Uzbekistan’s New Private Bank Joins National Crypto Card Initiative

Zero Two Enters Into JV to Develop First Middle East Mining OpZero Two, a digital assets development company based in Abu Dhabi in the United Arab Emirates (UAE), has partnered with leading North American crypto miner Marathon Digital in a joint venture that will result in the development and operation of the Middle East’s first large-scale crypto mining facility.Photo by Manuel Geissinger on PexelsInitial capacity of 250 MWIn a press release issued on Tuesday, Marathon Digital outlined that the venture is focused on accelerating the global digital economy while also supporting Abu Dhabi’s power grid.To progress the project, the two companies have formed the Abu Dhabi Global Markets JV Entity (AGDM Entity). Initially, two digital asset mining facilities, with a combined capacity of 250 MW, will be developed.One site, at Masdar City, Abu Dhabi, will account for 200 MW of that capacity. The remaining 50 MW capacity will be developed at a site located in the port area of Mina Zayed. The strategy of the firms is to exploit excess network energy in Abu Dhabi. The firms see this as a win/win as increasing the base load of the Abu Dhabi power grid will result in a more sustainable grid. The companies intend to supplement any use of non-sustainably produced energy with carbon offset certificates.80/20 equity splitThe two firms have agreed upon an 80%/20% equity split, with Zero Two being the lead investor. In the initial development period for the venture during 2023, both entities will contribute resources to the joint venture in proportion to the equity division, in the form of capital, equipment and infrastructure.Zero Two and Marathon had previously collaborated on a pilot project with the objective of determining the feasibility of building a large-scale facility. Air-cooled miners have not proven to be a success in hot arid climates like that of the Rub Al Khali Middle Eastern desert.The upshot of the pilot program was a determination that a custom-built immersion-cooled system would be feasible. Mining equipment for the facilities is already on order while construction at the two sites is underway. Both sites are expected to go online before the end of the year with a combined hashrate of 7 EH/s.Ahmed Al Hameli commented on the joint venture: “This alliance leverages Zero Two’s regional expertise, expansive relationships, and growing blockchain infrastructure development and operational capabilities, with Marathon’s technical prowess in developing digital asset sites and innovative mining technologies.These synergies create a powerful combination and lay the groundwork for the success of this pioneering project in the Middle East. Marathon shares our commitment to actively supporting Abu Dhabi’s power grid and developing global digital assets infrastructure. We look forward to working with them on this venture.”Jurisdictional arbitrageMarathon’s CEO Fred Thiel said that Zero Two’s regional relationships were an optimal compliment. It may be both a timely and shrewd move by Marathon to develop this project in the Middle East region. In recent weeks the Biden administration floated the idea of a 30% crypto mining tax. Crypto mining is a global endeavor.That type of additional overhead would make it very difficult for North American miners to remain viable. By opening up new working relationships in other regions, the company may be in a better position to pivot should North America and the firm’s Montana-based mining facility become unsustainable.

Russians will continue to have access to crypto markets despite the application of sanctions, according to a senior Russian official. Impossible to completely block marketThat’s the view of Anton Gorelkin, the deputy head of the State Duma committee on information policy. In a report published by Russian state-owned news agency TASS on March 6, Gorelkin is quoted as stating: "It should be recognized that it is impossible to completely block this market for Russia." Gorelkin added that crypto remains one of the mechanisms through which international sanctions being applied to Russia can be circumvented. Russian firms have increasingly been using Bitcoin and crypto in international trade to circumvent sanctions. The Russian official’s comments come as Russian crypto exchange Garantex has been forced to suspend its services. Last month, the Council of the European Union (EU) had added the exchange to its latest Russian sanctions package. This was part of the EU’s sixteenth sanctions package against Russia since the conflict in Ukraine began. It’s the first time that a crypto exchange has been included within any such sanctions. The EU did so on the assertion that Garantex is “closely associated with EU-sanctioned Russian banks.” Photo by Michael Parulava on UnsplashTether ‘enters war’ against Russian crypto marketThe crypto exchange took the decision to suspend its services following an action taken by leading stablecoin issuer, Tether. Taking to Telegram, the exchange stated: “We have bad news, Tether has entered the war against the Russian crypto market and blocked our wallets worth more than 2.5 billion rubles [$27 million].” The exchange took the opportunity to warn its users that “all USDT in Russian wallets is currently under threat.” Garantex added that it has been the first to be hit with such a measure, but that it won’t be the last. The firm said that it “will fight, and [it] will not give up.”  Tether has been under the spotlight of regulators and governments globally in recent years. In response, it appears to have incorporated the freezing of funds subject to sanctions more recently, with closer cooperation with law enforcement and government agencies. Last year, the company outlined that it planned to freeze funds held in addresses related to countries or companies subject to sanctions. Last September, Tether claimed to have played a role in an operation carried out by the Dutch authorities and U.S. Secret Service that led to the takedown of two crypto exchanges, Cryptex and PM2BTC, who were alleged to have been involved in money laundering. Garantex had already been subject to U.S. sanctions since April 2022. At the time, the U.S. authorities described the exchange as a "ransomware-enabling virtual currency exchange." The firm was originally established in Estonia in 2019. Commenting on the development, Gorelkin stated:  "To the investors who underestimated this risk, my condolences."  He also asserted that the latest round of sanctions will not be the last in attempts to apply pressure on Russian cryptocurrency firms and crypto sector infrastructure within Russia. While he believes that crypto remains a tool to get around sanctions, he stated that “USDT can be safely deleted from this list.”

At the Foresight 2024 Hong Kong Summit on Aug. 11, Gary Tiu, director and head of regulatory affairs for OSL, a crypto market custodian, exchange and prime brokerage, outlined in a panel discussion that the crypto exchange-traded fund (ETF) market in the Chinese autonomous territory is challenged insofar as it lacks market incentives.Photo by Cecelia Chang on UnsplashThe intermediary problemTiu’s company hosted the event, alongside Foresight News and crypto publication The Block, who reported on Tiu’s comments. The OSL executive said that when it comes to funds and structured products in Hong Kong, there’s a “very rich layer of intermediaries— brokers, banks, private banks, retail banks, etc.” involved. Tiu explained that they make a lot of money from the distribution of such products, resulting in unlisted products being marketed far more effectively by comparison with listed products. It’s against that backdrop of misaligned incentives that Tiu identifies challenges for crypto ETFs on the public markets in Hong Kong. He stated: “So I think the incentive system in Hong Kong is one of the reasons why ETFs do have a bit of a hard time growing as a financial instrument.” In the case of ETFs, the OSL executive explained that equity brokers take just a few basis points in commission, only about 1-2% of what they make on the sale of structured products. Bias against Bitcoin and EtherTiu is also of the belief that cryptocurrencies like Bitcoin and Ether have a reputational problem among Hong Kong’s investment community, stating: “I think there is still a bit of a bias in the eyes of the regulators and also in the eyes of the financial institutions, that somehow bitcoin ETF is just this unique class of risk that you need to be extra cautious about.” Chen Zhao, who heads up the digital assets section of Hong Kong-based independent financial advisory firm Fosun Wealth, chimed in with his own concerns. According to Zhao, the crypto ETF products currently marketed in Hong Kong are lacking in terms of the depth of dealers and brokers offering the products. Zhao explained that there are three main types of market participant active on the Hong Kong markets, namely western institutions, Hong Kong-based institutions and their counterparts from mainland China.  Zhao stated: “Chinese brokers and dealers, they’re not allowed or they choose not to deal with the product, and for the western financial institutions, they don’t have the necessity of dealing the products because they acquire more fees and incentives, and have easier access to the U.S. ETFs.” While progress is far more modest by comparison with the U.S. market, the Hong Kong crypto ETF market continues to develop, with spot Bitcoin and Ethereum ETFs setting a record trading volume last week. In the same week, Mox Bank, a subsidiary of British banking multinational Standard Chartered, launched trading services relative to spot Bitcoin and Ethereum ETF products in Hong Kong. Last month, OSL CEO Patrick Pan, anticipated that an Ethereum ETF product that incorporated staking would launch in Hong Kong within six months. Many commentators have suggested that institutional interest in Ethereum ETFs will begin in earnest once a yield-producing staking product hits the market.