Hong Kong’s OSL crypto exchange receives $91M boost

Report: Can Bitcoin Replace Gold As a Safe Asset?In light of the substantial increase in Bitcoin (BTC) prices this year, a report from KB Financial Group in South Korea examined the potential for BTC to replace gold as a safe asset.©Pexels/Michael SteinbergThe study delves into the factors behind the recent BTC price surge and emphasizes the need for caution when considering BTC as an alternative to traditional safe assets.3 drivers behind BTC surgeFrom January 1 to March 31 this year, BTC experienced an impressive return of 71%. This surge can be attributed to three main factors: an anticipated increase in liquidity due to market expectations of unchanged or falling interest rates; central banks supplying liquidity to mitigate risks in the traditional banking system; and concerns over the potential delisting of cryptocurrencies should the US court’s decision on the Ripple-SEC case classify XRP, Ripple’s native token, as securities, prompting investors to shift their focus to BTC.The report suggests that the current BTC boom is more likely a result of short-term arbitrages and social conformity, given the greater information asymmetry in the crypto market, which lacks the disclosure system present in traditional stock markets.Persisting risk factorsLast month, blockchain tracker Whale Alert spotted a transfer of 11,125 BTC from an anonymous address to Binance. The primary reason for moving assets from a private address to an exchange address is to sell them, indicating that investors should keep a watchful eye on Bitcoin trading volumes, particularly for any signs of large sell-offs.Data from the crypto data analysis platform Glassnode revealed that the percentage of the BTC supply that was active over a year ago reached an all-time high of 68% in late March. Historically, such an increase has been associated with falling BTC prices.This year, the BTC supply is set to grow due to the US government’s liquidation of seized BTC. As detailed in a March 31 Cointelegraph article, the US government seized 51,352 BTC in a case related to Ross Ulbricht, the creator of the online black market Silk Road. The government has already sold 9,861 BTC, with the remaining amount expected to be liquidated in four additional portions throughout the year.Binance, the world’s largest crypto exchange by trading volume, has been struggling to find banks in the US to store client funds after crypto-friendly banks Silvergate and Signature closed their doors.Need for cautionAlthough various media sources often portray BTC as a safe asset, the report advises caution in accepting these claims. Although some liken BTC to “digital gold,” the two assets share little in common beyond their finite and scarce nature. In fact, gold and BTC diverge significantly in terms of social consensus, intrinsic value, price volatility, and investor protection.Gold serves as a highly liquid asset with applications in both jewelry and industrial goods, in addition to its role as an investment vehicle. In contrast, BTC’s intrinsic value is still debatable. The price volatility of BTC is also a concern, as evidenced by its 71% spike in the first quarter of 2023, compared to gold’s modest 8% increase. Additionally, gold investment products are regulated by law, whereas BTC is not. The report thus recommends treating BTC as a high-risk product and incorporating it into a diverse investment portfolio.It is worth noting that since the outbreak of the COVID-19 pandemic, the crypto market has demonstrated a stronger correlation with the global stock market in response to negative signals. This trend can be partially attributed to the growing presence of institutional investors in the crypto market, who often sell risky assets first to secure liquidity in the face of unexpected shocks.

Wallets belonging to the defunct Japanese Bitcoin exchange Mt. Gox have transferred over 140,000 Bitcoin (BTC), valued at approximately $9 billion, to an unknown address.  Sell-off fearsThis significant movement began in the early hours of Tuesday morning in Asia, marking the first such transfer from Mt. Gox’s cold wallets in over five years. Julio Moreno, head of research at CryptoQuant, initially confirmed that 12,239 Bitcoin had been transferred from Mt. Gox over the course of an hour. A short time later, he provided an update on X, stating:"All coins have been transferred to a new address." Despite market disquiet, the prevailing view which subsequently emerged is that the transfer is believed to be part of a plan to distribute assets back to creditors before the October 31, 2024 deadline. Alex Thorn, head of research at Galaxy Digital, shared his perspective on X, suggesting that most of the transferred Bitcoin would likely be held by creditors rather than being sold on the open market. Despite these reassurances, the market reacted negatively for a time. Bitcoin's price dropped by 1.4% since the start of Asian trading hours, falling to a low of $67,680 from a Monday high of over $70,000.Photo by Kanchanara on UnsplashNo Bitcoin FiresaleTo quell fears of a massive Bitcoin sell-off, Mark Karpeles, the former CEO of Mt. Gox, addressed the situation on X. He stated: “As far as I know, everything is fine with MtGox. The trustee is moving coins to a different wallet in preparation for the distribution that will likely happen this year. There is no imminent sale of bitcoins happening." Rehabilitation trustee Nobuaki Kobayashi also issued a press release, clarifying that no sale of Bitcoin or Bitcoin Cash (BCH) had taken place. He assured that the group was "managing bitcoin and bitcoin cash in a secure manner." Wallet activity reveals that these movements were executed through thirteen transactions. A test transaction worth $3 was made on May 20, followed by another smaller transaction of $160 early Tuesday. The remaining transactions varied from $1.2 million to $2.2 billion worth of Bitcoin. Bitinfocharts data shows that all of Mt. Gox's Bitcoin has now been consolidated into a single wallet. A long road to repaymentIn September 2023, Mt. Gox’s trustee announced that the repayment deadline had been extended by 12 months to October 31, 2024. It looked like repayments were imminent in November. However, those communications referenced cash repayments rather than the distribution of Bitcoin and Bitcoin Cash. Some cash repayments had started in December 2023. Speculation in January that the bankruptcy estate would begin the distribution of Bitcoin led to market fears of the impact that would have on the Bitcoin unit price. The extension provided a longer timeframe for preparing the distribution of assets to creditors. Mt. Gox, launched in 2010, quickly rose to prominence, becoming the largest Bitcoin exchange by 2013, handling 70% of all Bitcoin trades worldwide. However, the exchange faced a dramatic downfall in early 2014.  It suspended trading and stopped all withdrawals after losing hundreds of thousands of Bitcoin in a hack. Subsequently, the site went offline, and the company filed for bankruptcy protection after losing over 800,000 Bitcoins. Creditors have been waiting for repayment ever since.

Chinese Subsidiary of DBS Bank Launches e-CNY Product OfferingDBS Bank China, a cryptocurrency-friendly bank and subsidiary of the Singaporean multinational financial services firm DBS, has introduced a new solution for its customers in mainland China, facilitating transactions with the digital yuan.The bank has officially launched the digital yuan or e-CNY merchant solution, allowing businesses in mainland China to receive payments in the central bank digital currency (CBDC). The announcement of the new service offering was made via a press release published to the website of the parent company on Wednesday.Photo by Hanny Naibaho on Unsplashe-CNY settlementWith this new service, DBS clients in mainland China can receive the e-CNY and have it automatically settled into their CNY bank deposit accounts. DBS refers to this as a “merchant collection solution,” where the merchant collects the final amount in CNY directly into their bank deposit account. The solution aims to streamline the process by eliminating manual settlement procedures.Enabling CBDC functionalityThis innovative tool offers several advantages. It allows businesses to collect CBDC without the need for manual settlement processes. Moreover, the e-CNY’s capabilities enable users to receive payments in regions with limited internet connectivity, ensuring broader accessibility. The solution also provides reconciliation through consolidated merchant reports, with detailed e-CNY transactions available on DBS’ digital platform for business banking.The CEO of DBS Bank China, Ginger Cheng, announced that the first e-CNY transaction using the new solution has been successfully completed, involving a catering company in Shenzhen. Cheng emphasized that integrating a CBDC collection and settlement method into clients’ existing payment systems would position their businesses for a digital future where e-CNY becomes increasingly prevalent among Chinese consumers. She expressed the bank’s commitment to enhancing user experience and supporting China’s financial market innovation.Adoption pushChina has made substantial progress in promoting and expanding the digital yuan since its launch in 2019. The country’s central bank reported that there were 13.6 billion e-CNY in circulation, equivalent to approximately $2 billion, by the end of 2022.The digital yuan is currently accepted in 26 cities and 17 provinces across China, with further adoption expected as the program gradually expands to more regions. In recent days, another measure was taken to bring about everyday use of the digital yuan when the city of Jinan enabled use of the currency across its public transport system.DBS Bank has become actively involved in the digital assets space. In 2020, the bank launched cryptocurrency trading and custody services for institutional clients. In April of this year, it extended crypto trading services to its premier customers. The bank has also participated in various government-related blockchain initiatives in Singapore, including Project Orchid, Project Guardian, and Project Ubin.DBS is not the first foreign banking entity to collaborate with the Chinese relative to the digital yuan. Earlier this year, France’s BNP Paribas partnered with the Bank of China to promote the digital yuan to its corporate clients. The Chinese are clearly making every effort to promote use of the digital currency inside and outside of Chinese territory.