ACN had a chance to sit down today with Patrick Lam, the CEO of Hong Kong-based bitcoin exchange KBBEX and talk about its future plans. The company’s comfortable head office is in the Hong Kong Cyberport with stunning views across the Lamma Channel.
Lam and his partners launched the exchange in December after seeing bitcoin’s potential in their over-the-counter trading business and then raising HKD12 million (USD1.54 million) in seed capital.
Our exchange was built on customer demand. We have our own customer based. We actually started our business as OTC. That is… you give me money, I give you bitcoin. We saw the market as tremendous. Most clients are from China, Macau, Hong Kong, and Taiwan.
Adding to its traditional Chinese language exchange that caters to Hong Kong, Macau, and Taiwan markets, KBBEX will in January launch simplified Chinese and English language versions to target the mainland Chinese and global markets respectfully.
According to Hong Kong-native Lam, most of KBBEX’s users are from China, complemented by 20 to 30 percent from Macau and 10 to 15 percent from Hong Kong. A good part of the business from Macau is likely driven by the robust casino industry of the former Portuguese enclave and China’s stricter controls on mainland Chinese visitors to Macau.
Although KBBEX was registered in Vanuatu for tax purposes, Lam’s team felt Hong Kong with its laissez-faire business environment was a good place for the business office of its exchange operations.
“We have a healthy financial system, an uncorrupted (sic) government, and everything is based on contract,” Lam noted. There is a very low tax rate, good banking facilities, and in particular excellent online banking despite the customer population density. Despite the fact that Hong Kong’s public and its banks are still learning about bitcoin, Lam predicts that “Hong Kong will be one of the most successful cities for using bitcoin and exchanging bitcoin.”
Although its HQ is in Hong Kong, KBBEX utilizes Taiwanese developers and servers as the pricing there is competitive to China or Hong Kong.
There is also the strategic benefit of its developing relationship with local Taiwan bitcoin firm BitoEx. Fostered by a friendship between Lam and BitoEX CEO Titan Cheng, a joint venture rapidly developed in 2014 and was revealed in December. KBBEX and BitoEX formed a partnership to enable bitcoin purchases via digital kiosks in thousands of convenience stores in Taiwan.
With the recent addition of 7-11 to a list of store chains being serviced by the joint venture that include OKMart, FamilyMart and Hi-Life, KBBEX is providing BitoEX an exchange platform for 11,000 stores. The addition of 7-11 is actually a brand new development first to be revealed by ACN, and means that the joint venture has completely bitcoinized Taiwan’s highly competitive convenience store industry.
KBBEX has even more ambitious plans. Its management is investing in infrastructure and developing an API to become an exchange of exchanges. Lam and his team plan to allow the traders and “makers” in its customer base access to its API.
KBBEX has also been able to form partnerships with many of the world’s significant bitcoin exchanges. “We have worked with five or six major exchanges. We are a hub or switch for all exchanges. Most exchanges you have heard of, we work with them.”
Lam indicated that KBBEX was also planning on launching bitcoin futures trading in the second quarter of 2015.
It may also not be surprising that Lam is very positive about bitcoin’s future prospects as a currency. He is also not concerned about its volatility.
We like to see volatility. If there is more volatility, more people will come and more public will accept bitcoin. I see bitcoin in the short term staying around $300. If the popularity of bitcoin grows, it could be in two years ten times the value. Most of the smartest persons I have met recently are all doing bitcoin businesses as they can see the big picture of bitcoin.