Crypto in China: What It Really Looks Like - Ep.139

Transcript

Hi, everyone. Welcome to Unchained, your no-hype resource for all things crypto. I'm your host, Laura Shin. In case you haven't heard, I have another crypto podcast called Unconfirmed. It's shorter, newsier, and comes out Fridays. If you haven't yet, go subscribe now wherever you get your podcasts. Also, find out what I think are the top stories in crypto by signing up for my weekly newsletter at unchainedpodcast.com. Crypto.com. Get their app and buy crypto at true cost with no fees or markups. Get a metal MCO Visa card with up to 5% back on all your spending. Want more? Download the Crypto.com app today. Kraken is the best exchange in the world for buying and selling digital assets. It has the tightest security, deep liquidity, and a great fee structure with no minimum or hidden fees. Whether you're looking for a simple fiat on-ramp

or futures trading, Kraken is the place for you. CypherTrace cutting-edge cryptocurrency intelligence powers anti-money laundering, blockchain analytics, and threat intel. Leading exchanges, virtual currency businesses, banks, and regulators themselves use CypherTrace to comply with regulation and to monitor compliance. My guest today is Emily Parker, co-founder of Longhash. Welcome, Emily. Thank you so much, Laura. I'm really excited to be here. You're the co-founder of Longhash, which people may be familiar with for its data journalism, but there are actually two parts to the company. So can you describe what Longhash does? Sure. So the most general purpose of Longhash is to serve as a gateway to Asia and both parts of the company

try to achieve that goal. So on the incubator side, we help blockchain projects reach Asian markets, and we also try to help Asian projects go global. So we have offices all over the Asian region. And then we also have a data media platform, as you mentioned, in which we use data to help investors understand blockchain and cryptocurrency with an emphasis on Asian markets. And what's your background? Like, how did you come to the blockchain space and then end up founding Longhash, which, you know, obviously you sound American, which I believe you are. Yes, I am. Which, you know, has a focus on Asia. Okay, very, very reasonable question to ask. So I have been interested in China for a very long time. I started studying Chinese in high school.

And basically, I've done a lot of different things in my career. I started out in journalism. I worked at The Wall Street Journal and also at The New York Times. but I also was served in the US government as a policy advisor at the US State Department and then this is my second startup so I've done a lot of different things but I think the one consistent trend in my career has been Asia and technology so when I was at the Wall Street Journal and in Hong Kong I actually wrote a column looking at how the the impact of the internet in China specifically and then I went on to write a book looking at how the internet was changing lives in China Cuba and Russia and I've just been going back and forth to Asia for many, many years. And I've also spent a

lot of time in Japan as well. And so cryptocurrency kind of got on my radar when I saw how big it was in China and how it was blowing up in China. And this kind of caught my interest because it reminded me a lot of the internet because it was like this decentralized technology that was clearly making the Chinese government nervous. And one thing I had learned from looking at the internet in China for many years is that it's very hard to shut it down. You know, you can censor it, you can restrict it, but there's always going to be information that gets through. And so my instinct was that cryptocurrency would be similar. And you could even argue that the stakes were even higher because, you know, the internet is the spread of information and cryptocurrency is the spread of money, sometimes huge volumes

of money. So I got very interested in cryptocurrency in China when I saw, A, how big it was becoming there, and B, when I saw that the Chinese government was trying to rein it in and I kind of wanted to see what would happen. And that was sort of my entry into the crypto world, was looking at it from the Chinese perspective. And what year was that? That was like 2017. So it was right before, right around the time when China was signaling that they were going to be cracking down on cryptocurrency. Oh, interesting. And then how did you have the idea to kind of build the business this way, you know, half incubator and half journalist or media outlet? So, you know, I went to China and I was kind of really, I met a lot of the people in the crypto world

there. I met the people that would become my co-founders, my partners. And, you know, initially the idea behind Longhash was more of a straight data media platform. You know, this idea that there's so much data in blockchain, everyone always talks about that, right? Like that, how the data is transparent and you can see all this data, but it's not very easy to make sense of it. And it's not very easy to know like which data you should be paying attention to. So our initial idea was, okay, let's do like not just a media platform, sort of a hybrid, like a data media platform, because we're not a media platform like, like CoinDesk, for example. You know, we, we, most of our stories, use data analysis, but we're not a pure data platform either. So basically what we're trying to do is take, you know, data

and tell stories around it and help people understand that data. So that was kind of the initial idea. And the other thing we really wanted to do was, you know, have a real, a really global platform. You know, my partners were in Asia, Asia, which I'm sure we'll get to later is a huge part of the crypto world. It's a, you know, some people would say it's the heart of the crypto world. And we wanted to kind of increase coverage of those markets. So, you know, and in Longhash, our data media platform publishes in English, Chinese, and Japanese. And we also really try to cover those markets. And for the data side, what types of data do you typically utilize for your stories? So we use quite a wide variety, but we use a lot of on-chain data. We use price

data. Sometimes we'll do more creative things where we'll look at the number of meetups in a certain country to gauge interest there. We'll look at social media data. It's a pretty wide variety. But our main focus, whatever data we use, is to really try to tell a story around it and not just put that data out there and have people have to make sense of it for themselves. Yeah, I was kind of poking around and like I thought some of these were very interesting. Like there was a story that showed the Bitcoin price against the different time zones, Eastern time in the US, Pacific time. And then actually, I forget the last one, but it was an Asian, like maybe Beijing time or something like that. The conclusion when

you looked at kind of the different graphs was that basically, at least for the last few months, the US crypto market has been more enthusiastic than the Chinese one. And then some others were like, you know, what is the price premium on Coinbase versus OKCoin or like tracking the Bitcoin price against like Baidu searches for Bitcoin. So yeah, these are really interesting. Thank you, I'm glad you think. Yeah, we do a very wide, you know, we really try to do a wide variety of analysis. You know, we do things like we have a stable coin health index where we try to like rate the health of stable coins using various factors. Again, you know, we try to look at the level of social media interest in China in cryptocurrency, for example. So yeah, it's pretty broad. But our main point is to just

try to make these stories understandable. And are there any types of data about the blockchain and crypto space that you find are actually still difficult to get despite everybody kind of touting how transparent it all is? Oh, yeah, so many. I mean, well, first of all, the first point is that everyone says how transparent it is, but how many people actually know how to make sense of blockchain data, right? I mean, everyone's like, oh, you can see everything on the blockchain. But it's not like the average person can just go and see everything on the blockchain and take a story away from that, right? But B, yeah, there are a lot of missing pieces to the data. Particularly, I mean, I think China is a case in point because when China cracked down on crypto exchanges, After that, you know, in late 2017, a

lot of China became a real black box, you know, and I think for those of us who spend a lot of time in Asia, we know that there's a lot happening in China. We know that China has active trade, but it's really hard to find those numbers. You know, it's really hard to like prove that. And so I think China is a really good example of like there's just not a lot of like specific data about like what exactly is going on there. I mean, in general, I think geographical data can be very difficult. I mean, a lot of people point to data from like local bitcoins, for example, but that's obviously not conclusive. And like part of the problem is like a lot of these exchanges, it's like unclear where they're actually based and unclear like who the majority of their users are. So

it can be very difficult. I'm personally very interested in geographical data and it can be it can be difficult to find. Yeah, well, probably part of that is because since you are, you know, you do have this geographical focus and then within Asia itself, there's so much variety. I could imagine you trying to sort of parse the signals country by country. So just to kind of set the terms here, how do you define Asia, at least for your site or like what areas of Asia are you focused on? Yes, a very important distinction because yes, you say Asian, obviously Asia is different countries have different rules. And not only that, the rules are changing constantly.

It's a very dynamic space. So I would say that the countries that we are really kind of the most heavily focused on would probably be China and Japan and also Singapore. We do have a presence in Hong Kong as well, but I'd say China, Japan, and Singapore at least. And those are the three places that I personally, I think know the best. And is that why you decided to focus on those areas simply because that was your knowledge base? not exactly i think you know those three markets make a lot of sense i mean china you know is there is a very important market well i think it will continue to be regardless of the regulatory obstacles japan just on kind of like the retail trading side on the retail investing side is still huge um in singapore i mean you're just

hearing more and more about how singapore is kind of this like paradise of crypto and that they have friendly regulations. I think Singapore is a place that I just hear talked about a lot. So I think those three places, you know, are they do make a lot of sense strategically. Obviously, another important country is Korea. We don't really have a presence there yet. I think hopefully eventually we will. But that's yeah, that's that's kind of the missing piece of that puzzle. Yeah, yeah, I was going to say because I even noticed, I think one of the articles on your site showed the various trading pairs and that was the third largest. It was USD then.

Yeah, the Japanese yen and then Korean won. So. Yes, Korea is no doubt important. So very broadly, how would you characterize the differences between the crypto markets in the West or maybe even in particular in the West versus Asia? Yes. It's a really tough question. So I think recently, so I just interviewed SCC Commissioner Hester Peirce, who I know you interviewed her as well. It was a great interview. And she was visiting Asia for various reasons. She had various things that she was doing there. But one of the things she was doing in Singapore, at least, was trying to, you know, see the lay of the land and meet blockchain projects and learn about the crypto space there. And so I was talking to her specifically

about this question, you know, how she sees kind of the U.S. crypto landscape as compared to the, you know, Asian crypto landscape. And she was like pretty direct in saying that, you know, a lot of projects I'm talking to are avoiding the US and, you know, Singapore, for example, seems to have a more open approach to regulation. And so, you know, that's something that I feel like you kind of hear a lot these days, you know, in the Asian crypto world that the U.S. is seen as, you know, either very strict or I think more important, very confusing. I think that's kind of and that's what the commissioner was saying is that it's not so much a matter of strictness. It's that the U.S. is just confusing, you know, like and cryptocurrency is confusing enough, right? Like it's already confusing. And then you had like kind of a layer of, you know, I mean, with the US, for

example, you know, you have different regulatory bodies, you know, who that are involved in crypto, A. Then you have different states that have different, you know, rules on money transmission. So we did one of the visualizations we did at Longhash some time ago was we did a map of the United States looking at different approaches towards money transmission and, you know, kind of separating them by color. And it was like this rainbow map, right? You just couldn't, you know, it didn't make any sense. And then, and then, you know, so you have the different regulatory bodies and then you have this kind of rainbow map. And then you also have, you know, what is the security? What is the utility? You have the Howey test that like, you know, there's just a lot about the U S environment that I think seems like you kind

of need to be a securities lawyer to understand. And the commissioner at the SEC was basically acknowledging this and saying that we just don't have enough clarity. And I feel like if someone at the SEC is saying this, how is just a blockchain project going to figure it out? And I think there's this fear. I mean, the US is obviously a very important market. And I think a lot of people want to be in the U S but there's this fear that like you could break a rule without even knowing that you're breaking it, you know, and, and who, who's going to want to take that risk. Right. Well, so for that reason, I mean, are you seeing that there's then a lot of movement the other way?

Cause the way you've been phrasing this, it's a little bit like, Oh, Asian projects maybe are scared to go there, but then are you seeing projects where, you know, maybe the teams are from the U S but then they go to Asia? Yeah, I mean, again, anecdotally, you know, I don't it's this isn't something I don't know how big this this phenomenon is. But yeah, I mean, I think, you know, you definitely hear about companies that are, you know, registering in Singapore. You know, ICOs, we ran a story about how ICOs are leaving the United States, you know, like, there's there is some data on this, right? So Elementus that does really good work in data, they just they did they released a report where last year in August for the first time, August of 2018, Singapore ICOs, the number of Singapore ICOs surpassed those of the United States, which is kind of remarkable, you know, given

that like comparing the size of Singapore in the United States, you know, so, so I think there's, you know, there's a, there's a bunch of data points like that, you know, where you're just kind of seeing this, this move, you know, and, and, and new exchanges that are kind of opening up in Asia and yeah, and projects that are, you know, just, they just, they just see places like Singapore as more welcoming and more clear. And I don't, just to say, I don't think it has to be this way. I don't think it will necessarily always be this way, but that is kind of the feeling right now. And out of curiosity, do you think that some of that might be, obviously ICOs have been banned in China, so is some of that demand in Singapore Chinese people who somehow are able to

participate in Singapore? Do you see what I'm asking? Yeah, of course. Sure. So that's like kind of the really fascinating thing about Asia is that it's so dynamic. And, you know, even in, you know, the two years or so where I've been watching Asia very closely, there's been so many changes and it's almost like whack-a-mole, you know, like where something gets, there's some country clamps down and then all the activity goes somewhere else. And I feel like I've been watching this kind of spread throughout the region. Like, you know, when China cracked down on ICOs or when China sort of cracked down on crypto, the a lot of activity went to Japan and Korea, but then Japan and Korea have sent mixed signals. You know, Japan, for example, in early 2018 became a lot more strict on cryptocurrency. And then I think at that point,

Singapore started looking more friendly. So so, yeah, it has it has been moving around the region for sure. And I think a lot of people who are kind of leaving jurisdictions that are not friendly to go to places like Singapore that are seen as more friendly. Oh, that's really interesting. Yeah, I guess it would be like if, you know, I don't think Europe has like a super unified policy, but if the different European countries had different policies, then you might see movement. One other thing I wanted to ask was that in a previous episode, Eric Meltzer and Davi Wan of Primitive Ventures were saying that they thought the decentralized networks tended to be uh, have more kind of like Western founders, I guess, and that there were more,

um, like really good projects around infrastructure, like around trading and exchanges and stuff that were coming out of Asia. What do you think of that take? Well, there definitely are projects that, you know, have kind of like a background in Asia. Um, I mean, yeah, I think it's true. Again, I don't know how to quantify that to say like what percentage of these projects are, you know, because it is very decentralized and sometimes like a country, sometimes a project will have Asian founders, but then they'll be incorporated somewhere else, you know, but you look at, for example, I mean, you look at Binance, you look at NIO, you know, these are some really kind of important players. I mean, you look at Tron, I don't know, you know, if people have different opinions about Tron, but, you know, these are kind of interesting um

projects that have you know or exchanges that have come you know come from asia right okay well so let's kind of dive into the different markets within asia and i know that china is a you know a particular market that you have um you know special knowledge in so broadly how would you describe uh the industry and the markets there in china so i think i think it's I would describe it as full of contradictions and very different from how it appears would probably be the easiest way to describe it. So basically, you know, what happened in China, just short history of Chinese crypto markets is that, you know, trade was booming. You know, there was China, Bitcoin trade in China was huge. And then ICOs were also exploding. And then the Chinese authorities got very nervous and they kind of clamped down

on Chinese crypto exchanges, specifically looking at, you know, trading Chinese currency directly for cryptocurrency. And then they also banned ICOs. And so ever since that point, you know, and then at that time, I think, you know, the price reacted very strongly, the Bitcoin price reacted, but, you know, since came back. And I think China is still a vibrant place for cryptocurrency. It's just a little bit harder to see. So China, for example, still has a pretty active OTC market. So even though, you know, so you can still trade Chinese currency for cryptocurrency, you just have to do it via an OTC platform. There are still definitely like projects coming out of China.

So there are definitely, you know, startups in China. And also, the other kind of, I don't know if it's a contradiction, but distinction is that, you know, the Chinese government may be very wary of cryptocurrency, but they like blockchain, they like blockchain technology. So there's kind of these two things going on where, you know, you kind of have the authority sending positive signals about blockchain, but negative signals about about cryptocurrency. But I think the important the other important thing to say here is that cryptocurrency, like Bitcoin is not illegal in China, you know, per se, it's trying to crack down on some very specific aspects of the industry. And I think, you know, for example, you know, ICOs and at the time when China cracked down on ICOs, frankly, almost everybody I spoke to in the Chinese crypto world supported that crackdown because they

felt that ICOs in China were kind of getting out of control. There were a lot of frauds and there were a lot of scams and that it was it was bad for the industry. And so I think that that actually, you know, I've heard a lot of Chinese crypto enthusiasts say that that wasn't actually the wrong decision. yeah all the way back when the ban happened i did an episode with two founders it was uh da hung fei and patrick just blanking on his last name anyway they were from neo and and quantum and um they were giving some examples of some of the really really um kind of uh eyebrow raising icos and one of them was like a

business around mooncakes. I remember being like, hmm, okay. So yeah, it obviously was getting super, super, super frothy over there. But then when you were saying that people can still trade OTC and stuff, What does that look like? Here, OTC, I feel like generally means people who are spending more money where they are, you know, moving larger amounts of money where they might be worried about moving the price on an exchange or something. And then obviously you have maybe, I guess, kind of a local bitcoins model, but like, what does OTC look like there? So OTC looks like, you know, basically an online platform that sort of matches buyers and sellers, you know, so and that's where you can trade Chinese

currency directly for cryptocurrency. And then what but what and then what a lot of what people with some people in China do is then they will get USDT tether and then they will use that to trade on exchanges like finance, you know, or or hobby or something like that. So, you know, the first step is OTC, you know, kind of getting like using your Chinese currency there and then getting into, you know, maybe a stable coin like USDT and then using the USDT to trade on one of the larger cryptocurrency exchanges. So even if you're not able to trade directly from from Chinese currency into Bitcoin, you can trade from from USDT into bitcoin and that's why usdt is actually quite a big phenomenon in in china it

has like a little bit of a different connotation there okay okay this is really interesting so basically it sounds like it is really like a local bitcoins where it's kind of like a craigslist style hey i'm selling for this amount or i'm you know i want to purchase at this amount and then people could can match with each other and then once people get their bitcoin then they exchange it for usdt or some or or I don't know how that works. It's more like once they get their USDT, then they trade it for Bitcoin. Yeah. So like, yeah. Where do they get that? So basically you can look at some of the OTC platforms as kind of like the on-ramp from like, you know, fiat currency into cryptocurrency. And then once you have USDT, you can trade directly on some of these larger exchanges, you

know, Binance or whatever, if that makes sense. Oh, okay. So the OTC transaction is actually for USDT? In some cases, yes. I mean, you can use it for other things as well, but at least that's the use case that I've heard from some people in China is that they will try to get USDT first and then use the USDT on the more mainstream exchanges. Interesting. So then for these Chinese exchanges that basically still exist, I guess maybe they're not domiciled anymore in China like Huobi and OKCoin and Binance.

Do you think it's affected their volumes or it maybe sounds like it really hasn't? It's, I mean, it's so hard to know. I mean, it's kind of, it's another, it's kind of another funny thing. So Binance, for example, you know, was in China and, and, you know, according to CZ, they, they, they left China before the crackdown because they kind of saw the writing on the wall, you know, and then, you know, from, from then on, like Binance kind of exploded. Right. And it's not, it's not, I don't know if it's necessarily like due to China or in spite of China, but, you know, these exchanges have done really well post China crackdown. I mean, maybe part of it is because they've, they were sort of forced to go global, you know? But yeah, I mean, it hasn't really like, I mean, look at Binance,

right? I mean, look at, I mean, you did a great podcast with Binance, right? Like, I mean, look at their explosive growth. I mean, a lot of that happened after the crackdown, right? So it definitely didn't hurt them. Well, one thing I remember CZ saying is that, you know, with the ICO ban, the different projects were told that they had to refund investors who wanted to be refunded. But because the BNB tokens had risen, nobody wanted to give back their BNB tokens. And then on top of that, the exchange had actually done a few token sales on the platform itself. And so then they offered to refund any investors for those tokens. And I can't remember, I think... I'll have to check this, but I, it was in a single digit millions that they spent on it. And I, if

I remember correctly, I think it was 6 million that they spent and they only raised 15 million on their ICO. So it was like kind of, you know, a big step they were taking, but they felt like they should do that for their, uh, customers. And he said that he felt like afterward, then he just like won the loyalty of all these customers. So, um, you know, it sounds like I guess the thing that I was curious about is like, you know, I feel like in the US, if there were some kind of ban like this, like, then I don't know if you would still see a ton of entrepreneurial activity. Like it might kind of attract people who were more of the outlaw type or like, you know, whereas like it like, yeah, just I'm curious to know in

China, like, are these entrepreneurs more of that type, like the kind who aren't afraid to have a brush with the law or are they entrepreneurs who like are just kind of normal, you know, you know, operating above board type of people who don't feel like they're going to get in trouble? Like, Yeah, I think it's a really good observation and I think you're probably right about the US. I mean, in terms of like if something like this happened in the US, I think the reaction would be different. I mean, I think part of it is again, there are China didn't ban cryptocurrency totally, right? So, you know, and I think people can kind of see that distinction, you know, like that, you know, if you're a blockchain startup, you're not necessarily doing something shady. You know, China is worried about some very specific things like

using ICOs for public fundraising, right? So, you know, it's kind of clear what they're concerned about. But yeah, I mean, you could say that like they are sending a signal that this industry is not particularly liked. But again, it's a conflicted signal because sometimes they don't seem to be But I think, you know, the larger message here is that, you know, entrepreneurs in China, I think are just kind of used to restrictions, you know, I mean, China bans a lot of things. And, you know, I mean, if you look at if you look at like, look at the internet, for example, right? I mean, there are so many restrictions on the internet in China, this is like a fact. And yet, you know, what's happening in the internet in China is kind of amazing, right? I mean, it's still an amazing industry. I mean, in

some ways, you know, like, if you look at WeChat, and just how incredible a product that is, you know, and that, that was born in a very, very, very restricted environment. So I'm not praising Chinese restrictions, but I'm saying that I think entrepreneurs there, they know how to work around them and find kind of like the glimmers of opportunity in a very restricted environment. And I think cryptocurrency is very much the same way. I want to learn more about that in a moment, but first a quick word from the sponsors who make this show possible. Will the world follow France and advocate banning privacy coins? Will government backed stable coins become the new fiat? Are distributed and

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MCO Visa card? A metal card powered by crypto. Loaded with perks including up to 5% back on all your spending and unlimited airport lounge access. They pay for your Spotify and Netflix too. What's not to love? With Crypto.com, not only can you spend your crypto, but you can grow it too. Earn up to 8% per year on the most popular coins like BTC, ETH, XRP, and up to 12% per year on stablecoins like PAX or TUSD. Just a few tasks before you start receiving interest every week. Join the over 1 million others and download the crypto.com app today. Back to my conversation with Emily Parker of Longhash. So you mentioned right before the commercial break that you see some parallels to the book that you wrote, which I'll just read

out the title for people. Now I know who my comrades are, voices from the internet underground. And as you mentioned, it talks about how the internet is changing life in China, Cuba, and Russia. So what parallels are you seeing to the development of crypto and the internet in China? Yeah, so that's, I mean, that very question is exactly what got me interested in cryptocurrency. It was kind of like, are there parallels here? And I think there are a lot of parallels in the way that the internet and cryptocurrency are developing in China. I mean, I think, you know, the biggest parallel on the most macro level is that, you know, these are two examples of a decentralized technology that is very difficult for governments to control. This is true of the internet and this is true of Bitcoin, you know, and I think with

the Internet, you know, there are a lot of opinions about the Internet in China. I think right now a lot of people in the West are, you know, see it in a very negative light. Oh, it's so censored. It's so restricted. Nothing is happening there. I don't really agree with that. I mean, I think, yes, there is a lot of censorship, but I also think that there is also a lot of innovation and there's a lot happening on the Chinese Internet and there's a lot more happening there than ever would have happened in the period before the internet. I think the internet in China has had a huge impact on just like a lot of people's individual lives. The other thing about the internet, and I've sort of been saying this for years and I continue to say this, despite censorship, despite restrictions, it is

just not possible for any government really to completely control the flow of information on the internet. It's a decentralized phenomenon and it's just not possible to completely shut it down. And I think that's very true of cryptocurrency as well. And I think I don't think the Chinese government attempted to completely shut down cryptocurrency, but even if they had, I think it would be incredibly difficult. So I think what in some ways you can also compare kind of the way that authorities look at the Internet and look at crypto. I think in both cases, for example, Facebook, Twitter, these are all blocked in China, but with a little bit of effort, you can get to them. It's not so hard. You get a virtual private network or whatever.

But I think what the goal was, was to raise the barrier to entry. It wasn't to completely snuff all these things out. It was to say, okay, we're just going to make it a little bit harder for you to do this. The same holds true for cryptocurrency. It's not like China was saying, we want to get rid of Bitcoin entirely. They were raising the threshold. They were saying, okay, you need to know a little more. You need to make a little bit more of an effort because it was at the point where just anybody was getting involved in this market. I think in both cases, in China, if you want to go see Twitter, if you want to go trade Bitcoin, you can, but it's just a little bit harder.

You have to try a little bit harder. I think, you know, it's just a very interesting phenomenon because I think, you know, when China cracked down on cryptocurrency or on exchanges and ICOs specifically, you know, there was kind of this feeling like, okay, is this the end game? You know, like Bitcoin in theory, right, is supposed to be able to survive any kind of government repression. But China was so important. I mean, China was such an important market. And I think there were questions at the time, like, can Bitcoin survive this, you know? And not only did Bitcoin survive, I mean, it thrived, right? I mean, that was kind of like, we kind of entered a bull market, you know? So I think that was just sort of like a really strong example of like no government can kind of, no government can kill Bitcoin. No one government can kill Bitcoin, you know? And I think that's

true of the internet as well. Yeah, I wonder, you know, like, Actually, yeah, let me not ask the question that way. I was going to like ascribe some kind of intention to the Chinese government. But let me just ask in general, you know, obviously the PBOC, the People's Bank of China is going to be releasing its own digital currency. So what impact do you think that will have on interest in crypto in China? You know, it could go either way. I think it's a very similar conversation as to the one we're having about Libra. So, I mean, I think there are people who would say, oh, you know, this is bad for Bitcoin. It's going to kind of like replace it. But then, you know, there's the other side saying, well, not necessarily because, you know, just it might actually increase interest in cryptocurrency, increase awareness of digital currency. And also, I mean, I think and

this is my personal opinion. I mean, I think this is going to be such a different animal. that I don't think, you know, someone who's inclined to use Bitcoin is not going to be like easily persuaded to use this instead, you know? And you could even argue that it will make the case stronger for a cryptocurrency like Bitcoin because, you know, Bitcoin is not controlled by a government. It is decentralized. It has more privacy, you know? So I think it's just like a completely different beast. I wonder if it's going to drive interest in Tether in China even higher. So, you know, that's interesting. So we had a writer for Longhash wrote about this and he just, you know, kind of mentioned it and he had actually, he actually had a different interpretation. He said, well, maybe it will be good because maybe it will

be used instead of tether. Maybe it will be, maybe that will be the on-ramp. I mean, who knows, you know, but, but he, he seemed to think that maybe it would, it would become an alternative. So, but who knows, right? I mean, we, there's still so much we don't know about this and you just know, I mean, I really think it's very similar to Libra, right? Like how, how will play out is really anyone's guess. But I don't understand. I mean, like if they're currently banned from trading RMNB into Bitcoin, then why would I just feel like then the government's incentive to allow people to turn RMNB into Tether, which people know which the government would have to know is being used by Bitcoin that like I just feel like the likelihood that they're going to allow people to do that is

low. But I know nothing about the Chinese government. You know way more than I do. So what do you think? Well, I think it's – I mean, anybody who would have expected any of this, you know, so I really – I just really feel like it's anyone's guess. I think how that's going to play out is just impossible to predict. I think it's going to have a lot of interesting uses, but it's really hard to know. All right. Well, let's turn to Japan since obviously that's also a market, you know, really well. The, uh, in Japan, they suffered the largest crypto hack or a crypto exchange hack of $500 million at Coincheck back in early 2018. And then obviously before that there was Mt. Gox. So what is the atmosphere there like now? Yeah. So Japan is re I mean, even in again, like two

years, I think Japan has undergone several different cycles. Um, so, you know, When China initially kind of started cracking down, you know, a lot of that energy went to Japan for sure. I mean, we kind of saw that. There were reports about that. I mean, Japan, it was like, this is Japan's chance, right? This is Japan is going to become the new crypto paradise. And Japan was already heading in that direction. I mean, A, you know, there is a really strong, I spend a lot of time in Tokyo. There's a very strong kind of crypto community there. You know, there's Mt. Gox. They have a long history. There's, you know, Satoshi Nakamoto has a Japanese name. You know, whether he or she is Japanese or not is a whole other question. But yeah, Japan has kind of a long, relatively long affiliation with cryptocurrency. And I think at least the impression I had in 2017

was that the Japanese policymakers were kind of saw cryptocurrency as an opportunity. They saw it as an opportunity because FX trading is very strong in Japan. I think a lot of those people are interested in crypto. I think there were even some people who thought like, okay, maybe this will be good for the economy. Japan had been battling deflation and economic stagnancy for a very long time. I think there were some people who were like, maybe, What do we have to lose? Let's try this. Let's see if this will stimulate consumption. This will be a break for us. I think there was a little bit of that attitude. I think also Japan was thinking, okay, this is maybe our chance to become a fintech capital to attract startups here. the mood that I was picking up

kind of in 2017 of like, oh, this is kind of exciting. You know, it just the visuals, you know, you would go to, I think it was in Shibuya and there was this huge Bitcoin ad and you'd see them on the subways. I mean, it just, it felt like, and especially compared to China, right? It was like, okay, this is, this is, this is totally different, right? You know, Japan is sending the, China is sending a signal of like, we don't like this in Japan is like putting up billboards and I mean, private companies are putting up billboards. Anyway, so that was the mood. And then As you just said, early 2018, Coincheck is hacked, largest crypto exchange hack in history, over $500 million. And then like basically things kind of ground to a halt. And I think this is one of those things that I don't know if that translated so clearly here in the United

States. Like, I don't know if people really knew that because I felt like even after that happened, people were still kind of describing Japan as like a crypto paradise. But like after that, it definitely was not. I think policymakers were super freaked out and all of a sudden, you know, exchanges had to undergo like a much more rigorous process. There were like a lot of inspections. It became very difficult to get a new coin listed in Japan. I think it was like, you know, from that hack, it was like at least 18 months, you know, for a new coin to be listed. So the mood in Japan after that hack was pretty dark. You know, I think like the media, which had been kind of, you positive about cryptocurrency, you know, kind of became a lot more muted. And I think, yeah, I think just

ordinary Japanese people were more likely to see crypto as something that's shady and associated with criminal activity or hacks. So that's been the mood in Japan. And I think recently, we're starting to see a little bit of a thaw. And I think I'm sensing a little bit more of optimism that the regulators will kind of loosen up and that there will be more activity in Japan. But yeah, there was a very big changes in Japan over the past two years. But, you know, for example, Coincheck, when they were hacked, they were operating under a provisional license and then they finally got like an actual license. So there has been some some progress. And now they're, you know, one of the biggest exchanges in Japan. In Japan, you know, if

you look at at least according to some data, if you look at which national currency is most traded against Bitcoin. Number one is the US dollar, number two is the Japanese yen. So, it's still a pretty big important market there. So I don't know. I mean, I think, again, this could go either way. I mean, Japan definitely had a tightening, but they were also like very ahead of the curve on the regulatory front, like early on. And so the question is, Is this tightening just going to lead them to a better place where exchanges are more secure or are they going to kind of go overboard? And I think like, I'd say the mood in Tokyo now is cautiously optimistic. That's so, so, so we'll see, but it hasn't been very friendly for the past, you know, past year or two. And what about the

entrepreneurs in Japan? Like, you know, what you were discussing is kind of around the trading and the acceptance of Bitcoin, you know, as a national currency. But like, are you seeing that entrepreneurs there are kind of like interested in getting into the space and building stuff? Yeah, I think they definitely are. I mean, and this is something like, you know, our incubator, that's kind of what one of the things we do is try to help people get into the, you know, the Japanese crypto space. But I think it's again, it's a little bit slow. I mean, I think Japan still has a little bit of like a big company culture. I think that's changing for sure. But I think that that's not necessarily as much of a crypto phenomenon as like a startup phenomenon. But yeah, I think you are. I mean, I think just

in Japan and Tokyo, I mean, I've been going back and forth to Japan for so many years. And I think like the crypto environment there is vibrant. I mean, there's definitely a lot of meetups. You meet a lot of startups, but I do think like that there were people who were freaked out or alarmed by the regulatory crackdown and just the difficulty, for example, of listing a coin on a Japanese exchange. So I think like over the short term, some people probably have shied away from the Japanese market, but they could come back. So, yeah, I think, again, cautious optimism about the Japanese market. And we kind of briefly touched on Singapore earlier when you were contrasting it with the regulatory climate here in the U S but I was curious to know, you know, as we mentioned, Singapore is kind of

a small, a small country, somewhat small market. So, um, like what kind of activity are you seeing there? Is it literally just people being like, Hey, this is a place where we can experiment. So is it just like a lot of entrepreneurs or like who's going there and we know, what are they doing? Well, so as we saw, there were definitely a lot of ICOs there, definitely companies registering there. I mean, it's not uncommon where you see some company where they're in some whatever country and then you look at their, you see that they're actually registered in Singapore. You see that a lot. That's been going on for a while. I think just, yeah, people who are kind of like building companies, moving there, all sorts of activity happening. I mean, it just feels like, I mean, just even just on the conference level, it

feels like there's conferences, I mean, there's blockchain conferences everywhere, every second, but in Singapore, it feels like there's constantly something happening there. So yeah, I mean, Singapore, just when you go there, you really feel that there's like a lot of momentum. And I think in general, Singapore is kind of seen as like, kind of welcoming to innovation. I think the regulators in Singapore, you hear them talked about as being kind of like, relatively welcoming, relatively open, you can kind of talk to them. And also compared to the United States, the regulations are, you described is relatively clear. At least I've heard them described that way by the SEC and others. So basically it sounds like we might continue to see sort of the ICO trend just live on in a

place like Singapore or something like that. Or the IEO trend. Yeah. Change the letters. And you know, you did say earlier that Korea isn't like, you know, one of your of main areas of focus, but since you are in Asia a lot, I just wondered, you know, kind of what do you hear about what's going on in Korea and what that part of the crypto scene looks like? Yeah, I mean, I guess my main impression of Korea, I'm hesitant to riff on Korea only because I know sometimes these countries are so much more complicated than they look. So my impressions are fairly superficial, but my impression of Korea is just that, yeah, I mean, it's a classic case of, you know, a real, I mean, there's like a real, you know, there's crypto, it's a huge, it's a huge market. There

was a huge boom there. You know, a lot of people lost money, you know, and I think the, the authorities got very nervous about that, you know? So, so I think, you know, there's, there's, there's definitely that tension in Korea where, you know, the, the government is, is understandably concerned about, you know, speculation getting, getting out of control. But yeah, it's, again, I don't, I don't want to kind of speculate too much about Korea because people know much more about it than I do. Yeah, I could imagine so many people lost money there because not only was it that so many people in Korea were buying during the latter half of 2017 when the fever was at its pitch, but then on top of that, there was the kimchi premium, so they were already paying higher than normal prices. Yeah, I

mean, the one thing I do remember, you know, noticing about Korea was that, you know, again, and kind of like after the sort of, you know, the Chinese crackdown, Korea was definitely sending mixed signals about like what their attitude towards cryptocurrency could be. And there was a lot of confusion there about like, you know, if these exchanges would be allowed to thrive or not. So, you know, I think there's some, yeah, there was definitely a lack of clarity, at least coming from them initially. I don't know if that's still the case. And then you did mention that one of your other offices is in Hong Kong. You know, what are your observations about the crypto scene there? Yeah, it's funny. I just, you know, I was asking a friend the other day about it and we had a piece on LongHash about Hong Kong, which was basically the basic argument was, you know, Hong Kong is doing nothing on

crypto regulation and it's great. You know, basically saying Hong Kong was pretty much hands off. And that's been that's been great for crypto there. Again, what's happening in Hong Kong now is kind of overshadowed by just all these other things that are happening in Hong Kong. It's kind of hard to talk about anything. I don't really know the status of anything in Hong Kong right now. But yeah, that was at least something that was kind of how we covered it is Hong Kong being pretty hands-off and how that was a good thing. I mean obviously compared to mainland China, that's very, very different approach. Yeah, which is basically why I think people in that country are having trouble. And it's

totally understandable why maybe the status of the crypto industry there is like, you know, like... on hold right now because I think they're busy doing other things, have much more important priorities. Yes, that's exactly right. I actually asked a friend in Hong Kong just recently, kind of, you know, oh, so what's the status of cryptocurrency there? And his attitude was kind of like, really? Like, we have so many other concerns right now. So, yeah. Yeah. Yeah. Actually, well, it's sad. I really sympathize with them a lot. But speaking of which, so like one of the drivers of interest in crypto here, at least in the US and I think some of the other places in the West is this principle of

decentralization, which obviously brings with it the inability for others to censor or surveil your transactions, or maybe not the inability always, but at least on the surveillance side, but you know, it makes it difficult. And so obviously, I mean, I, you know, I don't know, a ton about it, but you know, obviously I do know that the stereotype at least, or the common observation is that the villain, you know, that has a poor track record on these issues is the Chinese government. So I was just curious to know, like, are concerns like that around decentralization or censorship or whatever, or surveillance, do those drive the Chinese at all? Like, are they kind of unhappy about having their transactions surveilled on Alipay and stuff? It's

always so hard to speak generally about what's motivating anyone in China, just A, because there's so many people, and B, there's not a lot of public opinion polling on this kind of thing. So I can only really talk about people I've spoken to or my very Anecdotal impression. I think, you know, look, I think there are plenty of people in China who are trading Bitcoin because they like Bitcoin and they like cryptocurrency. And I don't think they're thinking about more than that. Right. I mean, I think they're just just trading it the way anybody else would trade it. But of course, you know, money, I mean, yeah, yeah, exactly. Because, you know, to make money or to for whatever reason, but not necessarily out of some larger mission. You know, I think that's true all over the world. Right. But, you know, yeah, I do think like I mean, whether or not people are thinking of Bitcoin specifically as,

you know, okay, this is like an indirect opposition to some kind of regime or, you know, I don't know if they're thinking about it that way, but I do think like Bitcoin by its very nature, you know, it's a currency that's not tied to, you know, that's not controlled by a bank, that's not controlled by the government. It is a way of asserting your independence from the system to a certain degree. I think some people probably think about that a lot. Maybe people think like, okay, my money is safer here because my bank account can't be frozen and they can't just take it away. I think there's maybe some people that think that way. Again, I don't know how directly people make this connection, but I do think there is this idea that yes, Bitcoin is a form of independence. In

that sense, yeah, it's a form of Yeah, it's a form of asserting your autonomy from the system. And I do think people are very aware of that, for sure. Right. I mean, I guess my question is just a little bit more like, here I feel like one of the kind of main populations, I guess is the word or it's just, yeah, amongst the different groups that are really interested in Bitcoin. One of the ones, you know, maybe that I would call out is like this libertarian type crowd where, you know, which is a little bit against, you know, government involvement. And so but I just wondered, was that like a noticeable segment of the, you know, Bitcoin enthusiasts in China? They

definitely exist for sure. There are definitely like crypto thought leaders in China who think this way. That yes, this is a kind of a – this technology that, yeah, I mean again, grants them a kind of like independence from the system and they're thinking about that in a political way. How widespread that way of thinking is, I'm not sure. But I've heard it. I've definitely seen it and I've heard it. It's just hard to know the scale of it and if most people are thinking that way, I don't know. Oh, okay. Oh, interesting. So then here we have Libra potentially also being released. If that goes through, what impact do you think that will have on the crypto scene in Asia? And do you think it'll be competitive with the PBOC digital currency? Well, I mean, you

know, it seems like China's super aware of Libra and it seems like that's part of their motivation, you know, for this digital currency, right? That they, you know, I think they're more concerned about Libra accelerating dollarization, you know, and I think that's part. So who knows, right? I mean, I think Libra, again, it's this really open question of whether Libra will kind of, you know, serve as like some sort of replacement to cryptocurrency, which I don't really think it will, or if it will actually like stimulate and accelerate interest in cryptocurrency like Bitcoin, which I think is actually sometimes I think that's more likely. But how will play out in Asia? I mean, China's made it very clear that they have concerns about it. you know, for sure. So, yeah, I mean, and I think I think that's what's in part what's what's driving them.

And throughout this conversation, we've been talking about Bitcoin a lot, but obviously we have kind of all of these smart contract platforms that are Well, there's obviously Ethereum, which is dominant currently, and then there's a whole bunch of others that are trying to launch and maybe compete with Ethereum. And I wondered what your observations are about interest in smart contract platforms in China or elsewhere in Asia and kind of like what perceptions you have about which one of these is sort of like gaining more interest. Yeah, so I think like, I mean, just in general, I mean, I think that's a good question about Bitcoin versus just like all the other coins out there. You know, I think it definitely, there's definitely different projects that are seen differently across the region. I mean, you definitely do, you

do still hear about Ethereum. I mean, interestingly, I mean, this is kind of a different example, but like, Gavin Wood, who's co-founder of Ethereum and now is working on Polkadot. Polkadot has done some work with Longhash and Polkadot, Gavin has been doing a lot of outreach in Asia. And one of the things he said, I saw him when he was in Shanghai and I was kind of asking him his impressions of Shanghai. And he was saying that this is like the Chinese sort of grassroots environment was like really, really vibrant. And he seemed very impressed by kind of like the, the crypto culture that he was seeing there, you know? So it's interesting. I mean, I think like, I don't know, just in terms of other coins, I mean, you, you, yeah, I think there's, it, it depends a

lot, you know, region to region. You hear a lot about like XRP, for example, in, in, in, in, in Tokyo. I know it's a little different from the question you're asking, but yeah, I mean, in terms of like the, the, ex-Bitcoin, you know, I mean, it's, yeah, there's definitely, there's a pretty, that's also very dynamic, I think, in terms of like what coins people are looking at. I know that Ethereum specifically was quite hot in Korea for a while. I think partly, you know, that at least was in part due to the fact that, you know, I think Vitalik himself had done some outreach there. But yeah, it's a constantly, constantly shifting landscape. Yeah, yeah, I think Vitalik spends a lot of time in Asia Although maybe a little bit less than he once did. So then my last question for you is just

about actually the other half of the business, which we didn't really talk about a lot, but I was just curious to know more generally about the kinds of companies or projects that Longhash invests in and how separate that is from your media property. Yeah. So it is separate. So philosophically, it's united in the sense that we'd see both as like a gateway to Asia and, you know, that's our mission is united. But I think, but technically speaking, they are separate in the sense that we don't use the media platform to promote the projects. I mean, we try to keep them separate just so that the media platform has kind of like independence, because otherwise it would be seen as like PR and we really try to avoid doing that. So they're separate in that sense. I think, you know, and also our offices are, you know, it's a decentralized organizations. So for example, like Singapore and

Tokyo, um, Singapore and Japan have slightly different approaches. Um, You know, in Singapore, you know, Singapore invests in and incubates early stage blockchain companies, kind of like highly technical blockchain companies, pretty wide range. You know, they put money in exchange for equity and our tokens. And then Singapore also has a 12 week program for like mentorship and strategy and fundraising. And, you know, most important kind of like helping them break into the Asia market. Japan is a little bit different. Japan also helps. of startups with BD in Asia or BD in Japan specifically, but also works with larger Japanese companies and kind of helping like, you know, who are interested in blockchain and connecting them with startups who are developing blockchain applications. So the two offices

are a little bit different. But again, the general approach is all like, you know, because Asia is a, I mean, you know, as you can see from this conversation, it's a confusing market. All the, you know, different countries have different regulations, they have different approaches, and it can be kind of hard to go in there if you don't know what you're doing. And if you don't know kind of like who to deal with. Yeah, yeah, for sure. They sound really different. Yeah, they sound really different. And again, constantly, constantly changing. And I think there's also a trust question, right? I mean, you know, which is true in crypto everywhere, right? It's like you just don't want to get involved with people who aren't trustworthy, right? Or anywhere. This is true anywhere. But I think when you're going into a new market, you know, you just

want to make sure you have the right partners. Yeah. I actually thought of one more question. It's a fun one. You guys recently came out with that deck of cards that had different crypto people. And disclosure, you did give me a deck, which I was so grateful for. It's super fun to flip through. So how did you guys come up with that idea? And why are you not selling those packs? Yeah, I mean, you know, we really, this might not sound true, but it really, it really was just for fun. You know, there had been, it was just like, it was just kind of like a fun thing we wanted to do. It's not supposed to be that serious. You know, it's like, it's not supposed to be like, okay, these are like the best

people in blockchain. Of course it's not. It's just kind of like, these are sort of, you know, it's very subjective. Just kind of like, it was really, it was really just for fun. It's like, let's just make a deck of cards. You know, we put a wide range of people on there. Some of those people are not very like, that's okay. Which it was more like, here are some people that are like making noise in the blockchain industry. And here's a deck of cards with their faces on it. And we just put a lot of time into kind of making them sort of, I think they look cool. And it's a deck of cards. It's kind of like a collector's item. It's like a, you know, just a, it really, there wasn't any very like high purpose to doing it. I mean, you just sort

of like to just kind of capture, let's say to capture a moment in time. That's what we're trying to do. I love it. I love it. They're so great. All right, well, where can people learn more about you and Longhash? Well, very easy, longhash.com. That's our data media site. And yeah, I think that is a good place. And then you can also learn about, I mean, you can also go to incubator.longhash.com. So longhash.com is just for the data media platform and incubator.longhash.com is more information about the incubators. Okay, great.

Thanks so much for coming on Unchained. Thank you so much for having me. Thanks so much for joining us today. To learn more about Emily and Longhash, check out the show notes inside your podcast player. If you're not yet subscribed to my other podcast, Unconfirmed, which is shorter and a bit newsier, be sure to check that out. Also, find out what I think are the top crypto stories each week by signing up for my email newsletter at unchainedpodcast.com. Unchained is produced by me, Laura Shin, with help from Factual Courtney, Anthony Yoon, Daniel Ness, Rich Stroffolino, and Josh Durham. Thanks for listening.