BTCC CEO Bobby Lee On Why The Chinese Probably Aren’t Using Bitcoin To Evade Capital Controls

Bobby Lee is chief executive of BTCC, one of the world’s longest-running cryptocurrency exchanges.

He got into bitcoin early through his brother, Charlie Lee, the creator of Litecoin, the cryptocurrency often called digital silver, as opposed to bitcoin, the digital gold.

Before that, Lee was Walmart’s vice president of technology in China, and an engineer at Yahoo. (And before all that, he was in my freshman dorm at Stanford — just for the record.)

“Truth be told,” he says, “in 2011, six years ago, I did not fully understand the impact and fundamentals of bitcoin.” He mined a few coins that summer and fall — about 200 coins — but when his wife asked him what the computers were for, he replied, “just some servers,” and when the heat they were generating became too great, he shut them off.

However, he did promise himself at the time that if he ever did a startup, he would do one in bitcoin, which is how he ended up becoming a cofounder of BTC China, which has now been rebranded BTCC.

In the latest episode of my podcast Unchained (Google Play, iTunes, Stitcher or TuneIn Radio), Lee recounts how, back when he started in bitcoin, whenever he would ask people in China if they had heard of bitcoin, no one had. Then, within a year, it became a worldwide media sensation and a hot commodity for traders. He also tells the story of how his experience working during the early days of the internet gave him the idea for no-fee trading, which was driving huge trading volumes in China — an estimated 95% of transactions worldwide — until early this year.

BTCC

Bobby Lee, CEO of BTCC

In addition to the exchange, BTCC runs a mining pool in which it gathers together people who have mining equipment but want to be part of a group to even out their earnings in bitcoin into a steady paycheck rather than a big payday every few weeks or months.

Recently, the company has begun offering services more in line with its ambitions to be an international cryptocurrency company. For instance, its wallet, Mobi.me, an iOS and Android app, supports 60+ currencies and comes with a debit card. Its BTCC Mint creates physical bitcoins made of titanium that contain the private key for a bitcoin account. And in a creative combination of BTCC’s many services, the bitcoins in the physical coins are freshly mined, never-before-used ones from BTCC’s mining pool.

Despite BTCC’s new international focus, Lee’s location in China does give him some insight into the Chinese perspective on and activity around bitcoin. He does admit “People always, always come and ask me about it — how do I use bitcoin to evade capital controls?” (Those are the limits the Chinese government imposes on sending Chinese yuan out of the country.) However, Lee says, “I haven’t seen that happen on any scale. People may do that with $100 or $1,000 but we have not seen any evading capital controls on anything in excess of $100,000 or $1 million.” Tune in to hear why he believes many fewer people are using bitcoin to evade capital controls than you might think.

Lee gives the lowdown on the Chinese government’s attitude toward bitcoin, which hasn’t officially changed since late 2013, plus the changes that China-based cryptocurrency exchanges have been making after a visit by Chinese government regulators in early January that caused bitcoin’s price to take a dive.

The upshot has been a dramatic shift in the trading of cryptocurrency in China, where, due to higher demand, exchanges for the last few years have sported higher prices than exchanges in other geographies. Now, Lee says, prices within China have diverged — on Chinese exchanges, the cost of a bitcoin is a bit lower, but prices in China’s over-the-counter (OTC) market, in which people buy directly from each other without using an exchange to facilitate the trade, are higher, closer to what a bitcoin costs in U.S. dollars.

Tune in to the episode (Google Play, iTunes, Stitcher, TuneIn Radio, web) to hear how Lee believes Chinese people view bitcoin differently from Westerners; what Chinese opinions are of Ethereum, another blockchain-based network focused on smart contracts; and what the beleaguered Bitcoin Foundation, where Lee is a board member, is up to.

He also discusses what developments he expects in bitcoin this year, plus why millennials and the comparison to gold make him optimistic for bitcoin’s future. “We’re on a multi-decade mission,” he says of his expectations for further adoption and price appreciation in bitcoin. But he finds the industry especially exciting now: “It’s never a boring day in the bitcoin space.”

Laura Shin hosts the Unchained podcast (Google Play, iTunes, Stitcher, TuneIn) and wrote The Millennial Game Plan. Disclosure: I own some bitcoin and ether.