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Surge in Hong Kong Crypto License Applications from Mainland-Linked BrokersTwo new platforms with mainland China links are preparing to apply for retail trading licenses in Hong Kong, with several others believed to be interested in following suit.According to a report published by Nikkei Asia earlier this week, the platforms, Yax and PantherTrade, have connections to mainland online securities brokers. PantherTrade is reportedly associated with Futu, a company which in turn is backed by Chinese tech giant Tencent, one of China’s largest technology companies. Yax, an emerging player in the crypto sector, has strong links to UP Fintech Holding, a Beijing-headquartered firm more commonly known as Tiger Brokers.Photo by Kanchanara on UnsplashCapital flight concernsThese connections are significant, given the previous involvement of these brokers in helping mainland Chinese customers invest in offshore assets, primarily US stocks. The firms have previously attracted the attention of China’s financial regulators. A notice from the Chinese securities watchdog in December last year compelled them to cease their “illegal cross-border business” activities.While crypto trading is banned in mainland China, an investigative report by the Wall Street Journal in August suggested that global exchange Binance was thriving in China despite the ban. Actions taken by the Chinese authorities are demonstrative of some level of concern with regard to crypto trading and potential capital flight through crypto.VASP licensingThe move by Yax and PantherTrade signals their intention to apply for a virtual asset service platform (VASP) license in Hong Kong, which would enable them to operate cryptocurrency exchanges for retail customers.Currently, both platforms are undergoing third-party assessments, a mandatory step preceding their formal application to the Securities and Futures Commission (SFC). The timeline for their applications remains uncertain.Broader interestThe growing interest in VASP licenses is not unique to Yax and PantherTrade. At least four other exchange platforms, similarly linked to mainland China, have also sought the same license, highlighting the eagerness of various players to enter the Hong Kong market. OneDegree, the sole licensed insurer for digital assets in Asia, has observed a significant uptick in license applications, including applications from traditional financial institutions, reflecting a positive trend toward educating the mass market.The SFC’s recent decision to make license application information public is an attempt to enhance transparency, following a scandal related to Dubai-headquartered crypto exchange JPEX in which over HK$1.5 billion (approximately $190 million) in virtual assets reportedly disappeared from the exchange.Currently, only two cryptocurrency exchanges, OSL and Hashkey, have received SFC approval. Others, including online brokers, have considered applying for licenses since late last year but are awaiting greater regulatory clarity before taking the plunge.Hong Kong, under the “one country, two systems” framework, has established itself as a hub for legal retail trading of cryptocurrencies. This development may signify a shift in China’s stance on digital assets and its increasing openness to crypto initiatives, as noted recently by blockchain data provider Chainalysis.

Upbit Singapore Gains In-Principle Approval for Major Payment Institution LicenseCryptocurrency exchange Upbit Singapore announced in a press release via PR Newswire that it has secured an in-principle approval (IPA) for a Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS). The IPA enables Upbit Singapore to continue providing regulated Digital Payment Token services in compliance with the Payment Services Act 2019 as it progresses on the path toward obtaining a full license.Photo by Paul MARSAN on UnsplashUpbit’s presence in AsiaIt’s worth noting that Upbit Singapore is part of Upbit APAC, a larger entity that operates exchanges bearing the same name in Thailand and Indonesia. Both Upbit Thailand and Upbit Indonesia are also regulated by their respective local authorities: Thailand’s Securities and Exchange Commission of Thailand and Indonesia’s Commodity Futures Trading Regulatory Agency (BAPPEBTI).Upbit APAC holds a technological partnership with Dunamu, the operator behind South Korea’s largest cryptocurrency exchange, Upbit.Crypto firms flocking to SingaporeThis development places Upbit Singapore among the ranks of other cryptocurrency exchanges in the city-state. Earlier this month, GSR Markets, the Singaporean arm of global crypto trading firm GSR, also achieved IPA status in its journey towards obtaining a full license. Other notable names in the industry, such as crypto exchange Coinbase and crypto payment firm Ripple, have already attained full licenses. The transition from an IPA to a full license took approximately a year for Coinbase and about four months for Ripple.Meanwhile, the Upbit enterprise has been making various efforts to solidify its presence in the crypto industry. One of its key initiatives is focused on enhancing user protection. For instance, as the leading cryptocurrency trading platform in South Korea, Upbit recently launched a campaign aimed at assisting crypto investors in recovering mistakenly transferred assets.However, there have been concerns regarding Upbit’s relationship with Kbank, the internet-only bank that provides real-name bank accounts to the Korean exchange. In Korea, cryptocurrency exchanges that facilitate the trading of Korean won are legally obligated to secure such bank accounts as part of anti-money laundering measures. Referring to a document provided by the Financial Services Commission (FSC), Lawmaker Kim Hee-gon highlighted that Upbit customers make up 18% of the bank’s total customer deposits. This percentage is significantly higher than what other banks that offer accounts to exchanges typically experience. Lawmaker Kim has criticized the bank’s relatively extensive exposure to the cryptocurrency exchange, underscoring the importance of elevating the level of Upbit’s reserve funds held at Kbank to prepare for unforeseen losses.

Kazakhstan sets sights on 2024 expansion amid CBDC pilot successKazakhstan’s central bank digital currency (CBDC), the digital tenge, has completed a one-month pilot project, paving the way for significant advancements in business, regulation and technology in 2024.Photo by Nessi Gileva on UnsplashReal-world use through Onay cardThe National Bank of Kazakhstan (NBK) established the National Payment Corporation (NPK) in September. NPK is a dedicated entity that’s responsible for spearheading the launch and development of the digital tenge.At that time, the CBDC pilot phase had advanced to controlled environment use. Global exchange Binance has been actively involved with the project. It supported the pilot by way of its BNB Chain.During the pilot phase, the digital tenge played a pivotal role in providing free school lunches to children in Almaty, Kazakhstan’s largest city. The initiative utilized the local Onay card, initially designed for the transit system and transactions were facilitated by Kazpost, the Kazakh postal system operator.Local banking partnersNPC Chairman Binur Zhalenov became the first person to transact using the digital tenge in November. At the time, it was revealed that Eurasian Bank was one of the local banking participants on the project.Eurasian collaborated with Visa and Mastercard, alongside three other local banks, distributing plastic cards to focus group members. These cards empowered users to make both in-person and online purchases, with the added functionality of cash withdrawals from ATMs.Participating merchants were given the flexibility to accept digital tenge directly or convert them into “non-cash” tenge. The converted funds seamlessly integrated into existing point-of-sale (POS) and QR systems, demonstrating interoperability within and outside Kazakhstan.The success extended beyond local transactions, with further experiments involving cross-border payments via SWIFT, issuance of CBDC-backed stablecoins on platforms like Binance and the Kazakhstan Stock Exchange, tokenization of gold, value-added tax collection through smart contracts and the trial of a “move-to-earn” app.New objectivesWith an eye on the upcoming year, the National Bank of Kazakhstan and the National Payment Corporation (NPC) have set ambitious objectives. Plans include expanding the network of intermediary banks and advancing decentralized finance applications. A primary focus is on enabling offline transactions on a large scale to enhance financial inclusion in regions with limited internet connectivity.Anticipated developments also include increased participation in cross-border payment projects, such as Project mBridge, an experimental multi-CBDC platform being coordinated and developed by the central bank of central banks, the Bank for International Settlements. Regulatory and legislative goals are on the agenda, alongside efforts to enhance the security and processing speed of the digital tenge.While addressing privacy concerns, Zhalenov emphasized in interviews that the digital tenge will not be utilized for user surveillance. Previously, Zhalenov has also alluded to the versatility of the digital tenge due to its programmable nature, citing smart contracts in particular as having great potential.The successful pilot project and the ambitious plans for 2024 position Kazakhstan’s digital tenge as a promising development in the realm of CBDCs, showcasing the central Asian nation’s positive approach to innovation and financial inclusivity.