Interview with the partner of the cryptocurrency exchange shop: Hong Kong policy is uncertain, I choose to start a business in South America

Author: Meta Era

In this exclusive interview with Meta Era, we are honored to invite 0xpineapple, a senior practitioner of cryptocurrency exchange shops in Hong Kong, who shared with us his insights on the unique ecology of exchange shops in Hong Kong.

In the interview, 0xpineapple expressed his concerns about Hong Kong’s cryptocurrency policy. Due to the ambiguity of the policy, he believes that this brings high risks and uncertainties to the entrepreneurial process. In view of this, he made an important decision to give up continuing to develop in the Hong Kong market and turn to South America and the Philippines to seek new opportunities.

Currently, his company onoffdex.com focuses on developing online payment platforms in South America and the Philippines, and is confident in the potential of these markets. These areas have the advantages of dense population and a large young population, coupled with the strong government support for cryptocurrencies, making them a blue ocean market that is very attractive to entrepreneurs. In this interview, 0xpineapple especially emphasized the clarity of regulation in South America and the Philippines, as well as the positive attitude towards the development of cryptocurrencies, which makes entrepreneurs more confident in investing here.

In contrast, he is cautious about the domestic market, and believes that in the absence of clear policies, operations involving cryptocurrencies may have greater risks. Therefore, he decisively turned to South America and the Philippines, believing that these regions have greater development potential and provide entrepreneurs with a good investment environment.

(Image source: BusinessFocus)

The following is the full content of the interview:

**Meta Era: You once operated a cryptocurrency exchange store in Hong Kong, and have been expanding the store with your partners, but you finally chose to give up the Hong Kong business. May I ask, what prompted you to make this decision? **

0xpineapple: Personally, I think Hong Kong’s cryptocurrency laws and regulations still have some uncertain boundaries. Two years ago, relevant government agencies said that only corporate customers and high-net-worth individuals could invest, but now they allow retail investors to invest. I worked in the financial technology industry in Hong Kong before, and I understand that it takes a long time for a policy to be implemented. In this process, if you want to start a project, you have to go through a period of ambiguity.

But I don't like doing things clearly. I like to invest in legal and compliant industries and go all out. If the policy is not clear or not clear enough, it will be very difficult for entrepreneurs like us, and we do not have much capital to obtain expensive licenses like the HashKey Exchange. If we were all invested in a nebulous market, it would actually have a high time cost, making it difficult for me to expand to a larger business.

**Meta Era: At present, the total amount of the Hong Kong market still has more room for growth. In the future, Hong Kong is expected to become a very strong competitor and encryption center in the mainland and even the entire Asia. On this issue, everyone's point of view may be different. So when did you leave the Hong Kong business? **

0xpineapple: It's been over a year since I left Hong Kong. My judgment on Hong Kong is that people from China come to Hong Kong to buy cryptocurrencies, as if Hong Kong is a large money changer. Even with the MSO (Money Service Operator) license issued by the Hong Kong General Administration of Customs, in my opinion, the risk is still high. Some bosses who have obtained the MSO license even have the problem of being unable to return to the country, because this behavior itself is not within the scope of laws and regulations in the mainland. And I don't think that cryptocurrencies will be fully legalized in China in the future, so I won't get involved in this field.

In the Philippines, all my partners are licensed, and I'm applying for a license in Brazil as well. The market size of the entire Philippines and South America is definitely larger than the current size of Hong Kong, and all business operations can be carried out in compliance. In South America, the current competition is relatively light, so my time and money investment in this area will be relatively low.

(Image source: Gadgets 360)

**Meta Era: The past year can be said to be the hottest year in the entire Web 3.0 and cryptocurrency field in Hong Kong. With the introduction of the licensing system for virtual asset trading platforms, many Web 3.0 entrepreneurs have flocked to Hong Kong. However, you, as one of the very few, chose to give up your business in Hong Kong and move to South America to develop. Can you talk about your mental journey in detail? **

0xpineapple: I helped to apply for some SFC businesses before, such as SFC savings recharge financial licenses, which all need to be approved by the Hong Kong Monetary Authority. When a client comes to me for business cooperation, I need to submit a report to the Hong Kong Monetary Authority for review, but it will take at least half a year to complete. But when doing business, customers are unlikely to wait for the first half of the year. The crypto space changes rapidly, and when your business has to wait half a year, a lot of customers can be lost.

Sometimes I believe that policies exist, but whether they can be implemented and whether they can provide convenience and assistance to us entrepreneurs is another matter. Founders like us don't have much money, no investors, and don't have that much money to wait for such a long time. Most of the time, we have to make good use of our time to make money instead of spending time communicating with the HKMA or other institutions. We want to find a market where an idea today can be implemented tomorrow.

**Meta Era: So you think the current regulatory policy is still too vague. You chose to abandon Hong Kong and go to other places to develop business, because the business planning in those places is clearer and more stable, and more interests are attracted to you, right? ? **

0xpineapple: Yes, and Hong Kong’s regulatory policy does not have a clear timetable. There is no clear timeline for all applications and approvals. It would be much better if they could tell us that after I submit the application, the review will start the next day, and then give a reply within ten days, or confirm whether it is passed within a month.

So we must be clear about what to do at each time node, know what I will do today, and what I will do next month, and all schedules must be clear. But Hong Kong's policy does not provide this information. I'm not a follower. I've been to many different places, I've been exposed to different policies, and I've met different people. Therefore, I don't follow the crowd purely based on news or sudden trends, I prefer to explore and think independently.

**Meta Era: Hong Kong's policy was just introduced in June, and the entire implementation and policy implementation will take time. So do you think you will return to the crypto ecosystem in Hong Kong in the future, or will you continue to develop elsewhere? **

0xpineapple: My judgment is this, because I am currently a founder with limited funds, so I choose some places with lower costs, so that I can withdraw funds as soon as possible and start to make profits slowly. I often feel that Hong Kong is more suitable for financial investment and capitalists than for grassroots founders like me. It would be unrealistic for me to wait and compete with others for a license in Hong Kong. But if my business in South America and the Philippines are doing well, and I can get a large enough capital scale to be able to bid or wait for the timeline for license approval, then I may consider returning to Hong Kong. But this is a phased consideration, definitely not at the current stage, but when my business in other places is very stable and I have a large enough capital scale, I will consider returning to Hong Kong.

**Meta Era: In the long run, do you think Hong Kong is beneficial to you? **

0xpineapple: I think Hong Kong is good, especially for some of the larger companies.

Because Hong Kong itself issues licenses, there are both advantages and disadvantages. The advantage is that it can filter out some items that cut leeks. A serious problem in the currency circle before is that it is easy to issue coins, and it is also very simple to start a project. As long as you find someone who understands code and marketing, you can raise funds for any idea. I have personally experienced this stage, so the advantage of issuing licenses is that it can raise the threshold and allow powerful entrepreneurs to increase the reputation of this industry, which is very good.

But on the downside, as I just said, it's not a great scenario for grassroots founders like us. We currently don't have enough time or money to wait for a license, or compete with big companies.

We are aware of our shortcomings, so we are currently conducting in-depth cooperation with companies that have financial strength or are about to be licensed. We may not be able to go through the long process ourselves, but we have already communicated with some powerful organizations in advance. They are responsible for compliance in Hong Kong, while we are responsible for product development and promotion. I think such a pattern might work better.

You can also see that the issuance of licenses is not issued on a large scale, but issued by several companies. We need to find our own method, implement it in Hong Kong, and then selectively cooperate with some large institutions in depth. Doing so helps reduce the initial investment cost, and at the same time allows us not to completely give up pursuing the projects we want to do.

In the long run, however, Hong Kong's system may not be able to change. For us, Hong Kong is actually a relatively difficult place. First of all, our opportunity cost is very high, and Hong Kong's living standards and prices are very high, including labor costs. Therefore, larger institutions may be more beneficial in the long run. If grassroots founders want to gain a foothold in Hong Kong, actively cooperating with some big institutions like me is also a viable option.

(Image source: Vocus)

**Meta Era: Some time ago, the Financial Times interviewed the founder of a money exchange shop in One Satoshi. He mentioned that the transaction volume of mainland tourists at Hong Kong exchange shops increased by 20% to 25% in the first five months of this year compared to last year, and he predicted that there may be a 35% to 40% increase by the end of the year. According to the current actual situation of Hong Kong exchange shops, the profit trend is developing in a good direction and is expected to increase further. **

**With the gradual improvement of supervision, do you think these exchange shops will perform well in the future? **

0xpineapple: At present, my main business is not doing OTC (over-the-counter trading), but want to develop an online payment platform. My take on the OTC business in Hong Kong is to think of it as a currency exchange shop. In the Sheung Wan Central area of Hong Kong, you will see several exchange shops. The rent of these offline exchange shops is not cheap, and they mainly serve crypto enthusiasts who enter Hong Kong from China, so these exchange shops have living space.

In contrast, the transaction scale of Crypto is still relatively small. If the scale of the exchange store is compared with that of OTC, the transaction scale of the exchange store may be less than one percent of that of OTC. The OTC market in Hong Kong does not exceed 100, but there are more than 1,000 licensed exchange shops, among which there may be some large exchange shops with dozens of branches. The demand for currency exchange itself is a rigid need, but the number of people using Crypto is still in its early stages, and many people still use the US Dollar (US Dollar) instead of the stable currency (USDT).

However, as time goes on, more and more people will consider using USDT instead of US Dollar. A bank account is required to use the US Dollar, but opening a bank account is a complex and time-consuming process. In contrast, it only takes 30 seconds to create a wallet, and the speed of USDT can be confirmed in less than 1 minute. Therefore, when more and more people realize the advantages of Crypto, more people will choose this payment method, which will also lead to more and more people buying Crypto through OTC.

Although Hong Kong is still at a relatively early stage in this regard, I would not be involved in the OTC business at this time because the risks are higher. I'm not sure if domestic policy will change suddenly, so my approach is to wait and see, not execute.

**Meta Era: I just mentioned that there are many offline exchange shops in Hong Kong currently in a gray area. Many mainland tourists and residents go to Hong Kong to exchange and buy cryptocurrencies. As far as I know, many of these exchange shops do not require KYC (know your customer), and only need to provide very basic identity verification to conduct transactions. **

**What do you think of this gray industry? Do you think the Hong Kong government will adopt a strong regulatory policy in this regard? **

0xpineapple: I think supervision is an inevitable trend, whether it is in Hong Kong or the world. But personally, I prefer to invest my time and energy in a clearer and more compliant market, which will give me more peace of mind and ease.

Because many aspects of Hong Kong itself make me uncertain. The market may exist, and laws and regulations will gradually be supervised, but it is currently in a vague stage, which makes me worry. Our margins are already thin, but the possible risks are very high. This means we take on high-stakes compliance responsibilities. If we don't do compliance properly, we could inadvertently get involved in things like money laundering, so I'd rather not get involved in things like that.

**Meta Era: How do you think these offline conversion stores will be presented under regulatory policies in the future? **

0xpineapple: According to my understanding, the Philippines has started to issue virtual currency licenses, called CSP Licenses, 3 or 4 years ago. The Philippines is progressing even faster than Hong Kong. They allow offline exchange of fiat and cryptocurrencies. Their approach is that every customer who wants to make a transaction has to go through a full identity verification process. Stores collect customer identification information and a statement of source of funds. In addition to taking the ID card, it may also scan whether the customer belongs to a high-risk group, etc. After transactions are completed, store owners compile reports and inform regulators how many transactions were completed that day, the identities of those people, and other relevant information. This process is a regulatory measure already in place in the Philippines.

The second process is that since they have obtained the KYC information of these individuals, regulators have the opportunity to conduct tax reviews of these people's cryptocurrency buying and selling behaviors, so that the government can obtain taxes. Such regulatory measures will more actively promote implementation, and regulators may guide you on how to do compliant transactions. I think Hong Kong may develop in this direction in the future.

(MoneyBees is the first offline cryptocurrency OTC in the Philippines. Image source: manilastandard)

**Meta Era: Specifically, what is one of the reasons why you chose to develop in South America? In your opinion, what are the attractions and opportunities in South America for Web 3.0 entrepreneurs? Where is your company ****onoffdex.com **** promising? **

0xpineapple: We are optimistic about the blue ocean market, densely populated, young population, and banking infrastructure that is conducive to the encryption market, etc. These are all places we are optimistic about.

**Meta Era: Do you think both South America and the Philippines have a chance to coexist? **

0xpineapple: Yes, because their population is huge. Focusing on these two countries, one has a population of more than 100 million and the other has a population of more than 200 million. The total population exceeds 300 million, which is already several times the population of Hong Kong.

I have not dabbled in the domestic market because I have some concerns. Matters involving money must be compliant, but there are currently no clear regulations telling you how to operate, so it is still in a gray area. I won't consider it at the moment.

But the Philippines and Brazil are both good choices. Many problems can be solved by consulting a lawyer, and these markets have strong support for cryptocurrencies and are very open. We clearly know that every step of our investment is feasible, so we can invest boldly. Since we have no outside investors, our funding comes from ourselves and we have to spend every penny wisely. If there is a sudden domestic or Hong Kong policy change, telling you that you can no longer continue to operate tomorrow, and you have just formed a company and a good team, it will cause a lot of losses. In the Philippines and Brazil, the government policies are relatively clear. They will tell you whether you can continue to do it, and there will be no problem with the funds we invest, because you will know the time point for paying back the capital, and they will allow you to continue to develop. This is the most important factor we consider.

In fact, I invested in Crypto ATM before, and I was one of the earlier investors. But last year I sold the ATM machine company to someone else, mainly because I didn't know enough about the Crypto ATM policy in Hong Kong, and I wasn't sure what everyone's attitude towards it was.

But in Brazil, I will be the first to own a Crypto ATM.