Coinbase Acquires License to Enhance Crypto Operations in Singapore

India’s digital currency transactions have surged, surpassing 1 million daily transactions in December, meeting the Reserve Bank of India’s (RBI) ambitious target set for the end of 2023.Photo by Julian Yu on UnsplashCBDC-based employee paymentsReuters cited three sources familiar with the matter who have revealed that Indian banks played a crucial role in achieving this milestone by disbursing certain employee benefits through the central bank’s digital currency (CBDC), known as the e-rupee. As Indian crypto influencer and YouTuber Sumit Kapoor put it, the transaction level increase “happened because people working in regular banks were encouraged to use digital rupees instead of the normal money for their deposits and benefits.” RPI letter confirms increaseA letter seen by CoinDesk sent by the Governor of the Reserve Bank of India (RBI), Shaktikanta Das, to RBI staff on Dec. 29 confirmed the increased CBDC use, stating that it “exceeded the milestone of 1 million transactions in a day on Dec. 27, 2023.” The e-rupee, developed as a digital counterpart to physical cash, utilizes distributed ledger technology. The RBI initiated the e-rupee pilot in December 2022, initially recording an average of 25,000 daily transactions by the end of October. Despite its integration with the Unified Payments Interface (UPI), a popular framework for mobile app-based peer-to-peer money transfers, the transaction volume saw a substantial increase last month. Union Bank paymentsAccording to India’s Economic Times, the Union Bank of India is working towards transferring claims related to a number of employee benefits to CBDC wallets rather than the accounts of those salaried employees. Union Bank stated: “With an aim to promote CBDC wallet transactions, banks have been advised to encourage all staff members to transact using the digital currency and ensure 100% staff registration on digital rupee app.” Other banks have been playing their part in the current transaction level surge. This has included major private and state-run lenders such as HDFC Bank, Kotak Mahindra Bank, Axis Bank, Canara Bank and IDFC First Bank. These institutions disbursed employee benefits directly into CBDC wallets rather than traditional salary accounts, demonstrating a significant shift in adoption patterns. The RBI anticipates that non-financial firms will follow suit, contributing to a further boost in transaction volumes. The user base for the e-rupee has also witnessed steady growth, reaching approximately 4 million users, up from 3 million in December, according to an executive familiar with the pilot. Globally, several countries, including China, France and Ghana, are in the pilot stages of their central bank digital currency (CBDC) projects. Nigeria has rolled out its digital currency, although success has been limited despite offering incentives such as discounts on auto-rickshaw rides. To incentivize e-rupee transactions, Indian banks are offering rewards, aligning with the RBI’s push to enhance transaction volumes. Sharat Chandra, co-founder of the India Blockchain Forum, commended the move to compensate employees using CBDC and suggested expanding adoption incentives to other areas, such as toll tax collections, to further encourage widespread usage. The positive momentum in India’s digital currency landscape reflects a growing trend toward embracing innovative financial technologies. 

Japan’s Kumamoto City Bolsters Innovative Blockchain StartupsIn February this year, the city of Kumamoto in Japan organized the Kumamoto City Pitch 2022–2023, an event designed to bring together startups, established companies, and venture capital firms to promote business growth, according to Japanese tech media ASCII STARTUP.Photo by Christian Chen on UnsplashPromoting innovative startupsWith its inception in 2021, the Kumamoto City Pitch has been dedicated to promoting innovative startups with exceptional business models and unique technology. Its objective is to nurture local startups, build communities, and expand business sectors to strengthen the city’s growth.The event featured presentations from ten companies, including four that had been accepted into the Kumamoto City Acceleration Program “HIGO CANVAS.” The program offers support to projects based in Kumamoto that focus on areas such as cryptocurrency, blockchain, and virtual reality. Among the four accepted companies, two were involved in web3 and blockchain, while the others were working on medication guidance support through user-friendly pillboxes and digital transformation of manufacturing factory management.Web3-based marketing toolOne of the two blockchain-focused projects was Warashibe, a developer of Web3-based marketing tools. Its main product is a blockchain-powered marketing tool called “BADGE,” designed to enhance marketing efficiency.BADGE allows users to manage coupons and apps from retail stores in their own wallet. In turn, stores can reduce costs associated with producing and operating coupons and apps. Additionally, stores can analyze spending habits and other data from the wallet to identify target customers for promotions, enhancing the effectiveness of their marketing campaigns.Warashibe has achieved over 20 successful implementations, some of which involved leading manufacturing companies such as Daihatsu Motor, a major automobile engine manufacturer, and Ricoh, a renowned imaging and electronics company. Beyond coupon management, BADGE offers features like membership cards, credentials, and graduation certificates. The company is also currently developing services to analyze target consumers and manage advertising.Blockchain biz challengesIRISA is another startup exploring the blockchain sector. Initially, the company aimed to develop a social media platform incorporating blockchain games. However, the project changed direction due to challenges arising from the limited number of blockchain gamers and the blockchain oracle problem. The latter issue refers to the inherent limitations of blockchains in accessing data outside the network, also known as off-chain data.

Hong Kong Pressing Banks to Facilitate Crypto ClientsHong Kong’s banking regulator is urging banks, including HSBC and Standard Chartered, to onboard crypto exchanges as clients, despite increasing regulatory scrutiny of the industry in the United States.That’s according to a report published by the Financial Times (FT) on Wednesday. The FT cited three people who it claims are familiar with the matter, together with a letter seen by the publication as the basis for the assertion.Photo by Ansel Lee on PexelsChallenging crypto banking reticenceAt a recent meeting, the Hong Kong Monetary Authority (HKMA) questioned these UK-based lenders, together with the Bank of China, about their reluctance to accept crypto exchanges as customers, according to sources familiar with the matter. The HKMA emphasized that due diligence on potential clients should not create unnecessary burdens, particularly for those seeking opportunities in Hong Kong. While banks do not have a ban on crypto clients, concerns over potential money laundering and illegal activities have made them cautious.The pressure faced by banks highlights the challenges Hong Kong is facing in establishing itself as a global hub for the crypto industry, especially in light of previous high-profile collapses, such as the implosion of FTX. However, the HKMA is encouraging banks to overcome their reservations, as the regulator believes there is resistance from senior executives who adhere to traditional banking mindsets.The enthusiasm of some Hong Kong officials for the sector is evident as pro-Beijing lawmaker Johnny Ng invited Coinbase and other crypto exchanges to set up operations in the city following the recent SEC lawsuit against Binance and Coinbase.Caught between opposing forcesBanks in Hong Kong find themselves walking a fine line between supporting the crypto industry as encouraged by the government and being cautious due to the US regulatory environment. They want to ensure the industry’s development aligns with government policies, but they are also concerned about potential anti-money laundering and know-your-customer issues.The HKMA and the Securities and Futures Commission (SFC) have been vocal about their expectations, setting them apart from regulators in other jurisdictions that may be more skeptical of cryptocurrencies. Last month it emerged that crypto startups are having difficulties in establishing banking facilities in the autonomous Chinese territory. At the time, the HKMA did convene a meeting to bring parties together in order to forge a path forward.While Hong Kong has a history as a crypto center, its position weakened after Beijing’s crackdown on the industry in 2017. However, the Hong Kong government aims to reestablish the city as a hub for digital assets, having expressed its desire to provide a supportive environment for crypto-related businesses. The introduction of a new licensing regime for crypto platforms in Hong Kong is part of the government’s efforts to attract more crypto groups to the city.HSBC, Standard Chartered, and the Bank of China hold influential positions in Hong Kong as issuers of the city’s currency and have key roles in the Hong Kong Association of Banks lobby group. Standard Chartered claims that it maintains regular dialogue with regulators on various subjects, while HSBC has claimed that it is actively engaging in policies and developments within the nascent industry.