Japan’s SMFG expresses interest in stablecoin launch

Animoca Brands, a company focused on Web3 and metaverse projects, has gotten together with the Hong Kong subsidiary of British banking giant Standard Chartered to establish Anchorpoint Financial Limited.In a press release published to its website on Aug. 8, Animoca Brands outlined that the joint venture company has been established with the objective of building a business model that will concern itself with the issuance and advancement of licensed stablecoins. The move follows Hong Kong’s Stablecoins Ordinance, which went live on Aug. 1.Photo by Andres Garcia on UnsplashHKT involvementThe partnership also involves Hong Kong Telecom (HKT), one of the largest telecommunications companies in Hong Kong. This collaboration is not something that has just been formed. The trio had been participants in a regulatory sandbox related to stablecoin issuance established by the Hong Kong Monetary Authority (HKMA) in 2024.  Back in February, it emerged that the three companies had entered into an agreement to establish a joint venture with a view towards applying to the HKMA for a license to cover the issuance of a Hong Kong dollar-pegged stablecoin. By June, the companies had formed that company. Applying for a licenseAnchor Financial has already informed the HKMA of its intention to apply for a stablecoin license. A recent Bloomberg report asserted that somewhere in the region of 50 companies have expressed an interest in obtaining stablecoin licensing in Hong Kong. However, the regulator is likely to issue no more than 10 licenses. Additionally, disclosure by the HKMA of strict customer identification rules related to the city’s new Stablecoins Ordinance has sparked concern among industry stakeholders. Know-your-customer (KYC) rules will put an onus on stablecoin issuers in Hong Kong to verify the identity of every stablecoin holder. Bo Tang, head and assistant director at the HKUST Institute for Financial Research, told Reuters that the rules were “a bit too strict and not good for acquiring users.” Ricky Xie, a crypto trader based in Hong Kong, pointed out that these KYC rules aren’t just for those who would hold accounts with the stablecoin issuer, but instead they will apply to every stablecoin holder. A number of Hong Kong stablecoin-concept stocks, that had been performing well in the market, fell by as much as 20% when these stringent rules were disclosed by the HKMA. Evan Auyang, group president of Animoca Brands, expressed contentment with Animoca’s partnership with HKT and Standard Chartered Bank (Hong Kong), while adding:”Stablecoins represent one of the most compelling use cases within Web3, and we believe we are still at the early frontier of widespread adoption across institutions and retail alike. As assets continue to move on-chain, the HKMA-regulated fiat-referenced stablecoin is important in reinforcing Hong Kong’s position as a leading international financial center.” The first stablecoin licenses are expected to be issued by the HKMA early next year.

Conflict Identified as Crypto.com Trading on its Own PlatformTrading practices at Crypto.com, the Singapore-based cryptocurrency exchange, have raised questions about potential conflicts of interest within the digital assets industry.Citing a number of unnamed sources, the Financial Times (FT) made the claim in a report published on Monday.Photo by Pixabay on PexelsConflict of interestIn traditional financial markets, exchanges typically match buyers with sellers at competitive transparent prices, while market making and proprietary trading are conducted by separate private companies. However, US regulators have recently cracked down on similar activities at digital asset exchanges. Binance, the world’s largest crypto exchange, faced 13 charges from the US Securities and Exchange Commission (SEC), including allegations of manipulative trading to inflate trading volume.The presence of internal traders at Crypto.com has not been widely known since the company’s launch in 2016. The FT’s sources claim that Crypto.com executives provided sworn statements to external trading houses denying the company’s involvement in trading activities.Employees were allegedly instructed to deny the existence of an internal market-making operation. In response to inquiries, Crypto.com denied that employees were asked to lie, stating that their internal market maker functioned similarly to third-party market makers, ensuring tight spreads and efficient markets on their platform.The majority of Crypto.com’s revenue reportedly comes from its app for retail traders, where the company acts as the counterparty for transactions and operates as a broker model. The company’s trading team hedges these positions on various venues, including their own exchange, to maintain risk neutrality. Crypto.com emphasized that their exchange provides a level playing field for institutional traders.According to insiders, Crypto.com’s proprietary trading desk engages in trading activities on the company’s exchange and other platforms, solely focused on generating profits rather than facilitating an exchange. The market making desk, on the other hand, aims to enhance liquidity on the platform.Not a revenue sourceCrypto.com defended its practices by stating that comparing trading volumes to competitors is common in the industry. It said that the company’s priority is to continuously improve order book liquidity and reduce spreads, benefiting all participants. The firm told Decrypt that trading is not a source of revenue: “While we do have some market making activity, for example, we have internal market makers for our CFTC-regulated product Up/Downs in the United States.”As a private company, Crypto.com publishes accounts in different countries, but revenue breakdown by business line is not disclosed.Closure of institutional tradingFollowing the SEC’s enforcement actions, earlier this month Crypto.com announced the closure of its exchange for institutional US traders due to limited demand in the current market landscape, effective from June 21.In any marketplace transparency and fairness are crucial. It’s fair to say that there has been some level of sharp practice among some actors in the marketplace while regulators have been lacking in getting up to speed with the emergent sector, and moving to protect consumers. With the major crypto platform failures of 2022 has come renewed interest in resolving these issues. That may make for some short-term difficulty, but in the longer term, it should mean greater protections for market participants so long as a common sense approach is pursued.

EDX Markets, a crypto-trading platform backed by Citadel Securities and Fidelity Digital Assets, is planning to establish a new crypto exchange in Singapore. EDX ClearingThe plan was revealed in a recent Bloomberg article. In tandem with the report, a press release published on Tuesday also provided further detail on its recently-launched digital asset clearinghouse, EDX Clearing. Unlike traditional exchanges, EDX operates its own clearinghouse, following a non-custodial model in collaboration with Anchorage Digital. This approach allows institutional investors to execute trades without the need for pre-funding in fiat currency or crypto, contributing to capital efficiency and risk management. Since its launch in October, EDX Clearing has cleared more than $3.1 billion of transactions. The recent approval of bitcoin exchange-traded funds has further intensified trading activity, with substantial volumes traded following their launch. EDX Markets offers a unique platform for institutional investors to directly trade major cryptocurrencies like bitcoin, ether and litecoin. EDX addresses institutional players' needs with a non-custodial model, emphasizing risk management and infrastructure that aligns with traditional market practices.Photo by Julien de Salaberry on UnsplashFresh funding infusionThe company is also introducing spot and perpetual futures trading, following a successful additional funding round led by new investor Pantera Capital and existing supporter Sequoia Capital. The recent funding infusion, the exact size of which was not disclosed, empowers EDX Markets to enhance its technology and expand its global footprint. The firm’s CEO, Jamil Nazarali, highlighted Singapore's strategic significance, citing its favorable environment for trading a diverse range of tokens and perpetual futures, along with its pool of financial talent. The platform has gained support from traditional finance heavyweights such as Charles Schwab and Miami International Holdings, alongside original backers Citadel Securities, Virtu Financial and Fidelity Investments' digital-asset arm. The recent funding round saw investors buying in at double the initial share prices from 2022. According to Paul Veradittakit, Managing Partner at Pantera Capital, EDX mirrors traditional market expectations, incorporating speed and capital efficiency while adapting to the unique features of the crypto landscape. Taking to the X social media platform, Veradittakit wrote:”We believe that EDX markets reduces counterparty risk for institutions through its non-custodial clearing model.” EDX Markets has witnessed noticeable trading volumes, with over $1.4 billion in notional volume traded in December alone. The company, headquartered in Hoboken, New Jersey, plans to build out its technology independently and transition away from its initial partnership with MEMX (Members Exchange). Singapore expansionThe expansion into Singapore involves seeking approval from the Monetary Authority of Singapore (MAS) to operate an exchange offering both spot and perpetual futures trading. In December, EDX's clients traded more than $1.4 billion in notional volume. Following the approval of spot bitcoin exchange-traded funds (ETFs), EDX customers executed trades totaling more than $100 million in a single 24-hour period this month. While many in the sector welcome the involvement of TradFi in the crypto space, some have concerns with regard to how things play out over the longer term. Community member Joe Kerr took to social media on the subject, stating:”My concern is that they’ll use the ETFs to buy from public exchanges, custody with Coinbase but when shares sell, the Bitcoin is bought through EDX and locked behind an ‘institutions only’ firewall.”