Hong Kong’s Bricks-and-Mortar Crypto Shops Attract Chinese Visitors

Blockchain gaming platform Intella X has partnered with Galxe, a Web3 protocol that allows users to own, manage and share their digital credentials, according to an official announcement by Intella X’s operator Neowiz on Tuesday (KST). The two companies vowed to leverage Galxe's community network and expertise to create an Intella X channel on the Galxe platform, revitalizing the Intella X ecosystem.Photo by GuerrillaBuzz on Unsplash"Through this partnership, we look forward to exchanging our knowledge with Galxe and effectively growing the Intella X community, which will help revitalize the Intella X ecosystem and strengthen our global competitiveness," said Jose Ko, CEO of Intella X. Leading the way in Web3 communitiesWith over 14 million on-chain users, Galxe is a pioneer in Web3 community building. Its vast network supports 26 blockchains and various social networking websites, including X, Discord and more. In particular, the protocol also operates a rewards-based Loyalty Points system with over 3,300 partners, including Optimism, Polygon and Arbitrum, which distributes points rewards based on participation in project campaigns. "We will strive to leverage the Galxe community and introduce Web3 technology that serves to expand the Intella X ecosystem. Through our collaboration, we will bring innovations, developers and gamers to the Web3 market,” said Galxe CEO Charles Wayn. Revolutionizing blockchain gamingIntella X, which is built on the Polygon Network, is a Web3 gaming platform that emphasizes contribution and rewards. Services include a decentralized exchange (DEX), NFT marketplace and digital wallet, as well as a service protocol that rewards platform participants. In December last year, the platform also beta-launched a service last month dubbed Space Candy Store, an innovative platform service designed to reward gameplay.

Korean Crypto Exchanges Struggle Despite Market RecoveryThe results of a recent study by the South Korean Financial Intelligence Unit (FIU) released on Monday revealed that ten domestic cryptocurrency exchanges have reported zero revenue from transaction fees, with half of them struggling to achieve a daily average trading volume of KRW 1 million ($740).Photo by Maxim Hopman on UnsplashTrends of growth and declineThe study looked into data from 35 registered virtual asset service providers (VASPs) for the first half of this year. The findings showed that compared to the second half of last year, the crypto market capitalization and Korean won deposits increased, but exchanges faced growing challenges, illustrated by a widening gap between leading fiat-to-crypto exchanges and smaller crypto-only exchanges.In the first half of this year, the operating profit of won-based exchanges reached KRW 259.8 billion (approximately $193 million), a 46% increase compared to the second half of last year, which recorded KRW 177.9 billion. In contrast, crypto exchanges recorded an operating loss of KRW 32.5 billion. Notably, out of 21 crypto-only exchanges, 10 of them reported no revenue at all from transaction fees, and 18 were in a state of complete capital impairment. Meanwhile, the operating profit of won-based exchanges was concentrated among the country’s top two exchanges, Upbit and Bithumb.But from a broader perspective, as of the end of June, this year’s total capitalization of the crypto market reached KRW 28.4 trillion — a 46% increase compared to the end of the second half of last year. Korean won deposits also increased by KRW 400 billion, or 11%, compared to the previous half. The overall operating profit was KRW 227.3 billion, up 82% from KRW 124.9 billion at the end of the second half of last year.“The first half of this year saw a rise in prices of virtual assets and investor sentiment, leading to an increase in Korean won deposits, overall market capitalization, and operating profits for exchanges, compared to the second half of 2022,” the FIU remarked.The number of new listings and delistings on virtual asset exchanges also surged with 169 new listings and 115 new delistings. These represented a more than double increase and a 47% increase, respectively, compared to the second half of last year. 66% of the delisted crypto assets were coins that had been exclusively listed on a given exchange.Despite the market’s recovery, trading volume and the number of users have slightly decreased. The daily average trading volume in the domestic crypto market for the first half of this year was KRW 2.9 trillion, down 1.3% compared to the second half of 2022. In addition, the number of registered accounts with VASPs also dropped by 19% to 9.5 million compared to the end of last year. This can be attributed to a growing number of dormant accounts and the removal of duplicate accounts.The quantity of verified users has also declined. The number of individuals and corporations that had completed the mandatory Know Your Customer (KYC) procedures needed to engage in trading decreased by 210,000 to 6.06 million (including duplicates) compared to the end of 2022. The majority of users, or those who own less than KRW 1 million in virtual assets, dropped by 7%.On the other hand, the amount of virtual assets leaving the country increased. In the first half of this year, a total of KRW 22.1 trillion was transferred to whitelisted overseas operators or individual wallet addresses, marking a KRW 500 billion increase compared to the second half of last year. This trend could be accredited to futures trading and arbitrage trading influenced by the so-called “kimchi premium” — a term used to describe the difference between trading prices of cryptocurrencies in Korea and in other foreign exchanges.Age demographicsOther findings showed that the age group that traded the most virtual assets is in their 30s, accounting for 30% of all users. Within this group, men make up 70%, with 1.27 million men recorded as engaging in crypto trading. Following closely with 1.2 million, men in their 40s were the second-largest demographic.

China’s Legal Daily, a publication that falls under the supervision of the Chinese Communist Party’s (CCP) Central Commission for Political and Legal Affairs, has sounded an alarm regarding cryptocurrencies, raising concerns about their use as potential avenues for corruption. In the newspaper’s New Year’s Day edition, it quoted legal scholars, who had convened at the annual China Integrity and Legal Research Association meeting, who underscored the urgency of addressing the emerging threat posed by digital assets.Photo by Max van den Oetelaar on Unsplash‘Hidden channels’ for briberyIn particular, it focused on views expressed by Associate Professor Zhao Xuejun from Hebei University Law School. Zhao Xuejun warned against the use of virtual currency and electronic gift cards as “hidden channels” for bribery. Notably, these forms of payment, often stored in “cold storage” devices, offer a convenient means for transporting funds abroad, the academic claimed. This development aligns with recent warnings from state agencies, including the Supreme People’s Procuratorate and the State Administration of Foreign Exchange, cautioning against the use of stablecoin Tether in yuan-related foreign exchange transactions, deeming such actions illegal. Anonymity and traceability concernsProfessor Mo Hongxian from Wuhan University Law School explicitly mentioned Bitcoin, highlighting the challenges associated with virtual currencies, such as their anonymity and difficulty in traceability, which can facilitate illegal activities. Despite lacking official recognition in China, Professor Hongxian stressed the need for judicial attention to transactions involving virtual currencies. Although China maintains a cryptocurrency ban, it actively explores blockchain technology for identity verification. The country’s central bank digital currency, e-CNY, still in the pilot stage, has witnessed significant development. Despite its limited geographic distribution, the digital yuan recorded transactions totaling nearly $250 billion in China as of June 2023, with international use noted in commodities sales. Varying degrees of enforcementChina has demonstrated that it can at times take a very hard line on restricting cryptocurrency trading and related activities, while at others, it seems to tolerate such activity or turn a blind eye. Last month China’s Supreme Procuratorate provided details on the nature of the prosecution of over-the-counter (OTC) crypto trader and RenrenBit founder, Zhao Dong. Zhao was handed down a seven year sentence for carrying out illicit crypto business operations. By contrast, an investigation carried out by the Wall Street Journal last year found that business has been thriving for the world’s largest cryptocurrency exchange Binance in China, despite the ban. Other crypto-related activity has been uncovered, flouting capital controls. BitMEX founder Arthur Hayes suggested recently that all wealthy Chinese individuals have access to banking in Hong Kong, allowing them to access, trade and use cryptocurrency. As part of the CCP’s intensified anti-corruption efforts, the focus on cryptocurrency’s potential role in financial crimes underscores the evolving landscape as use of digital currency unfolds. The Legal Daily article emphasizes the need for vigilance and regulatory measures to counteract the perceived threat of corruption facilitated by cryptocurrencies and electronic payment methods.