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The fundamentals for crypto haven’t really changed: Okcoin CEO

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Hong Fang, Okcoin CEO, joins Yahoo Finance Live to discuss the state of the crypto market and the regulatory environment around cryptocurrency.

Video Transcript

KRISTEN MYERS: So, Jared, you're sticking with us for this next conversation, which is going to be all about crypto. We have the CEO of Okcoin, which is a cryptocurrency platform, Hong Fang joining us now. So, Hong, I'm curious to know what makes Okcoin different from some of the other crypto exchanges like Coinbase for example, or something like Gemini?

HONG FANG: Yeah. Like Coinbase and Gemini, we are licensed in US. We are registered with Fin CEN and are licensed to operate in 44 states at this point. Different from them, we are a very global platform. We're not just working in US. We also have a customer base in Asia, in Latin America, and other parts of the world. And we feel very strong about serving everyone in the world, making it accessible and possible.

- Well, I'm looking at your website and the various cryptocurrencies that you support. And it's quite a few. I note that Dogecoin is up there, Polkadot, Tether, Litecoin. How is it that you're offering these particular alt coins when a lot of your competitors simply don't?

HONG FANG: No. If you look at the other platforms, I think they're very similar offerings actually. And we do go through a very vigorous internal process when it comes to our listing.

ALEXIS CHRISTOFOROUS: I'd love to get your take on what we saw happen yesterday, that's this crypto meltdown. And a lot of folks are saying that even though we're seeing a bounce back today, that long term there are some worries, especially with the way a lot of people seem to be borrowing in order to pay for their Bitcoin, basically over leveraging themselves. Does that concern you at all? And how should perhaps even regulators be taking a second look at this?

HONG FANG: Yeah, no. I think at the micro level, if you look at the market right now, the pullback yesterday was very brutal. But I think it's a healthy pull back. To your point, there was a lot of leverage in the market. And I think through the pullback, we're getting back to a more healthy status for the market. And we actually see a lot of inbound flow in the form of stable coins with both our exchanges and other exchange platforms. And that's just a very much spot that we covered. People who are actually believing in this long-term are willing to buy [INAUDIBLE].

And also if you look at what has happened this year to date, take Bitcoin for example. The increase of Bitcoin price is actually close to 40%, which is still a very decent increase. But when you look at the all time high price over starting of the year, it's over 110%. So that definitely indicates a lot of softness in the market that led to a 100% increase within such a short time frame.

However, if you take a step back, there's a model of it. I actually disagree with the point that the fundamentals changes. I think the fundamentals for crypto hasn't really changed. There's always a long term evolution to the digitization about life that was started by internet. And crypto is a continuation of it. And that hasn't changed. There is the concern about inflation and how we hedge against inflation long term. And I don't think that changes. And there also information for empowering individuals and empowering the decentralized mediation. And that hasn't changed.

And then you talk about the philosophical debate about privacy and things like that. And that hasn't changed. So I think there are cyclical trends that have been driving crypto adoption long term. And those cyclical trends are still here with us. So I think the important thing to bear in mind is ask ourselves, what we are here for? What is the fundamental that we're looking for? Always look for fundamentals.

- Well--

- I want to ask you-- No, go ahead, Jared. We both want to ask you about the regulatory environment. So go ahead, Jared.

- Yeah, because we just got some news earlier today that sent the price of most of the cryptocurrencies down. And that was the Treasury basically saying that this Biden proposal to overhaul the tax, the IRS, includes a portion of cryptocurrency proposals, one of which would be mandatory reporting of all transactions over $10,000. Where do you see this fitting? And where do you see this going? Because as an outside observer, it just seems to me like the regulatory rhetoric has kind of ramped up recently. And then coincidentally we have these lower crypto prices. I'm wondering how you view the situation.

HONG FANG: Yeah. I actually think that is expected as crypto going more mainstream as it touches a wider audience. I think it is expected to see regulators around the world pay more attention to it, in particular the US, having a more vigorous-- more transparent way of regulating it. US is actually a market where there are actually more regulatory transparency than many other markets in the world. And that's why we are here for. And we fully embrace regulatory framework because that actually helps adoption, helps providing kind of [INAUDIBLE] to the industry as crypto reaches more people in the world.

So I think that is actually expected. However, there's always a conversation, a high level conversation, philosophical debate, of where is the line between, for example, how do we make sure AML policy is fully adhered to versus privacy protecting privacy of individuals. Can technology be a better tool for us to do that? I think there's always that kind of debate. And that's a healthy debate to be had, particularly in the US.

When it comes to tax, I think there are people who are probably trying to use crypto to evade tax. But I don't think it's a smart idea because it does leave trail on chain. It can be traceable. And it's actually a permanent traces on chain. So I don't think it's a smart idea to actually use it can evade tax. And there are rules existing, rules already, about people having to report their gain in crypto trading activities. I mean, that's already in place.

The point is probably, where should that line be? Is $10,000 the right line, or it's probably something else? Or are there any-- how to execute it? Or how do you define those type of transactions? So I think there are a lot of room to explore and discuss here. And I would be very happy to see more conversation around that between the market participants and the regulatory body because I think that's constructive.