Chinese cryptocurrency exchange Huobi and social networking platform Tianya are setting up $1B fund to invest in domestic blockchain-related startups
Yingzhi Yang / South China Morning Post :
Context & Ripple Effects
Huobi is pairing with Tianya, one of China's oldest online communities, to put $1B behind domestic blockchain startups — an exchange converting trading profits into an ecosystem fund at home. Weeks later, rival Binance answered with its own $1B fund of funds, also investing directly in blockchain firms, turning balance-sheet-backed startup funding into a two-horse race between the top Chinese-founded exchanges.
The domestic framing matters because of what followed: within three years, regulators pushed both exchanges to close their Beijing subsidiaries, and founder Li Lin eventually resurfaced raising ~$1B for a digital asset trust buying Ether — the same scale of commitment, relocated offshore.
First-order effects
- Chinese blockchain startups gain a dedicated $1B domestic capital source backed by an exchange and a major social platform, rather than generalist VCs.
- Tianya gains direct exposure to the blockchain economy through its portfolio role, while Huobi secures deal flow and goodwill among the startups most likely to list tokens or run ICOs on its platform.
Second-order effects
- Binance's competing $1B fund forces both exchanges to bid up valuations for the same small pool of credible domestic blockchain teams, making ecosystem funds a customer-acquisition cost rather than pure investing.
- Huobi hedges the domestic bet by expanding abroad via Huobi Cloud partnerships in the Philippines, Russia, Taiwan, Indonesia, and Canada, spreading infrastructure beyond regulatory reach of any single government.
Third-order effects
- The pattern — onshore fund first, offshore migration when policy turns — becomes the template for Chinese crypto capital: the 2021 Beijing closures and Li Lin's later Ether trust show the same money re-forming outside China rather than disappearing.
- Exchange-run mega-funds entrench a structure where the largest trading platforms, not traditional VCs, set which blockchain projects get funded — concentrating gatekeeping power in a handful of venues whose fortunes then track regulatory risk.
The trend: Chinese crypto exchanges are using billion-dollar corporate funds to build captive startup ecosystems at home, then migrating that capital offshore as domestic regulation tightens.