global – put this into many dozens of countries and have more users. We’re very excited about the growth of Moby.
ED: And, the 100 people who work in your office – what do they do?
BL: They do everything from the bitcoin exchange, to the mining pool, to the line of BTCC mint products – the coins – and also, the Moby wallet. That’s our newest offering.
ED: Right. And, the mining pool is more like holding the community together rather than actually doing the mining?
BL: Correct. We don’t actually invest in mining hardware, but we work together with the miners – the bitcoin miners in China, and then, they use our mining pool service to guarantee a steady income stream.
ED: Great catching up with you, Bobby, and it’s always great to follow what you’re doing, and great to be here in your office.