OKEx CEO Thinks That China's Digital Currency DCEP Could Be A Gamechanger For Crypto And Finance by@Sergeenkov
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OKEx CEO Thinks That China's Digital Currency DCEP Could Be A Gamechanger For Crypto And Finance

April 27th 2020
11 min
by @Sergeenkov 2,067 reads
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OKEx CEO Jay Hao is the CEO at bitcoin exchange OKEx.com. He has been at the helm of the Malta-based crypto exchange since 2018. Mr. Hao has extensive leadership experience and diverse technical background. DCEP is a digital format of the Chinese yuan banknotes and coins we use every day. Unlike Bitcoin or Libra and USDT, which is not backed by any central banks or issued by private institutions respectively, DCEp is 100% state-backed by the government’s reserve fund.

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Andrey Sergeenkov

Cryptocurrency researcher

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I sat down with Mr. Hao to talk about his background, his work at OKEx, the Coronavirus pandemic and its effects on major global economies, as well as the crypto markets. Recently, China revealed a test interface of their CBDC (Central Bank Digital Currency) , Mr.Hao also shares his opinions about this big news. 

Jay Hao is the CEO at bitcoin exchange OKEx.com. He has been at the helm of the Malta-based crypto exchange since 2018. The exchange has become an industry leader in offering a variety of trading products such as spot and derivatives trading, onchain wallets, mining pools, a decentralized exchange and a token sales platform known as OKEx Jumpstart. 

Mr. Hao has extensive leadership experience and diverse technical background. Prior to OKEx, he worked on live video streaming and mobile gaming platforms driven by blockchain. Before blockchain piqued his interest, he worked for 21 years in the semiconductor industry where he developed a wide range of UVLED, ASIC, FPGA, multimedia codex and more. 

Thank you very much for this opportunity. Let us start from the recent hot news. China has revealed the sample interface for their DCEP (Digital Currency Electronic payment), what do you think of that? 

Well, I think DCEP can be a game-changer in the finance, blockchain, and crypto spaces. Simply put, DCEP is a digital format of the Chinese yuan banknotes and coins we use every day. Unlike Bitcoin or Libra and USDT, which is not backed by any central banks or issued by private institutions respectively, DCEP is 100% state-backed by the government’s reserve fund. What’s more, from a legal perspective, DCEP is a legal tender, so merchants cannot refuse payment in DCEP. 


Compared with Alipay and WeChat Pay, DCEP is designed to replace the current Reserve Money (M0), which is cash, while the funds stored in Alipay and WeChat Pay belong to M2, the deposits of non-depository financial institutions. This is to say, DCEP is the new cash. Besides, the legal status and security level of the central bank digital currency is much higher than the Alipay and WeChat Pay balances, and DCEP holders won’t need to worry about the risk of losing their funds. 

With DCEP, it eliminates the problems about the high cost of issuing, withdrawing, and storing banknotes, as well as the inconvenience in carrying and using cash. Also, it can help the authorities to monitor the circulation and use of the currency, providing an excellent reference for formulating and implementing future monetary policies. Besides, DCEP facilitates the work of anti-money laundering, anti-tax evasion, anti-corruption, and anti-terrorist financing. In conclusion, it can foster the development of China’s digital economy, and improve the quality of financial services in underdeveloped and remote areas. 

Although it is still too early to say whether it will completely replace cash or not, I believe DCEP will facilitate the monetary policy making of the Chinese government and benefit the internationalization of Chinese yuan. 

Thanks for the deep answer, maybe we come back to your professional experience in technology as it spans several years. Please tell us a bit more about your tech background.

Prior to OKEx, I focused on blockchain-driven applications for live video streaming and mobile gaming. Before tapping into the blockchain industry, I had 21 years of solid experience in the semiconductor industry, developing a wide range of UVLED, ASIC, FPGA, multimedia codec, as well as complex system-on-chip (SOC) design for multimedia processors and wireless communication systems. 

What led you ultimately to consider getting your feet wet in the blockchain industry?

I first came across Bitcoin around 2011 when my programmer friends introduced me to this kind of peer-to-peer electronic cash. After reviewing the Bitcoin whitepaper and source code, I was immensely attracted by its features like immutability, traceability, and decentralization. It’s really at the forefront of cryptography, security and distributed systems. Although the blockchain industry is still in its infancy, I see huge potential in this emerging technology.

And I believe its current stage is similar to the IT industry back in the 1960s and 1970s; when chips were just created and the Internet has not come to life. And fast forward to the present day, we see the incredible growth of the IT industry over the years, which definitely has gone far beyond everyone's imagination. I believe that the same is true for the blockchain industry, which is why I decided to take part in the blockchain revolution.

OKEx has been an industry leader since its launch in 2017. How has the company managed to always be a few steps ahead of the competition?

We focus on three key elements - security, innovation, and reliability. First, for security, we are always working hard to improve and maintain a safe platform for our global users to store and trade their digital assets. Second, we listen to our users’ feedback to improve and make innovative products that cater to their needs. Lastly, we are keen to build the most reliable platform and facilitate the development of the whole blockchain industry. On top of that, we are committed to providing the best training and development opportunities for our employees, simply because we believe they are our most valuable asset.

Your team announced the testnet launch of OKChain a few weeks back. What is your vision of this blockchain once it is fully launched?

At OKEx, we believe blockchain technology will become a fundamental infrastructure and catalyst for the next human breakthrough. Capitalizing on the global decentralization development, we have developed our very own blockchain - OKChain - in order to contribute to the community with our decentralized applications. In the era of blockchain, we must embrace openness and complete decentralization.


That’s why we want to build a decentralized and open public chain to empower every participating node with the same power to run and issue decentralized apps freely. Eventually, we hope OKChain could be as decentralized as Bitcoin, and such a highly efficient public chain can be used by anyone around the world to create a truly borderless ecosystem.

OKB recently celebrated its 2nd anniversary. Please tell us more about the token, its utility and your vision for it in the OKEx ecosystem.

OKB is issued by OKB Blockchain Foundation, and OKEx has adopted it as its utility token.  With wide support from millions of users since its birth, OKEx and others in the OKB ecosystem will continue to explore and expand the ecological applications of OKB and perfect the buy-back and burn scheme in the future. Following the launch of the OKChain testnet, we will burn a total of 700 million unissued OKB. So, OKB will enter absolute deflation and become the world’s first fully circulated platform token. We will not retain any OKB, and the burn token comes entirely from the market via our buy-back and burn scheme.

You seem to have confidence in OKB. Why?

OKB is the bridge connecting OKEx and our global users. The value of OKB does not only come from the exclusive benefits all OKB holders can enjoy on the OKEx platform, but also a wide range of ecosystem use cases. More specifically, OKB holders can enjoy trading fee discounts, subscription of OKEx Jumpstart, designated merchants and many other benefits.  So far, there are 33 ecosystem partners of OKB covering network security, financial services, and utility service sectors.

We keep moving forward and develop more partnerships in the OKB ecosystem. On top of that, the clear and transparent buy and burn mechanism of OKB can also bring OKB holders with great benefits. As mentioned above, we have burned the 700 million unissued OKB, and OKB is currently an absolute deflation token with the total supply of 300 million. From May 4, 2019, 30% of the OKEx spot market transaction fee income will be used to buy back OKB from the 300 million circulating supply on the secondary market. So far, we have already burnt 13,978,364 OKB from the initial circulation of 300 million OKB, and we will repurchase and burn more OKB in the future.

What is the relation between OKB, OKT and OKChain? Why did you engineer such a design?

OKChain is a native public chain that adopts the DPoS consensus mechanism. In order to fulfil the DPoS consensus requirement, we have issued OKT as the native token of OKChain. The issuance of OKT will be on the genesis block and node block, and is expected to increase by 1-5% every year. OKB holders are an important driving force for the development and promotion of OKChain, we will map 100% of the genesis block to OKB holders. In the future, OKT and OKB will be interconnected to foster the ecological development of OKChain.Thus, OKT and OKB are inseparable on OKChain, as OKT will empower the development of OKB ecosystem. OKT trading will be available when the OKChain mainnet is live.

The reason why we make this design is because OKB has a deflation economy model, which is not suitable for the public chain ecosystem development. Just imagine when the OKB price keeps increasing, it could be unaffordable for the developers to build decentralized applications on your chain, which will eventually lead to a destruction of your ecosystem. Eventually, users would prefer holding the token or speculating the price rather than using it to develop the applications. With our innovative design of OKB and OKT, this issue could be solved properly.

The OKEx Jumpstart platform saw significant growth and interest in 2019. How do you plan on navigating crowdfunding efforts around the current market turmoil?

OKEx Jumpstart is a token sale platform we launched to help quality blockchain projects go public and get listed in a liquid and world-class market, and at the same time, help fuel the growth of the blockchain market and ecosystem healthily. We will keep on being a gatekeeper to bring a highly transparent platform for IEO projects to get listed. And we also perform due diligence for the market to justify each of their qualities. For firms that need funding, we highly encourage them to gear up with a good proposal and leverage the existing market resources e.g. toke sale platform of leading bitcoin exchange, in order to be heard.

What are your thoughts on the theory that Bitcoin is correlated to the Stock markets? Does it hold water or was it a coincidence that both markets fell at the same time due to the global effects of the Coronavirus?

In the first quarter of 2020, Bitcoin shows relatively high correlation with the stock market, but I don’t think it will remain in the medium-to-long period. The first quarter of 2020 is the worst of times for the global economy. Almost every major economy is inescapable from the outbreak of coronavirus, and the recent stock market shocks and oil price war are fuelling the economic hardship of the world. The fear of recession is rising, and the crypto market is hard to escape. 

Despite a few days of uncertainty, the crypto market is picking up quicker than many thought. Given that the global equity markets are now in troubled waters, more people are turning to crypto for opportunities, bucking up Bitcoin, a unique blend of both risk and safe-haven assets, amid the pandemic.

What measures did OKEx take to combat the market turmoil witnessed in the month of March and how will it deal with the possibility of a global recession?

The crypto market has been undergoing an unprecedented time, particularly the recent bitcoin slump and the global impact brought by the coronavirus. Given the drastic changes in consumers’ internet browsing behaviors, we observe their investment strategies and portfolios are showing new patterns, our team has started to investigate and study the new set of data, so as to get prepared for the future.

I think bitcoin exchanges need to re-evaluate the market, and it will be a new stage of the game when the current storm is over. After the rapid actions to the market changes, OKEx achieved great performance in March, topping the derivatives market with $161 billion in the month according to the Exchange Review March 2020 report by Cryptocompare, the global leader in digital asset data. Thus, we can see OKEx has demonstrated steady growth in the past months.

The US stock market has had a total of 4 circuit breakers when the S&P 500 and Dow kept falling. Do you think the crypto industry needs such tools to safeguard traders? Will it work across the industry given the fact that there are many autonomous bitcoin exchanges?

The circuit breaker is a protective mechanism that can safeguard the interests of small and medium investors, and prevent them from suffering dramatic losses. However, from my perspective, when it comes to the cryptocurrency market, it would be hard to be put in place. Firstly, it would be hard to set thresholds for circuit breakers because of the high volatility in the crypto market. Secondly, the cryptocurrency market runs 24/7 and cryptocurrencies are traded on many bitcoin exchanges. Imagine if a trading platform implemented and tripped a circuit breaker, there would be a price difference of a crypto asset across bitcoin exchanges, driving investors to go for arbitrage. Eventually, the circuit breaker will fail on its purpose.

We’ve also seen the US Federal Reserve and Central banks in Europe start the process of Qualitative Easing in a bid to prevent recessions in their respective economies. What are your thoughts on this and how will it affect the crypto markets?

From my perspective, the scale of the monetary easing this time has far exceeded market expectations, not only did they lower the interest rate range to zero, but they also directly launched quantitative easing. In this case, such a move also gave a negative signal to the market, which sparked market concerns and led to the market plunge. 

In terms of the crypto market, in theory, the Fed’s loose monetary policy will drive Bitcoin price up in the mid-to-long term, and it may take effect in two ways as below theoretically. 

1. Loose monetary policy → increase in bank credit → increase in liquidity → part of the increased fund would flow into the crypto market and drive up crypto prices

2. Loose monetary policy → market interest rates drop → returns on dollar-denominated assets drop → funds flow out of the dollar market and the dollar depreciate → some of the funds flow into the crypto market and drive up crypto prices

However, as cryptocurrencies, such as Bitcoin, have not been included in the asset allocation pool of most global investment institutions, it might take a longer time for the rate cut to take effect. Therefore, the crypto market, especially Bitcoin price, is hardly affected by the Fed’s loose monetary policy in the short term, but we might expect it to happen in the mid to long term.

The effects of the Coronavirus are being felt globally on a daily basis. How has it affected OKEx’s businesses considering the outbreak happened at the same time as the Chinese New Year?

We have always been closely monitoring the trading performance since the virus outbreak started in January. Interestingly, we noticed a boost of almost 20% in trading volume across OKEx in general. Although there is no specific pattern, and given our steady growth in the number of new users, we believe not only the coronavirus pandemic incurred the increase but also the recent slump in bitcoin. We can see the economic environment is already changing which is likely to incur a new trading scene in crypto space. That’s why I think bitcoin exchanges need to re-evaluate the market after the chaos, and reinforce their risk management regarding capacity and stability.


As a responsible employer, it is our priority to ensure the protection for our talents and their families. We have implemented a work-from-home policy, and kept our offices open during this period in case employees feel a need to enter the office to work. Masks and sanitizers are ready at the reception, and the whole office has been completely disinfected to prevent the spread of virus.

Across the globe, leaders and health experts are recommending that employees consider working from home to curb the spread of the Coronavirus. What measures have you taken as a Company to cope with and curb the spread of the Outbreak? Has it affected the day-to-day operations of the exchange?

Internally, we implemented a work-from-home policy across our global offices once the virus outbreak began in Asia. That was in mid-January, just before the start of the Chinese New Year. We also implemented daily health reports, asking our almost 1,000 employees to keep track of and record their health status within our company communication system. The move is an effort to make sure our team is getting the support and medical care they need. We’re happy to report that so far, not a single OKEx employee has contracted the virus, and we hope to keep it that way. Additionally, like many (probably most) other companies, our virus-response policy includes  suspending work-related travel indefinitely. 

Regarding whether it affects the daily operations, the answer is no. Given the tech-oriented nature of our company, our day-to-day operations have really not been disrupted. We’re lucky to be able to manage meetings and tasks easily and remotely. As the OKEx workforce is decentralized by nature and now fully remote, we allow employees the flexibility they seek instead of micromanaging. We stay in touch in chats and have regular video calls within departments to keep everyone on the same page.



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