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Nasdaq-listed Bitcoin Depot, an American cryptocurrency ATM specialist, is expanding into Hong Kong, citing the city’s burgeoning status as a crypto hub and rapid digital asset adoption across Asia. The Atlanta-based company, which provides kiosks for converting cash into cryptocurrency, went public in July 2023. Its move into Asia follows a recent acquisition of assets from National Bitcoin ATM that boosted its domestic market share to a reported 30% as well as the strengthening of its compliance program. "Hong Kong is quickly becoming a global center for crypto, with the right mix of regulation, demand, and momentum," company president Scott Buchanan said in a Nov. 12 statement.Photo by Keller Chewning on UnsplashHong Kong's digital asset pushBitcoin Depot’s expansion aligns with a concerted push by the special administrative region to position itself as a global hub for digital assets. Eddie Yue, Chief Executive of the Hong Kong Monetary Authority (HKMA), recently highlighted this ambition, which was underscored by a Nov. 11 announcement of an additional HK$10 billion ($1.3 billion) issuance of digital green bonds. The tokenized bond issuance, the third under the government's program, was denominated in Hong Kong dollars, Chinese yuan, U.S. dollars, and euros, and involved major banks like HSBC, BNP Paribas, and J.P. Morgan. The move also reflects a broader regional trend. In September, Tokyo-based Coinhub launched Japan's first officially registered crypto ATM network, installing 25 machines with plans to expand to 3,000 nationwide. Industry faces regulatory headwindsDespite the growth, the industry faces scrutiny from law enforcement over the use of crypto ATMs in criminal activity. In 2024, the FBI logged nearly 11,000 fraud complaints tied to the kiosks, with reported losses topping $246 million. According to Cointelegraph, increased regulatory attention has prompted several U.S. cities to ban crypto ATMs outright, while some states are introducing new restrictions. Concerns are growing over scams targeting vulnerable groups, especially seniors. Regulatory pressure is also mounting elsewhere. Australia's financial crimes watchdog, AUSTRAC, issued a $56,340 infringement notice last month to local operator Cryptolink, which the company paid. Cryptolink must now appoint third-party reviewers to ensure its anti-money laundering and counter-terrorism financing (AML/CTF) controls are adequate. The action followed findings from AUSTRAC’s Crypto Taskforce that 85% of transactions by the 90 most frequent crypto ATM users were linked to scam proceeds or money mule operations. AUSTRAC CEO Brendan Thomas urged the public "to be cautious of making transactions to any wallet they don’t control and thinking twice in circumstances where someone asks you to deposit money into a crypto ATM.” 

BOCI Partners with UBS in Hong Kong on First Tokenized NotesIn a groundbreaking move, the investment arm of the Bank of China (BOCI), has partnered with Switzerland-headquartered global financial services company UBS, to issue tokenized notes in Hong Kong.Photo by Eric Prouzet on UnsplashHong Kong’s first tokenized notesThis marks the first instance of a Chinese financial institution issuing a tokenized note in the region. Leveraging the power of blockchain technology, the notes were tokenized on the Ethereum blockchain. UBS announced the milestone development via a press release published to its website on Friday.The Swiss banking giant has some expertise in this area, having first issued a tokenized fixed rate note in December 2022, recorded on a permissioned blockchain and established under English and Swiss law. On this occasion, the Hong Kong-issued tokenized notes will be compliant in terms of both Swiss and Hong Kong law.The issuance of these tokenized notes involved a significant amount, with BOCI issuing 200 million Chinese yuan worth of notes, equivalent to approximately $28 million. The collaboration with UBS aims to simplify digital asset markets and products for customers in the Asia Pacific region, specifically by developing blockchain-based digital structured products tailored to their needs.Ying Wang, Deputy CEO at BOCI, expressed enthusiasm for the digital transformation and innovative development of Hong Kong’s financial industry, recognizing the evolving digital economy in the region. Wang expressed the view that the development puts BOCI “at the forefront of innovation in technology finance and digital finance.”She sees the UBS collaboration as a means of driving “the simplification of digital asset markets and products, for customers in Asia Pacific through the development of blockchain-based digital structured products, designed specifically for customers in Asia Pacific.”Embracing digital assetsHong Kong has been actively working towards establishing itself as a hub for cryptocurrencies. Paul Chan Mo-po, the Chinese autonomous territory’s Financial Secretary, has emphasized the region’s intention to embrace regulation in this domain. Despite recent fluctuations in the virtual asset market and the closure of certain virtual asset exchanges, Chan remains optimistic about the prospects of Web3 and believes it is the opportune moment to drive its advancement.This month, Hong Kong lifted its ban on crypto retail trading and encouraged crypto exchanges to seek licenses within the region. The Securities and Futures Commission (SFC) has introduced exchange guidelines, leading firms such as Huobi, OKX, and BitMEX to express their intentions to apply for licenses in Hong Kong. Furthermore, in light of the recent lawsuit filed by the SEC against Coinbase, Hong Kong legislator Johnny Ng extended an invitation to the exchange to establish a hub in Hong Kong.The collaboration between BOCI and UBS is significant as unlike UBS’ previous tokenized note project which was established on a permissioned blockchain, this Hong Kong-based project is making use of Ethereum. By issuing tokenized notes on the Ethereum blockchain, these institutions are exploring the decentralized potential of digital assets and paving the way for further innovation in the Asia Pacific region.

Bitget withdraws from Hong Kong crypto marketSeychelles-incorporated cryptocurrency derivatives platform Bitget has made a decision to permanently exit the Hong Kong market, discontinuing its efforts to obtain a virtual asset trading platform (VATP) license.Photo by SHUJA OFFICIAL on UnsplashBitgetX platform shutdownThe decision comes only months after it had introduced its BitgetX platform to comply with local regulations. The company, which bases its operations out of Singapore, is a well-known entity in the crypto space, renowned as the operator of the 12th-largest cryptocurrency exchange globally in terms of 24-hour trading volume. It made this revelation on Monday, citing what it referred to as “business and market-related considerations.”In a published statement, the company said:”With a heavy heart, we regret to inform you that due to business and market related considerations, we have decided not to pursue a Virtual Asset Trading Platform (VATP) license in Hong Kong. As a result of this decision, the BitgetX website (www.BitgetX.hk) will cease its operations effective December 13, 2023. At the same time, Bitgetx.hk will permanently exit the Hong Kong market.”While outlining that BitgetX will close its doors, the firm urged users to withdraw their assets beforehand. Bitget is among a handful of exchanges that had publicly expressed their intent to secure a license following Hong Kong’s proactive push over the course of the past year to embrace the virtual asset sector.Broader challengesThe decision to abandon the pursuit of a VATP license echoes the broader challenges faced by the cryptocurrency industry in Hong Kong. Despite the city’s recent enthusiastic regulatory embrace of the virtual asset sector, a number of stumbling blocks remain.High compliance costs and the lingering aftermath of the JPEX financial scandal have hindered Hong Kong’s aspirations to establish itself as a leading crypto hub. A report back in June identified the major cost implications of acquiring a license in Hong Kong. At the time, it was estimated that the required spend to obtain a VATP license could range from $2.55 million to $25.5 million.Banking crypto companies has also become a major bottleneck. In June, the Hong Kong Monetary Authority (HKMA) urged banks such as HSBC, Standard Chartered and the Bank of China to bank the crypto sector, having identified a reluctance amongst them to do so.Limited interestThe forthcoming closure of BitgetX adds to a growing trend of limited interest in Hong Kong’s new licensing scheme. Only five companies, all local, have submitted applications for virtual asset licenses to the Securities and Futures Commission (SFC). This list began publication in response to the JPEX scandal, which significantly damaged public trust in virtual assets.The challenges faced by the industry go beyond regulatory hurdles. The damaged public trust, coupled with the high-profile exit of JPEX, has contributed to the hesitancy of international crypto platforms in pursuing licenses in Hong Kong. The abrupt withdrawal of Bitget raises questions about the viability of Hong Kong as a central player in the cryptocurrency industry and underscores the complexities faced by exchanges navigating the evolving landscape of the digital asset sector.