Phemex introduces Lending Protocol and Pulse Season 3

Korea unveils detailed plan for retail CBDC transaction pilot with 100K participantsThe Bank of Korea (BOK), Financial Services Commission (FSC) and Financial Supervisory Service (FSS) jointly announced on Thursday (local time) their comprehensive plan to pilot a central bank digital currency (CBDC). This pilot program will concentrate on two key areas: retail transactions and technical experiments within simulated environments.For the retail transaction aspect, the test aims to give citizens direct experience in using the new digital currency, helping them understand its advantages. This practical approach will promote public familiarity with the CBDC.In terms of technical experiments, these will be conducted in partnership with various banks. The goal is to explore and develop methods for constructing a financial market infrastructure suitable for the future, leveraging the capabilities of the digital currency.Photo by Terrence Low on UnsplashRetail CBDC test to commence in Q4 2024The initiative to examine retail transactions using a CBDC is scheduled to begin in the fourth quarter of 2024. This test will focus on improving how vouchers work. Currently, the use of vouchers faces several challenges, such as high fees, complex and slow settlement procedures and the risk of fraudulent transactions. CBDC-based deposit tokens programmed with the digital voucher functionality could help solve these problems. The exploration of digital vouchers within the realm of CBDCs is not just a concern in Korea but also a topic of global interest.Banks that will participate in the CBDC retail transaction test are to be selected by the end of the third quarter of next year, following necessary procedures such as the financial regulatory sandbox policy. These selected banks will receive the green light to issue deposit tokens within this regulatory sandbox framework. They’ll be in charge of recruiting and managing test participants, which includes both individuals and merchants. Additionally, these banks will be responsible for developing digital wallets for users and handling payment transactions. On the other hand, any bank interested in joining technical experiments in simulated environments may apply to do so until mid-December this year.Citizens who want to take part in the retail transaction test for the CBDC can apply through the banks involved in the test. However, it’s important to note that since this CBDC utilization test is a limited trial, the number of participants will be limited to a maximum of 100,000.The retail transaction test for the CBDC will involve three stages: issuance, distribution and payment. Initially, banks will issue deposit tokens with digital voucher functions upon request. Users will then use these tokens to buy goods from merchants, with the transactions being settled accordingly. Before starting, the BOK, FSC and FSS will propose pilot tasks to the banks, following consultations with relevant agencies and the review of pertinent laws. Banks will also propose tasks related to the voucher function. During the test, these tokens will be used solely for digital voucher transactions, and peer-to-peer transfers won’t be allowed.Simulated environment experiments: three use casesFor technical experiments within simulated environments, the financial authorities have selected three use cases focused on examining the technical feasibility of new types of financial instruments.The first objective is to collaborate with Korea Exchange, the only securities exchange operator in the country, to connect the CBDC system with a carbon credit trading simulation platform. This platform will be based on an external distributed ledger. The key objective here is to assess if the “delivery versus payment” (DvP) mechanism between carbon credits and special payment tokens can function smoothly. DvP is a settlement method that ensures the transfer of securities occurs only after the corresponding payment is made.The second objective will see collaboration with the Korea Financial Telecommunications and Clearings Institute (KFTC). In this scenario, a hypothetical issuer will release tokenized assets to the public through a public offering. To manage this, deposit tokens that match the subscription amount by investors will be temporarily frozen, preventing them from being liquidated. After the final allocation of these tokenized assets is determined, the system, using smart contracts, will automatically transfer funds equivalent only to the allocated tokenized assets.The last objective revolves around advancing the concept of a unified ledger introduced by the Bank for International Settlements (BIS). In this endeavor, the BOK aims to issue digital demo securities within the CBDC system. Following this, an experiment will be conducted where financial institutions will have the opportunity to trade these digital securities using the institutional CBDC. This trading will be executed using the DvP method.

Hong Kong Gives HKVAX Green Light for Virtual Asset TradingHong Kong’s financial landscape continues to develop, with the latest installment coming from a Securities and Futures Commission (SFC) decision to grant in-principle approval to Hong Kong Virtual Asset Exchange (HKVAX) to operate a virtual asset trading platform within the bounds of the region’s securities laws.The development, announced via a press release published to HKVAX’s website on Friday, follows the recent introduction of crypto retail trading by exchanges HashKey and OSL in Hong Kong.Photo by Dids on PexelsLicensed to extend service offeringIn a notable move, the SFC has green-lit HKVAX’s entry into the virtual asset trading arena. The approval-in-principle, announced on Friday, empowers HKVAX to conduct regulated activities of both Type 1 and Type 7. A Type 1 license permits the operation of a digital asset trading platform specializing in securities. Meanwhile, the Type 7 classification endows the company with the official capacity to deliver automated trading services to both retail users and institutional investors.Upon obtaining the final green light, the platform envisions providing an array of services, including over-the-counter (OTC) brokerage enabling seamless fiat-to-digital asset trading, an institutional-grade exchange platform, and a secure custody solution fortified by insurance coverage.HKVAX is poised to introduce an up-and-coming product category, security token offerings (STOs), seeking to harness the burgeoning investment prospects of the Web3 ecosystem. STOs involve offering security tokens which represent traditional legal ownership of real-world assets.Upcoming collaborative fundingAnthony Ng, the Co-Founder and CEO of HKVAX, affirmed the exchange’s growth trajectory and outlined plans for expansion of its product suite in Hong Kong. Ng also emphasized forging collaborations with strategic investors to fuel the exchange’s upcoming funding rounds.HKVAX’s announcement is emblematic of Hong Kong’s embrace of crypto retail trading. Recent entrants HashKey and OSL have set the precedent by becoming the first exchanges to secure licenses for offering crypto trading services in the region as of August 3.It’s been a long process for HKVAX to arrive at this point. The firm first contacted the SFC in 2018 in relation to licensing. It started the application process in 2019. It’s also proving to be an incredibly costly exercise. It’s believed that crypto-related operating licenses are costing firms up to $20 million.The backdrop to these developments is Hong Kong regulators’ proactive stance on crypto regulation, catalyzed by the FTX exchange collapse in 2022. CEO Julia Leung Fung-yee of the SFC, in a speech on June 24, highlighted the integral role of crypto trading in the virtual asset ecosystem, underscoring the importance of safeguarding investors through the new licensing framework for virtual asset service providers.In a financial landscape undergoing transformation, Hong Kong’s regulatory moves are poised to shape the future trajectory of virtual asset trading and its integration within the broader securities landscape. As HKVAX gains its foothold and the crypto industry matures, the coming months are expected to see further refinements in this nascent yet rapidly evolving market.

Hong Kong Insurer Expands Into Digital AssetsOneDegree, a leading virtual insurer in Hong Kong, has successfully raised US$55 million in its latest funding round to support the expansion of its digital assets insurance portfolio, according to an announcement made by the company on Thursday.The round saw participation from existing investors such as Gobi Partners, Sun Hung Kai, and Bitrock, as well as new investors. This marks OneDegree’s fifth fundraising effort since its establishment in 2016 and brings its total funds raised to over US$97 million. $28 million of this Series B round had been raised in 2021.Digital asset insurance will be offered under the name “OneInfinity” by the firm in partnership with global insurance behemoth Munich Re. The product is being targeted at digital asset trading platforms, custodians, asset managers, and technology providers. While the company doesn’t insure DeFi projects right now, it aspires to do so in the future.Photo by Kindel Media on PexelsLeading Hong Kong online insurerAs one of the four purely online insurers licensed by the Hong Kong Insurance Authority, OneDegree is at the forefront of the authority’s push to integrate technology into the insurance sector to enhance services and reduce costs. The company is not permitted to hire agents, and all sales must be conducted online or through mobile apps.Alvin Kwock Yin-lun, Co-Founder of OneDegree and former JPMorgan banker, expressed his gratitude for the strong support received during this challenging fundraising environment. Kwock attributed the successful round to the company’s robust revenue growth in various insurance segments, including pet, home, fire, medical, and digital assets coverage. He expects OneDegree to achieve profitability next year.Digital asset insurance importanceHighlighting the importance of digital asset insurance, Kwock pointed out that in 2022, approximately US$3.8 billion worth of digital assets were compromised globally, out of a total global cryptocurrency market capitalization of US$1 trillion. He estimated that the market for digital asset insurance premiums would surpass US$1 billion annually in the coming years.To capitalize on this growing demand, OneDegree has been focusing on providing insurance coverage to virtual asset trading platforms and operators. The company introduced its cryptocurrency insurance by offering a HK$100 million cover to Hong Kong Digital Asset Exchange in November 2021.Kwock emphasized that the recent regulatory regime introduced by the Securities and Futures Commission (SFC) on June 1 will further drive the demand for digital asset insurance. He believes OneDegree is well-positioned to offer comprehensive coverage for the risks faced by digital asset operators, as the company possesses the necessary expertise and experience.Looking ahead, OneDegree plans to expand its presence across Asia and offer innovative products such as InsurTech and cybersecurity software-as-a-service solutions.OneDegree’s expanding presence in Asian markets relative to digital assets is to be welcomed. The digital assets space has had its fair share of collapses that may have been prevented with the involvement of a digital asset insurance specialist, and failing that, the application of such a product would naturally prevent losses suffered by market participants.