Hong Kong Adapts Crypto Regulations to Broaden Market Access

Foblgate adds D’CENT and Trust as supported external walletsSouth Korean cryptocurrency exchange Foblgate will allow users to register the external digital wallets D’CENT and Trust on their accounts, offering more options for managing and trading crypto assets, according to local news site Etoday on Tuesday (KST).Photo by Shubham’s Web3 on UnsplashD’CENT is a hardware wallet that safeguards users’ assets through a robust security system employing biometric technology, encrypted storage, firmware authentication and security certification. It supports some 3,000 cryptocurrencies and allows users to create up to 80 addresses in a single wallet. Trust, on the other hand, is a one-stop Web3 wallet where holders can trade and swap crypto, earn rewards, manage NFTs and enjoy various decentralized applications (dApps). Like D’CENT, it is known for securing customer assets and privacy.“By providing support for external wallets, we are striving to enhance user convenience, respond to various demands and create a safe and convenient trading environment on Foblgate,” Ahn Hyun-jun, CEO of Foblgate, emphasized.Travel Rule requirementsAs per the Travel Rule under Korea’s Act on Reporting and Using Specified Financial Transaction Information, any user who wants to transfer cryptocurrencies worth more than KRW 1 million (approximately $775) via a personal wallet must register that wallet beforehand. The Travel Rule refers to the Financial Action Task Force’s (FATF) Recommendation #16, which outlines that VASPs must share certain personal information about customers — including names and account numbers — when facilitating crypto transactions that exceed a certain amount. This is aimed at preventing money laundering and other illicit activities.Expanded optionsFoblgate currently supports several other external wallets as well, including MetaMask, Blockchain.com, MyEtherWallet, Klip and Burrito Wallet, which was added at the end of last month. The two newest additions, D’CENT and Trust, bring the total number of supported wallets to seven. The exchange has also uploaded a guide on its website on how to add external wallets.

The CEO of Hong Kong’s central banking institution, the Hong Kong Monetary Authority (HKMA), has outlined that the introduction of the Chinese autonomous territory’s Stablecoins Ordinance on Aug. 1 will criminalize the unlicensed promotion of stablecoins. In an article published on the HKMA website on July 23, CEO Eddie Yue stated:”According to the Ordinance, starting from the commencement date, it will be illegal for any person to offer any unlicensed fiat-referenced stablecoin (FRS) to a retail investor, or actively market the issue of unlicensed FRS to the public of Hong Kong.”Photo by Manson Yim on UnsplashSubject to fine & imprisonmentIf an individual is found to have promoted an unlicensed stablecoin, they will be subject to a fine of HK$50,000 ($6,400) and imprisonment of up to six months. Yue warned the public to remain vigilant and to exercise caution if they come across marketing material related to an unlicensed stablecoin offering. The HKMA CEO is conscious of the fact that stablecoins are an emerging payment instrument that is being gradually integrated into the mainstream financial system. However, he feels that some discussion on stablecoins has been overly idealistic. Yue outlined that interactions with the few dozen institutions that have reached out to the HKMA with regard to stablecoin licensing have led him to believe that “many proposals remain conceptual.” He claimed that many of the institutions putting forward these proposals “fail to put together viable and concrete plans as well as implementation roadmaps, let alone demonstrate their awareness of risks and competence in managing them.” Limited license issuanceYue believes that in many instances, these institutions would be better served to collaborate with stablecoin issuers rather than becoming stablecoin issuers themselves. It’s on that basis that the HKMA will only grant a handful of stablecoin issuer licenses. Bloomberg reported that in the region of 50 companies have been seeking to apply for stablecoin licensing in the city, with the HKMA likely to approve around 10 licenses. It referenced particular interest from Chinese brokerages and a related move recently by asset management firm ChinaAMC in launching a yuan-denominated tokenized money market fund that facilitates subscriptions via stablecoins.  Significant Chinese businesses such as JD.com and Ant Group have been preparing to acquire stablecoin licensing in Hong Kong. Chinese stablecoin urgencyIn its Asia Morning Briefing, CoinDesk pointed out that in 2021, the Chinese authorities had been critical of the development of global stablecoins, preferring instead to concentrate on their own central bank digital currency (CBDC), the digital yuan. However, it asserts that “Beijing’s caution on stablecoins is giving way to a sense of urgency.” Animoca Group President Evan Ayuang told the publication that China’s interest in stablecoins is on the rise. Ayuang asserted that actions taken by the Trump administration in the U.S. related to stablecoin policy are “pressuring China to act a lot faster.” Developments in Hong Kong are relevant in the context of China’s newfound interest in stablecoins. Lily King, chief operating officer (COO) at crypto custodian Cobo, stated recently that Hong Kong continues to be a testing ground for mainland China.  In keeping with that outlook, analysts at Morgan Stanley recently asserted that yuan-denominated stablecoin projects launched in Hong Kong would potentially serve as a developmental stablecoin sandbox for mainland China.

Web3 Offers Potential for Japan to Rediscover its MojoEveryone recognizes that Japan has been at the forefront of innovation and the development of technology in the past but can it rediscover that cutting edge through Web3 and blockchain? In a recent interview with Forkast News, Yudai Suzuki, Co-Founder of a Tokyo-based Web3 incubator, suggested that it has that potential.©Pexels/邱 韬Re-establishing a competitive edgeSuzuki, who heads up Fracton Ventures, believes that such a pivot is possible for Japan in making Web3 the means through which it can rediscover the innovative edge it has been lacking in more recent years.Despite an historical strength and depth in technology and innovation, Japan has struggled when it comes to adopting and implementing new technology on a global scale more recently.Legacy techEarlier this year, it emerged that leading Japanese technology companies were collaborating with a view to creating a new open metaverse infrastructure called “Ryugukoku.” That project implicates the creation of a Japan Metaverse Economic Zone. Suzuki cites this project as demonstrative of a key issue relative to the overall development of Web3 in Japan.The project involves Japan’s legacy tech companies such as Fujitsu and Mitsubishi. He goes on to clarify that the majority of Web3 projects in Japan are being led by the existing technology behemoths despite the fact that Japan is seeing the emergence of a Web3-native generation.Suzuki identifies that one of the fundamental aspects of Web3 is that every decentralized autonomous organization (DAO) that’s created is immediately global in nature. Allied with that, most of that 18–25 year old Web3 native generation in Japan want to break through language barriers and communicate on a global basis.That outward looking characteristic is positive but it’s not how venture investment has traditionally worked in Japan. He explains that the conventional approach to investing in start-ups in Japan has been to first look to dominate the Japanese market before going global. The Fracton Ventures founder believes that this is a flawed approach in today’s world and that by the time they’ve gotten to number one in Japan, it’s already too late in trying to achieve that on a global basis.Government responsibilitySuzuki places much of the responsibility in affecting a more appropriate approach on the Japanese Government. “If they focus only on these huge Japanese companies, they will not succeed,” he says. He is also critical of the regulatory approach. Suzuki believes that “the government wants to change the laws and set new regulations at an early date,” and with that, such over-regulation has resulted in crypto entrepreneurs leaving the field. Regulation needs to be set on a more flexible basis so that it can be easily updated and upgraded as the technology develops.Global MindsetHe highlights the importance of having a global mindset and being open to different ideas and perspectives in order to succeed in the Web3 space. The entrepreneur points to that Web3-native demographic in Japan, explaining that their mindset has changed to a more global one as a consequence of dabbling in Web3. The same he believes is necessary on the part of the government if Japan is to become a leader in the tech industry once again.