Ledger, one of the world’s biggest makers of hardware devices used to store cryptocurrencies, is expanding into Asia-Pacific, looking to capitalise on strong Chinese demand for cryptocurrencies storage despite a ban on such exchanges in China.
The company’s launch of its Hong Kong-based regional operation comes despite Beijing’s blanket ban in mainland China of cryptocurrency trading and cryptocurrency-based fundraising schemes, known as initial coin offerings.
“For us, it was a no-brainer to be in Asia because a third of our business is there,”
said Pascal Gauthier, Ledger’s president.
The Paris-based company sells hardware wallets that allow investors to store their cryptocurrency holdings offline to make them more difficult for hackers to steal. Last year, Chinese financial regulators shut down local crypto exchanges over concerns that the unregulated digital currencies could pose financial risks and allow residents to contravene strict capital controls.
Beijing has also moved to shut down extensive bitcoin mining operations in the country, citing wasteful electricity use. Despite the formal crypto-trading ban, Ledger said it was counting on surging demand from Chinese investors in offshore crypto funds registered in Hong Kong or Singapore.
“For a lot of the bigger funds, whether it’s venture capital or new crypto funds, the limited partners backing them at the end of the day are mainland Chinese family offices,”
said Benjamin Soong, Ledger’s new Asia-Pacific director. Mr Soong said more mainland companies were also exploring setting up their own crypto funds outside of China.
“You are seeing a lot of entities being registered across different countries that are more crypto-friendly. There’s still a very big following coming out of Beijing,”
he said. The proliferation of offshore crypto funds is the latest sign that digital currencies are becoming more mainstream in Asia as crypto assets become more of an investment product than a tool for capital outflow.
“This is an asset class where retail [investment] is starting to emerge before the institutional side,” said Mr Soong. Leo Weese, president of the Bitcoin Association in Hong Kong, warned against the increasing commercialisation, voicing concern about the prospect of allowing a third-party to store one’s crypto assets.
“Ledger seems to currently be going through a transformation from a wallet producer to a custodian,” said Mr Weese. “As a bitcoiner, this is also quite contrary to the core value proposition: be in control of your own money.”