Ebang continues flirtation with launching exchange in Singapore

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China-based Ebang International Holdings Inc. (NASDAQ: EBON) recently announced that it had completed establishing a wholly-owned subsidiary in Singapore to prepare for setting up a regulatory-compliant digital currency exchange.

The Nasdaq-listed ASIC chip maker and block mining equipment manufacturer plans to seek the relevant governmental approval and license to operate the exchange and related business. In June, the plans were first hinted at during an interview with Bloomberg BNN by Ebang CFO Chen Lei. 

Dong Hu, Chairman and CEO of Ebang, said, “With our newly established subsidiary in Singapore, we expect to expand our industry chain layout from providing equipment to offering trading services.” Hu further added, “We plan to establish a robust risk control system and develop an optimal transaction system… in order to provide investors with safe, fast and stable digital asset transaction services through blockchain technology.”

Singapore’s Payment Services Act regulates digital currency payments and trading enterprises under some aspects of the regulatory regime that govern traditional payment services and require them to hold a license. While Singapore’s regulatory regime means exchange firms will have to run their operations to a high regulatory standard, it also brings them legitimacy and an officially licensed status.

Ebang follows in the footsteps of rival Bitmain Technologies, who established a Singapore spin-off Matrixport in February 2019 to launch the derivative exchange Bit.com. Its plans have come amid losses for the last two consecutive years. The company suffered net losses of $11.8 million and $41.1 million in 2018 and 2019.

Ebang cautions that there is no guarantee that they will receive the green light on approval, nor a license on commercially reasonable terms. They also warn that it may not start the purposed business as planned, or at all. 

Ebang further caution shareholders in the company not to place undue reliance on their press release. Regardless, the capital markets responded positively to the news, resulting in an increase in Ebang’s share price. With a clear nod of skepticism, what are they buying really?

Ebang hopes to expand beyond the block reward mining sector that tends to boom or bust around the volatile BTC prices. Insiders claim sales could almost double with the exchanges’ launch into the competitive space dominated by Binance, Kraken, etc. In truth, it is little more than an enormous collection of assumptions.