What happened
Shares of Ebang International Holdings (EBON 0.13%) surged on Friday after the maker of bitcoin-mining machines and chip designer announced plans to launch a new cryptocurrency trading platform. As of 2:20 p.m. EDT today, Ebang's stock was up a stunning 40%.
So what
Ebang, based in China, created a new subsidiary in Singapore to operate the exchange. CEO Dong Hu says the new digital asset trading platform will have "robust" risk controls and an "optimal" transaction system, to provide a safe and reliable way to buy and sell cryptocurrencies.
Ebang International Holdings' stock rose sharply on excitement for its new cryptocurrency exchange. Image source: Getty Images.
Ebang must first receive approval from regulators and be granted a license before it can launch the exchange. With regulatory approval not guaranteed, the company cautioned investors against placing "undue reliance" on the press release announcing its plans.
Now what
It's understandable why Ebang would like to enter the cryptocurrency trading arena. The price of bitcoin, Ethereum, and other cryptocurrencies have rallied in recent weeks, bringing investor interest and capital back into the crypto markets.
But the question is whether Ebang will be able to compete effectively with the likes of Binance and other crypto exchange titans. If it can't, the stock's recent gains could prove fleeting.
