Zodia Custody Expands Its Custodial Services to Singapore

Hong Kong’s HashKey Adds AVAX TradingHashKey Hong Kong, the Chinese autonomous territory’s first licensed retail crypto exchange, has unveiled an addition to its platform with the launch of Avalanche (AVAX) trading.According to an announcement published to its website on Wednesday, HashKey has listed Avalanche on Thursday with the caveat that access to AVAX trading will be reserved for professional investors, as defined by Hong Kong’s Securities & Futures Commission (SFC).Photo by Wance Paleri on UnsplashAccessible to professional investorsTo meet the criteria as a professional investor in Hong Kong, individuals must possess an investment portfolio valued at a minimum of 8 million Hong Kong dollars, roughly equivalent to $1 million. This decision sets AVAX apart from other widely traded cryptocurrencies, such as Bitcoin and Ether, which remain accessible to retail investors in Hong Kong. While Tether (USDT) enjoys retail status, the majority of altcoins on HashKey will remain the preserve of professional investors.This move is a direct result of the SFC’s proactive stance on regulating the rapidly expanding crypto market in Hong Kong. Since the introduction of regulated retail crypto trading in the Chinese autonomous territory in August, the SFC has imposed rigorous requirements on exchanges. HashKey mandates users to deposit a minimum of 10,000 Hong Kong dollars or $1,500 into their exchange accounts as part of the Know Your Customer (KYC) verification process.Low trading volumeAmid these regulatory challenges, HashKey Hong Kong currently reports a 24-hour trading volume of approximately $5.3 million, significantly lower than its global peers. This lower trading volume suggests that stringent regulations may be affecting the exchange’s ability to attract retail investors effectively.The path to regulatory compliance in Hong Kong has been anything but smooth for crypto exchanges. Reports indicate that these platforms have collectively invested over $25 million in establishing the requisite infrastructure for obtaining a Hong Kong Virtual Asset Service Provider (VASP) license. It was reported earlier this year that crypto firms are forking out between $2.55 million and $25.5 million in order to secure a VASP trading license.Despite the challenges, HashKey is looking at various avenues in bringing its offering forward. Earlier this month the firm signed a memorandum of understanding (MOU) with insurer OneDegree. That collaboration could be significant as it should lead to the assets of HashKey users being protected and insured on the platform. That would solve a major issue for participants in the crypto space amid the backdrop of ongoing platform failures and hacks.JPEX collapseEven as regulatory efforts intensify, the crypto industry in Hong Kong has not been impervious to bad actors. The recent collapse of the JPEX crypto exchange earlier this month serves as a stark reminder of the ongoing risks associated with the industry. Described as the largest financial fraud in Hong Kong’s history, JPEX faced allegations of embezzling over $178 million of investors’ funds. Notably, JPEX was operating without SFC registration at the time of the alleged embezzlement.In response to such incidents, the SFC has taken proactive measures by publishing a warning list of crypto exchanges considered non-compliant within the Chinese autonomous territory.

The Ministry of Justice Investigation Bureau in Taiwan has referred Nine Chen, a popular Taiwanese singer-songwriter and television program host, to the prosecutors' office in Taipei on suspicion of aggravated fraud and violations of banking laws for his alleged involvement in a fraud scheme linked to the JPEX cryptocurrency exchange. Local media publication the United Daily News reported on June 26 that as an outcome from an investigation into the matter, the authorities have established that Chen acted as a brand ambassador for JPEX in 2023, receiving 320,000 USDT in the process. While Chen has been referred on to the prosecutors’ office in Taipei, they have yet to press charges against him. Photo by Thomas Tucker on UnsplashOngoing sagaThe first public soundings of an issue in Taiwan relative to JPEX emerged in November 2023. At that time, the Taipei District Prosecutors Office (TDPO) requested that Chang Tung-ying be taken into custody amid allegations of fraud. Tung-ying was understood to have been chief partner at JPEX’s Taiwan office.  The previous month, the TDPO had called Chen in as a witness. The singer had informed local media that he was out of pocket for funds he had held in digital assets via JPEX, incurring a 15% loss.  At that time, the authorities in Taiwan arrested dozens of suspects related to what is believed to be a fraud to the value of approximately $205 million. Hong Kong investigationsJPEX garnered the most negative reaction in Hong Kong. In excess of 2,000 complaints were registered with local regulators within the Chinese autonomous territory relative to the cryptocurrency exchange.  Problems were first reported in September 2023 when the platform outlined that it had experienced a liquidity crisis. Losses in Hong Kong relative to the platform were understood to be in the region of $180 million.  In an effort to deal with the matter, JPEX proposed a plan in October 2023 to transition the business to a decentralized autonomous organization (DAO). Multiple arrests were made by the Hong Kong authorities, with a collection of assets being seized in an effort to gather up funds on behalf of platform customers who found themselves out of pocket. While JPEX hit the headlines in 2023 for questionable activity in Asian markets, the business is actually headquartered in Dubai in the United Arab Emirates (UAE). In September of last year, Dubai’s Virtual Assets Regulatory Authority (VARA) outlined that as far as it was concerned, JPEX wasn’t regulated in Dubai and hadn’t registered with the regulator.  Following the same pattern in Taiwan, JPEX had not registered with the Financial Supervisory Commission (FSC) relative to anti-money laundering (AML) regulations, which it requires crypto platforms to comply with. Taiwanese authorities have experienced issues with a number of crypto platforms over the course of the past 18 months. Aside from JPEX, the founder of ACE Exchange, David Pan, was arrested in January 2024. Charges of money laundering and fraud were brought against him. As with JPEX, there was a connection with Dubai in that Pan was also the founder of Dubai-based crypto exchange ZORIXchange. In November 2023, Bitgin, a local crypto exchange, found itself at the center of an investigation into money laundering.

While the Web3 sector seemed to be hamstrung by litigation and regulatory scrutiny in 2023 following multiple platform failures, it's going out with a bang in China with news of a $10 billion fund in Shenzhen to support Web3 startups.Photo by 李大毛 没有猫 on UnsplashFueling Web3 startup growthGBA Capital, a Chinese venture capital (VC) firm, made a significant announcement during the Guangdong-Hong Kong-Macao Greater Bay Area Digital Economy Development Conference on Tuesday. The firm, backed by China's state-owned National Engineering Laboratory, unveiled plans to launch a substantial $10 billion Web3 fund. The conference also served as an educational platform, enlightening investors and attendees unfamiliar with the intricacies of the Web3 industry. Luo Jinhai, founder of Huoxun Finance and creator of the "Yuan Asset" concept, elucidated on the unique attributes of specific forms of digital assets, including independence, privacy, security, scarcity and liquidity. Metaverse focusThis initiative aims to fuel the growth of startups specializing in virtual reality, the metaverse and non-fungible tokens (NFTs), ultimately transforming the Guangdong-Hong Kong-Macao economic region into the global "meta-asset capital."  Meta-assets are virtual objects that serve as key components within the make-up of the metaverse. Haolong Li, the chairman of GBA Capital, outlined the ambitious vision, stating that the conference would facilitate "meta-asset global tours" in key international hubs such as Japan, Singapore, Dubai, Silicon Valley and Europe. The objective is to enhance the visibility of meta-assets and position the economic area as a leading force in the emerging Web3 landscape. Previous developments that have played out over the course of 2023 suggest that China is placing a particular focus on embracing metaverse technology, with a view towards integrating the metaverse with existing systems in the country.   The Ministry of Industry and Information Technology of China, in response to a proposal about promoting the development of the Web3 industry, emphasized ongoing research in areas such as the Metaverse, NFTs and decentralized identity management. In September the Ministry set out an action plan for the cultivation of a domestic metaverse. As part of that plan, it aspires to nurture three to five metaverse companies of global significance. GBA Capital, established by China Europe International Financial Group in Hong Kong, boasts strategic partnerships with key financial institutions, including the Asia Pacific Investment Bank and China's state-owned National Engineering Laboratory. The firm's focus on investment and incubation in the digital economy aligns with its goal of integrating industrial clusters, capital resources, corporate resources and policy advantages to offer comprehensive support and services to enterprises. In a related development, GBA Capital's subsidiary Zhongrong Global successfully raised an angel funding round at a valuation of 100 million Chinese yuan ($14 million) back in May. The funds will be allocated to Web3 project incubation and industrial services in the artificial intelligence sector. The Guangdong-Hong Kong-Macao Bay Area has experienced a surge in Web3 startups and overseas corporate relocations since the beginning of the year, setting the stage for GBA Capital's substantial Web3 accelerator fund.