HKX latest exchange to drop out of Hong Kong market

Kiln, the Paris-based Ethereum staking platform, has successfully secured $17 million in a recent funding round, as revealed in a press release on Thursday. Round led by 1kxThe financing round was spearheaded by 1kx, with participation from Crypto.com, Wintermute Ventures, Thailand’s KXVC and Hong Kong’s LBank and IOSG. This infusion of capital brings Kiln's total funding to $35 million, marking a milestone in the company's growth trajectory. The latest funding follows a previous investment of $17.6 million in 2022 from Illuminate Financial, LeadBlock Partners, Sparkle Ventures, Alven and Blue Yard Capital, among others. Kiln opted not to disclose the valuation associated with the recent funding round. In 2021, Canadian blockchain infrastructure and staking firm Figment reached unicorn status with a $1.4 billion valuation. The Kiln platform has witnessed significant growth, increasing its staked assets under management to $4.2 billion in 2023. Acknowledging that growth on Jan. 4, Fred Lardieg, partner at Abu Dhabi sovereign fund Mubadala wrote:”This little-known French startup called @Kiln_finance has been killing it in the #Ethereum #Staking space, by relentlessly releasing new features throughout 2023. They're now the #1 operator of Ethereum validator nodes according to @ratedw3b.” The firm’s expansion is attributed to strategic integrations with various custody solutions, wallets and exchanges over the past year.Photo by DrawKit Illustrations on UnsplashRegional headquarters in SingaporeThe funds raised will be instrumental in facilitating Kiln's global expansion initiatives, including the establishment of its Asia-Pacific (APAC) headquarters in Singapore during the first quarter of the year. Additionally, the company aims to allocate resources for further product development to enhance its offerings in the decentralized finance (DeFi) space. Laszlo Szabo, CEO and co-founder of Kiln, articulated the company's mission, stating: "Our mission is to democratize value creation in the digital assets ecosystem, providing millions of users with easy access to rewards through our platform." The funds will support Kiln's commitment to making value creation in the digital assets space more accessible globally. The company plans to use the funding not only for expansion but also to introduce additional reward mechanisms in the rapidly evolving DeFi landscape. Regulatory uncertaintyWhile Ethereum staking offers users the opportunity to earn yields by validating transactions on the blockchain, the regulatory landscape remains uncertain. The U.S. Securities and Exchange Commission (SEC) has taken legal action against several exchanges involved in crypto staking, with SEC Chairman Gary Gensler expressing views on Ethereum-like tokens as potential securities. Despite regulatory challenges, Kiln's staking platform caters to institutional clients, allowing them to stake assets and offer white-label solutions to their customers. With a focus on proof-of-stake blockchains, Kiln holds a significant portion of staked assets on Ethereum, exceeding $3.1 billion, according to its Dune Analytics dashboard. 1kx Founding Partner Christopher Heymann emphasized the increasing role of financial institutions in the crypto space, stating:  "Financial institutions will become a dominant force in crypto, leveraging the immense market opportunity as they stake on behalf of their customers." By utilizing smart contracts, Kiln allows users to stake smaller amounts, overcoming the traditional barrier of a 32 ETH minimum requirement for native ether staking. This approach aligns with Kiln's goal of fostering inclusivity in the rapidly expanding world of decentralized finance.  

Hong Kong SFC CEO Prioritizes Investor Protection in Crypto RegulationsAccording to a report by Chinanews, Julia Leung, Chief Executive Officer of the Hong Kong Securities and Futures Commission (SFC), participated in a seminar organized by the Hong Kong Academy of Finance (AoF). During the event, she emphasized the importance of investor protection in the formulation of guidelines for operators of virtual asset trading platforms.Photo by Kanchanara on UnsplashDevelopment of crypto in Hong KongAt the seminar yesterday, Leung discussed the development of virtual assets in the special administrative region of China. She recalled the pushback the SFC received in 2018 when it first proposed regulations for virtual asset trading platforms. Critics argued that the licensing system, demanding applicants to comply with stringent internal control and investor protection standards, might compel fintech companies to relocate their operations to other jurisdictions, such as Singapore.Market recognition of crypto regulationsDespite initial criticism, the market came to appreciate the importance of these regulatory standards, especially after witnessing the bankruptcy of several overseas cryptocurrency organizations.The guidelines for operators of virtual asset trading platforms in Hong Kong are set to take effect in June. Leung mentioned that these guidelines match market expectations and place emphasis on protecting investors. They encompass regulations for virtual asset custody, the segregation of client assets, and the avoidance of conflicts of interest. She also expressed satisfaction with the SFC’s role as a leading regulator in the virtual asset space.Crypto exchange ratingMeanwhile, Chinese blockchain news media Jinse Finance reported today the official establishment of the Hong Kong Virtual Asset Consortium (HKVAC), a private entity that rates virtual assets.It has also launched a virtual asset index and will introduce a virtual asset exchange rating system. The HKVAC Large Market Cap Cryptocurrency Index comprises the 30 leading cryptocurrencies by market capitalization. The index will be reviewed quarterly on the last day of each quarter (March, June, September, and December). The Virtual Asset Exchange Rating System will assess the credibility of trading platforms and enhance transparency and accountability in the virtual asset trading market.HKVAC was established by a team of industry experts and professional rating agencies. It brings together key stakeholders in the virtual asset industry, such as big data firms, exchanges, and institutional investors, along with the city’s licensed rating agencies. HKVAC aims to cultivate a secure environment for crypto investments and enhance the public’s understanding of virtual assets.

OKX collaborates with Polygon Labs on layer-2 network launchSeychelles-incorporated OKX, one of the world’s largest cryptocurrency exchanges, has collaborated with blockchain development firm Polygon Labs to unveil the testnet for its latest zero-knowledge layer-2 network, named “X1.”Photo by Shubham Dhage on UnsplashIntroducing “X1”The company announced initial details on X1 via a press release published on Tuesday. This Ethereum-based ZK network has been constructed using the Polygon Chain Development Kit (CDK), with OKX playing a pivotal role as a core contributor to the CDK. Substantial engineering resources are being invested by OKX to strengthen the Ethereum scaling solution.The new network will serve to bolster the utility of OKX's native token, OKB. OKB will be used for X1’s gas fees. There has been a lot of chatter about the utility of exchange tokens following the collapse of FTX, as that platform was over-reliant on its native token in propping up the exchange. Similarly, critics are speculating that a comparable dynamic may be at play at Binance, relative to its native token BNB.Likely buoyed by news of this development, OKB observed a 10% unit price increase on Tuesday. However, that move has retraced downwards in the meantime.ZK proof technologyX1 has been designed with ZK proofs, a method through which one party can convince another that a particular claim is true without disclosing details of the claim itself. In this way, X1 ensures high security and scalability while mitigating transaction costs. The network seamlessly aligns with Ethereum, facilitating the secure deployment of EVM-based dApps and connectivity with a wide array of smart contracts, wallets and tools. OKX underscores X1’s status as its new native network.Chief Innovation Officer of OKX, Jason Lau, expressed optimism about X1, deeming it integral to the firm’s efforts in guiding users into the realm of Web3. Lau emphasized the scalability and accessibility of X1, especially for developers who can leverage it to construct user-friendly Web3 applications while maintaining interoperability with other networks.The collaboration with Polygon Labs marks another milestone in the evolution of Polygon’s CDK. Launched in August, the CDK enables the development of layer-2 blockchains on Ethereum, emphasizing zero-knowledge proofs. Networks deployed using the CDK gain the ability to connect to a shared ZK bridge, fostering interoperability.Sandeep Nailwal, co-founder of Polygon, underscored the significance of X1’s adoption of Polygon CDK technology, envisioning a future where CDK-deployed chains interoperate and coexist within a larger network of ZK-powered layer 2s in the Polygon CDK ecosystem. The CDK has gained traction, with various Layer 2s, including Immutable zkEVM, IDEX, Palm Network and Astar zkEVM, currently in development using this technology.Industry trendA trend is developing among crypto exchange platforms and their involvement in establishing layer two networks. Earlier this year, U.S. crypto platform Coinbase introduced the Base network, an Ethereum layer-2 network that focuses on offering a safe, low-cost and developer-friendly mechanism to build on-chain.Last week, it emerged that another leading U.S.-based crypto platform, Kraken, is on the lookout for a development partner to enable it in building out its own layer-2 blockchain network. According to those reports, it’s understood that Kraken is considering partnering with Polygon Labs, Matter Labs or the Nil Foundation.As this OKX-Polygon Labs collaboration progresses, the industry will continue to observe how X1, with its innovative technology stack and seamless integration with Ethereum, contributes towards broader Web3 development.