US Treasury Sanctions Gaza-Based Crypto Operator

Unprecedented surge in trading volumes on HashKey exchangeHong Kong-based cryptocurrency exchange HashKey has experienced an unprecedented surge in daily trading volumes over the course of the past week, reaching approximately $4.5 billion, a notable increase from its usual levels.Photo by Jungwoo Hong on UnsplashToken rewards programThe surge, highlighted in a report published by The Block on Monday, occurred on Friday, and is being attributed to the company’s token rewards program, according to a spokesperson from HashKey Group.A HashKey Group spokesperson clarified that the surge in volumes was a result of the company’s recent HSK rewards campaigns, which involve the distribution of HSK tokens or EcoPoints. Introduced in April, these incentives were designed to encourage trading activity on the platform. The spokesperson emphasized the company’s commitment to operating within the regulatory framework, stating:“At HashKey, we operate strictly within the regulatory framework, and any actions of misconduct are not tolerated.”Last Thursday, HashKey issued a post on X (formerly known as Twitter), detailing one of its incentive campaigns. The post announced the introduction of a DOT/USD trading pair and encouraged users to explore additional ways to earn through ongoing campaigns. Despite receiving only 15 likes, the post aimed to attract users with the promise of HSK rewards for logging in, trading and participating in the platform’s campaigns.Licensing approval in AugustHashKey had obtained the first license to offer retail crypto trading in Hong Kong in August under the new regulatory regime, with an upgrade of its type 1 and type 7 licenses. Officially opening to traders on November 1, it quickly garnered attention in the crypto community. In the same month, it also launched an app, offering full mobile trading capabilities.While daily trading volumes on Sunday dropped to $275 million, still higher than the usual levels but closer to the volumes recorded in its initial month, the significant spike on Dec. 1 was particularly noteworthy. Comparatively, Binance, the world’s largest crypto exchange, recorded $11.3 billion in volume over the past 24 hours.Wash trading ruled outSpeculation arose on X regarding the possibility of wash trading contributing to the sudden surge in volumes. Wash trading involves intentionally matching a large number of orders to create artificial trading activity. However, HashKey’s spokesperson dismissed these claims, stating that no misconduct has been detected.Justin d’Anethan, Head of Business Development in Asia for Keyrock, a crypto market-making firm, commented on the situation, stating:“Many people in the crypto space assumed wash trading was taking place… But it’s almost unbelievable.”He noted that if one wanted to appear more active, it would be done gradually, rather than in a single surge.Market sentiment and trading volume trendOver the course of the past 24 hours, the Bitcoin unit price has surged from $39,500 to almost $42,000, with Asian trading believed to have contributed significantly to that trading momentum. The overall crypto market capitalization has reached $1.5 trillion for the first time since early 2022. Bitcoin trading volume over the past 24 hours hit $39 billion, with a bitcoin market dominance rate of 51%.

Chinese Prosecutors Issue Warning on NFTsIn recent days, China’s top procuratorial agency, the Supreme People’s Procuratorate of China, issued a warning alongside some guidelines on non-fungible tokens (NFTs).The Supreme People’s Procuratorate is the highest office in China charged with the mandate of upholding legal integrity, safeguarding citizens’ rights, and where necessary, conducting criminal investigations. In a statement published on Monday, the agency set out an advisory, together with additional recommendations, pertaining to NFTs.Photo by Markus Winkler on PexelsNFT status in ChinaWhile all and sundry are aware of a multi-year crack-down by the Chinese authorities on crypto in recent times, exemplified by a ban on crypto trading and the operation of crypto mining facilities within the country’s borders, the status of NFTs has been discussed to a much lesser degree.NFTs remain legal within the country. When the crypto trading ban came into play in 2021, much of the local industry connected with that trading activity disappeared. However, in its place, a newly emergent trend came to the fore in the form of NFTs. With cryptocurrencies perceived as being high risk and sanctioned by the authorities, attention turned to NFTs and there has been a surge of adoption of the digital collectibles within China as a consequence.NFT risksThe procuratorial agency highlighted a number of attributes as well as risks in relation to NFTs in the report that it published. The agency finds the issue of ownership of NFTs as a troublesome one. It cites the fact that NFTs can be replicated and distributed at will on this basis as being particularly problematic. The legitimacy of the right source of the work itself is the decisive factor for the healthy and orderly development of digital works NFT transactions,” it states.It appears that the agency, like many in traditional professional circles before them, have a difficulty recognizing the model of asset ownership that NFTs incorporate. That ownership is not defined by civil law or in accordance with centralized systems but by simply the possession of the requisite private key pertaining to a given NFT within a decentralized system.Blockchain, not cryptoThe agency acknowledged that NFTs do present a novel application of blockchain technology. This is not surprising as while there might be an ongoing clampdown on decentralized cryptocurrencies in China, officials at a national level and in numerous instances within regional administrations, are demonstrating a strategy of leveraging blockchain technology for the betterment of the Chinese economy in the future.Public prosecutor Wang Xia-fen, one of the authors of the report, stated: “It’s widely recognized that digital collectibles have the potential to protect intellectual property rights, boost content creation and enrich the digital economy.” Wang encouraged public prosecutors to “find the distinction between real innovation and criminal activities” where NFTs are concerned.The upshot of its report though, is that the procuratorial agency is uncomfortable with the similarity of many of the attributes of NFTs when compared with decentralized cryptocurrencies. It issued a warning on that basis, emphasizing a need for risk assessment to be carried out and further consideration of the legal risks that are implicated.

India’s Jio Financial Services to Delve Into BlockchainJio Financial Services (JFS), a subsidiary of Indian multinational conglomerate Reliance Industries (RIL), is gearing up to venture further into the realm of blockchain and central bank digital currencies (CBDCs), according to announcements made by Indian billionaire businessman and Reliance Chairman and Managing Director, Mukesh Ambani, during RIL’s 46th annual general meeting on Monday.Photo by Shubham Dhage on UnsplashBlockchain ambitionsThe Indian billionaire revealed his Web3-related plans, signaling a strategic move for JFS towards blockchain and centralized digital currencies. While addressing the AGM, Ambani emphasized his current caution regarding highly volatile crypto assets. However, he indicated that he aims to have Jio Financial delve deeper into blockchain technology and permissioned digital currencies, particularly the eRupee CBDC, which is undergoing advanced trials within India.JFS will serve as the entry point for Reliance Industries into the Web3 sector. Formerly known as Reliance Strategic Investments, JFS has been rebranded and will now facilitate management services for digital assets.Consolidating payment infrastructureAmbani’s vision for JFS encompasses the consolidation of payment infrastructure, a strategic effort to drive digital adoption throughout India. JFS hit the headlines in July when it was revealed that it was forging a major partnership with BlackRock, the world’s largest asset manager, valued at over $100 billion as of August 18.Ambani’s statement during the RIL annual general meeting highlighted JFS’s objectives: “JFS will consolidate its payment infrastructure further driving digital adoption for India. JFS products will explore pathbreaking features such as blockchain-based platforms and CBDC.”CBDC development has been ongoing through initiatives taken by central banks around the world over the past couple of years. The Reserve Bank of India (RBI) has been no slouch in this respect. It is actively engaged in developing its own CBDC, aiming to modernize online payment systems while reducing reliance on physical cash, thereby optimizing operational efficiency.In July, the RBI turned its attention to the cross-border functionality aspect of CBDCs, experimenting with various use cases relative to international payments. At a governmental level, India is also playing a key role in working towards global regulatory standards for cryptocurrencies. The RBI has contributed to the discussion, citing risks associated with stablecoins in a Financial Stability Report released in June and calling for global regulation.RIL CBDC initiativesNotably, Reliance General Insurance recently announced its acceptance of the eRupee CBDC for premium payments, and earlier this year, Reliance Retail initiated the use of India’s digital rupee CBDC across its Mumbai-based stores. The CBDC is anticipated to outperform India’s successful Unified Payments Interface (UPI) mobile payments system, according to V Subramaniam, Managing Director at Reliance Retail.Ambani’s RIL empire encompasses a diverse range of businesses, including Jio’s network services, retail stores, and fuel stations. Mukesh Ambani’s move to embrace blockchain and CBDCs will likely have broader implications beyond his own companies, given that it signals his intention to drive India’s digital transformation forward.