China Unveils Blockchain-Powered Data Exchange

Circle CEO Sees Role for Yuan-Backed Stablecoins in Hong KongJeremy Allaire, the Co-Founder and CEO of Circle, the USDC stablecoin operator, expressed his acceptance of mainland China’s ban on cryptocurrencies. However, he remains optimistic about the development of Web3 technology in Hong Kong and the city’s monetary authority’s move towards regulating stablecoins.Photo by Mitchell Luo on UnsplashYuan internationalizationAllaire believes that Hong Kong must embrace digital assets to remain relevant in the global financial market. While he acknowledges that China is unlikely to open up its markets to cryptocurrencies, he sees potential for stablecoins to contribute to Beijing’s goal of yuan internationalization.During an interview with the South China Morning Post (SCMP), Allaire highlighted that major financial markets worldwide are embracing digital assets and that the biggest financial institutions are adopting them. He mentioned that there is Chinese government support for stablecoins, but he clarified that it doesn’t imply opening up crypto trading on the mainland. Allaire emphasized that stablecoins could be a more immediate solution to the Chinese government’s aim of internationalizing the yuan compared to the central bank digital currency (CBDC) e-CNY.Allaire cited the example of a stablecoin pegged to the offshore yuan (CNH) as a potential tool to facilitate the RMB’s use in global trade and commerce. He mentioned the existence of CNH Coin, a stablecoin team that also offers HKD Coin, pegged to the Hong Kong dollar.Virtual asset hubHong Kong is positioning itself as a global virtual asset hub by focusing on the regulation of stablecoins. The Hong Kong Monetary Authority (HKMA) has committed to implementing stablecoin regulations by 2024, recognizing the potential impact of such assets on financial markets. Additionally, the Securities and Futures Commission (SFC) is working on complementary regulations for stablecoins following the recent implementation of licensing rules for sellers of other cryptocurrencies.Circle’s USDC, the second-largest US dollar-backed stablecoin by market capitalization after Tether (USDT), is considered a “stored-value instrument” in the United States. Allaire expressed Circle’s encouragement regarding the HKMA’s plans and highlighted the positive motivation to expand their business in Hong Kong.While central banks worldwide have expressed concerns about stablecoins’ impact on financial stability, the HKMA has proposed that the value of reserve assets should match the outstanding stablecoins at all times. The HKMA has also been researching the possibility of a digital Hong Kong dollar and is part of a cross-border trial for the e-CNY using a blockchain known as the mBridge.CBDCs alongside stablecoinsRegarding the future role of stablecoins in a well-regulated environment alongside CBDCs, Allaire believes that CBDCs and private coins are complementary. He sees CBDCs as an upgrade to central banks’ systems and views the private sector’s work on innovation in distributed ledger technology as distinct and valuable.Allaire noted that Circle conducts significant business activity in Asia, particularly in Hong Kong, which is its largest non-US market, employing around 125 individuals.While mainland China maintains its ban on cryptocurrencies, Allaire remains optimistic about Hong Kong’s regulatory stance on stablecoins and believes they could contribute to the internationalization of the yuan. Allaire emphasized the importance of digital assets in the global financial market and expressed Circle’s support for Hong Kong’s initiatives.

Singapore's Monetary Authority (MAS) has recently added the non-custodial crypto wallet, imToken, to its Investor Alert List, prompting a response from the Singapore-based company.Photo by Zhu Hongzhi on UnsplashIdentifying unregulated entitiesAccording to the official MAS website, imToken found its place on the alert list on Dec. 5. This regulatory move demonstrates that MAS is monitoring the evolving crypto landscape with a view towards safeguarding investors from potential risks. The list serves as a repository of unregulated entities that might be mistakenly perceived as licensed or regulated by MAS. The regulatory body had also flagged BKEX digital asset exchange in December. BKEX had suspended withdrawals earlier in the year, having gotten caught up in an investigation surrounding money laundering activity on the platform. More recently, the company has ceased operations. Company responseIn response to being added to MAS's alert list, imToken took to the X social media platform (formerly Twitter) to address user concerns on Tuesday. The non-custodial wallet clarified that it had not applied for a financial business license in Singapore, the primary reason for its listing. Notwithstanding that, ImToken reassured its users that their assets remain unaffected due to the platform's decentralized nature. The company outlined that it is actively engaging with MAS to clarify its business model and aims to have imToken removed from the Investor Alert List. This development highlights the ongoing dialogue between crypto platforms and regulatory bodies, emphasizing the need for clear communication and compliance within the evolving crypto regulatory landscape. As MAS continues to take decisive actions, the industry remains under scrutiny, necessitating collaboration between regulators and crypto entities for a well-balanced and secure financial ecosystem. Unintended consequencesMAS has taken a proactive approach to regulation in the crypto space. That has been evidenced in previous actions such as blacklisting Binance in 2021, leading to Binance relocating its operations to Dubai. That blacklisting turned out to provide a classic example of the law of unintended consequences. With Binance having removed itself from the local market following the blacklisting, many Singaporeans chose to use FTX instead. FTX subsequently failed in November 2022, leaving a disproportionate number of Singaporean customers out of pocket. The inclusion of imToken on the alert list is particularly noteworthy amid the growing popularity of non-custodial wallets. Statista data from 2022 indicates that 81 million users have adopted non-custodial wallets, providing them with greater control over private keys and crypto assets. However, this surge in usage has also brought about increased regulatory attention due to associated risks. Founded in 2016, imToken was initially launched in Hangzhou, China, prior to relocating its headquarters to Singapore. At various stages, the firm has been funded by companies such as IDG Capital, Qiming Venture Partners and HashKey. HashKey has also collaborated with the company by extending trading services to imToken wallet users, including direct bank transfers. In 2021 imToken partnered with U.S. blockchain infrastructure provider Infinity Stones in order to enable an in-wallet ETH2.0 staking service.

ICP Planning Hong Kong HubThe development team behind the Internet Computer Protocol (ICP) is planning on creating a Hong Kong-based hub.In Twitter comments published on Wednesday, Dominic Williams, the Founder of the Dfinity Foundation, the development team responsible for ICP, stated that as a consequence of his recent visit to Hong Kong and participation in the Web3 Festival, the project “plans for an Internet Computer Hub, probably in Cyberport.”©Pexels/PixabayICP is a set of protocols that facilitate independent data centers globally to band together, offering a decentralized alternative to the existing centralized cloud providers. On that distributed basis, it allows users to create websites, apps and various web-based services.Founded by Williams and the Dfinity Foundation, the project had the backing of venture capital firms Andreessen Horowitz (a16z) and Polychain Capital from an early stage. Cyberport is a 25 hectare multimedia park in Hong Kong’s southern district, consisting of a hotel, four primary office buildings and a retail entertainment complex. It’s home to over 1,900 start-ups and technology companies, making it a creative digital community and technology cluster within Hong Kong.Giving Silicon Valley a run for its moneyWilliams had made a keynote address at the Web3 Festival last week. Dfinity expressed the view that enthusiasm for blockchain, Web3 and the ICP project was “off the charts” at the Hong Kong event. It seems that Williams was similarly enthused such that he wants to establish a physical presence for the project in Hong Kong.Prior to the Web3 Festival event, Williams had also stated that “dynamism in Asia is incredible” . . . “Asia will give Silicon Valley a serious run for its money.” In making a comparison with Silicon Valley, Williams referred to comments he had heard being made by a Taiwanese venture capitalist, suggesting in relation to leading Californian tech companies such as Facebook, “that nobody does any work, it’s like a retirement company.”ICP Asia AllianceAnother item that Williams noted as a take away from his Hong Kong visit was a recognition by the Dfinity Foundation founder that the formation of an ICP Asia Alliance is a possibility. He stated that “things [are] already happening” to effect this eventuality.Confirming that work in progress, it appears that Williams met last week with members of TinTin, a Web3 development DAO, as part of his ICP Asia Alliance initiative. It’s understood that as part of the initiative, the ICP Asia Alliance will cooperate with local venture capital firms in Hong Kong, with a view towards promoting and cultivating talent in Asia relative to Web3 and the ICP project.Building a new internetAs a Swiss non-profit, the Dfinity Foundation launched the ICP blockchain in May 2021. The project has garnered considerable attention from both developers and investors. It also distinguishes itself from many other blockchain projects insofar as it has attracted the involvement of leading tech companies such as Oracle and Samsung.At the time of publication, $ICP was trading at $6.24, 15% its 2023 high point of $7.34.