Surge in Hong Kong Crypto License Applications from Mainland-Linked Brokers

Kazakhstan setback for Coinbase as government blocks website accessIn alignment with the Law on Digital Assets legislation which was enacted in February, Kazakhstan’s Ministry of Culture and Information has officially confirmed that access to the Coinbase website has been blocked within the country.The development follows the enforcement of regulations prohibiting the issuance and trading of unsecured digital currencies, according to local news media.Photo by Kai Pilger on UnsplashAccusation of regulatory violationThe authorities in Kazakhstan initiated the blocking of local IP addresses from accessing Coinbase as early as September. The action was taken in response to a request from the Ministry of Digital Development. The Ministry of Digital Development accused Coinbase of violating the Law on Digital Assets, resulting in the restriction of access to the platform.The Law on Digital Assets, introduced earlier in 2023, stipulates that the issuance and circulation of unsecured digital assets are prohibited. The exception to this rule is within the Astana International Financial Center (AIFC), a designated economic zone in Kazakhstan. Permits to operate crypto trading platforms within the AIFC are issued by the Astana Financial Services Authority (AFSA).Several cryptocurrency exchanges have already received approval from the AFSA. Notable names among these approved exchanges include Binance, Bybit, CaspianEx, Biteeu, ATAIX, Upbit and Xignal&MT.Reports of access issues to the Coinbase website initially emerged in September, with the local Telegram media outlet Finance.kz referring to it as the “great Kazakh investment firewall.” This firewall was not limited to Coinbase. It also affected access to other major international crypto exchanges such as Kraken.Stringent regulationKazakhstan’s approach to crypto regulation has been notably stringent, particularly concerning its significant mining sector, which ranks among the world’s largest. In October, eight leading cryptocurrency mining operators wrote an open letter to President Kassym-Jomart Tokayev, expressing concerns about the challenging conditions faced by the crypto-mining industry.Those entities included BCD Company, TT Tech Limited, Green Power Solution, Kinur Invest, KZ Systems, AI Solutions and VerCom. High energy prices for miners were cited as a significant issue, leading to what was described as a “very distressful situation” in the sector.Mining got off on the wrong footing in Kazakhstan. Following the banning of crypto mining activities in China in May 2021, there was a sudden influx of miners into Kazakhstan. As that development wasn’t planned for, it led to major stresses being placed on the country’s electricity grid. As a consequence, blackouts occurred.While this development in Kazakhstan is unwelcome news for Coinbase, the company has experienced more positive outcomes elsewhere. Last week it emerged that the U.S. crypto exchange had outperformed Q3 revenue estimates. That said, it also emerged that the exchange’s trading volumes had declined for the second consecutive quarter in a row.Kazakhstan’s move to block Coinbase access underlines the country’s determination to enforce its digital asset regulations, contributing to a growing trend of governments worldwide seeking to bring crypto-related activities under regulatory oversight.

Strategic Partnership Sees BitKeep Add Mantle Network SupportBitKeep, a Singapore-centric multi-chain wallet project, has recently formed a strategic partnership with Mantle Network, an Ethereum Layer 2 modular network developed by BitDAO.According to a tweet posted by BitKeep on Monday, the collaboration brings with it the opportunity for BitKeep users to now manage and transact their assets on Mantle Network directly through their wallets.The latest version update of the BitKeep wallet incorporates support to enable users to store, transfer, and trade on-chain assets seamlessly within the wallet. This integration streamlines the user experience and provides easy access to the functionalities offered by Mantle Network.Photo by Shubham Dhage on Unsplash10,000 USDT prize poolTo celebrate this partnership and promote the growth of the Mantle ecosystem, BitKeep has announced a campaign open to all Web3 users. The campaign features a prize pool of 10,000 USDT, adding an element of excitement for participants. Additionally, BitKeep plans to further expand the ecosystem by integrating more DApps based on Mantle Network, ensuring diverse offerings and attracting users from various angles.Although at a corporate level, BitKeep is headquartered in the Cayman Islands, leading members of its project team including Founder Kevin Como are based in Singapore.Mainnet alpha releaseMeanwhile, Mantle Network has reached a major milestone by unveiling its highly anticipated mainnet alpha. The announcement took place at the Ethereum Community Conference (EthCC) in Paris, following an extensive six-month testnet phase. Mantle Network, as the first Ethereum layer-2 chain incubated and governed by a decentralized autonomous organization (DAO), has already gained attention for its innovative approach.With its modular design, Mantle Network separates key components such as execution, data availability, consensus, and settlement into distinct layers. By employing optimistic roll-up technology and leveraging Ethereum’s network for security, Mantle Network achieves efficient transaction processing at a lower cost and higher throughput compared to Ethereum itself.This unique architecture has been validated during the testnet phase, handling over 14 million on-chain transactions and facilitating the deployment of more than 140,000 smart contracts.$200 million EcoFundThe mainnet launch also marks the activation of a $200 million EcoFund, which aims to fuel the growth and development of the Mantle ecosystem. This substantial fund will support the ecosystem’s progress, ensuring resources are available to drive innovation and attract developers.Moreover, the merger between Mantle Network and BitDAO has created the Mantle Ecosystem, a unified Web3 ecosystem led by a DAO. Under the Mantle.xyz brand, this collaboration harnesses the strengths and resources of both entities. The merger bolsters the tokenized governance system, empowering token holders to govern the use and allocation of the significant treasury inherited from BitDAO.As BitKeep integrates Mantle Network into its wallet, users can expect an enhanced experience and increased accessibility to the Mantle ecosystem. Meanwhile, Mantle Network’s mainnet launch and the activation of the EcoFund signify significant milestones that lay the foundation for continued growth and development in the DeFi space.

Chinese authorities are unveiling new strategies to expedite the integration of the digital yuan in selected districts in Beijing and Shanghai, with a separate initiative furthering cross-border use of the e-CNY with Hong Kong.Photo by Yigang Zhou on UnsplashPudong New AreaAccording to the Xinhua news agency, the Chinese authorities have introduced an extensive reform initiative for Shanghai's Pudong New Area, which is scheduled to span from 2023 to 2027. This five-year plan, issued by the Chinese Communist Party Central Committee and the General Office of the State Council, aims to position the Pudong District as a leader in modernization. The reform plan places a strong emphasis on the pilot implementation of the digital yuan across various sectors in Pudong. As part of the plan, Pudong will be granted new authorities to evolve into an international hub. Key aspects of the reform include the integration of digital yuan into trade settlement, e-commerce payments, carbon trading and green power trading. This move is expected to standardize and broaden the application scenarios of the digital currency. Beijing's ‘Digital Yuan Adoption Demonstration Zone’Simultaneously, a member of the Beijing Municipal Committee and Hong Kong Professionals Association president, Fung Kwok-yau, has advocated for the swift progress of Beijing's "Digital Yuan Adoption Demonstration Zone." In a recent interview, Fung suggested expanding the digital yuan's application by installing e-CNY terminals in local stores at popular tourist destinations, malls and shopping districts. Fung acknowledges challenges in promoting the digital yuan, including late entry into the contactless payment market, high user acceptance barriers and difficulties in sustaining subsidies. To overcome these challenges, Fung recommends that culture and tourism departments take the lead in popularizing the concept of central bank digital currency (CBDC) and educating the public on digital yuan usage. To encourage small and medium-sized merchants already using digital yuan terminals, Fung proposes providing incentives to help consumers understand and use the currency. He emphasizes the need for a regular promotion mechanism and measures such as electronic consumption coupons to boost citywide adoption. PBoC cross-border e-CNY pilotIn a related development, the People's Bank of China (PBoC) plans to expand its cross-border digital yuan pilot in Hong Kong. Deputy Governor Xuan Changneng expressed the intention to deepen the cross-border e-CNY pilot to enhance convenience for businesses in both Hong Kong and mainland China. According to a social media post from Chinese news outlet Caixin, the PBoC will collaborate closely with the Hong Kong Monetary Authority (HKMA) to introduce new policy measures, including financial services and cooperation initiatives to drive CBDC adoption. Areas of cooperation between PBoC and HKMA include providing support for institutions participating in the pilot, increasing convenience for digital yuan users, expanding the number of Hong Kong-based banks handling e-CNY and exploring new digital yuan-powered cross-border remittance services for micro-payments. The goal is to develop digital yuan services that align more closely with the habits of Hong Kong residents and promote interoperability with Hong Kong payment systems. The PBoC aims to make further progress in key scenarios such as cross-border e-commerce and education.