South Korea, Canada expand cyber ties amid crypto developments

Hong Kong Legislator Courting US Crypto Exchange CoinbaseRecently, Johnny Ng, a member of the Hong Kong Legislative Council, expressed his interest in the future development of Coinbase, a major US cryptocurrency exchange, in Hong Kong. In a tweet today, Ng said that he had been in contact with Coinbase and that he would keep the public updated on further progress.Photo by Ruslan Bardash on UnsplashNg’s invitation to crypto exchangesThis tweet follows Ng’s earlier invitation to Coinbase and other global crypto trading platforms to apply for licenses in Hong Kong. His comments are in line with Hong Kong’s efforts to become a hub for cryptocurrency and blockchain-related activities. As of June 1, a new licensing regime for centralized virtual asset trading platforms (VATPs) went into effect in the Chinese special administrative region.Differing opinionsDespite the enthusiasm shown by Ng, there are differing opinions on Hong Kong’s current suitability as a crypto-friendly jurisdiction. Leo Weese, the co-founder and President of the Bitcoin Association of Hong Kong, expressed reservations in an interview with crypto media outlet CoinDesk.Weese described Hong Kong’s current setup as “highly unattractive” for crypto businesses. He cited factors such as a relatively small and untested market, limited banking partnerships, and restrictive product offerings.Despite these challenges, Weese acknowledged some potential advantages, stating that Hong Kong’s classification of tokens as non-securities allows for the trading of securities that are deemed unregistered in other jurisdictions. It is important to note, however, that Weese cautioned against assuming that moving operations to Hong Kong would protect Coinbase from US regulatory measures.Moody’s altered outlook on CoinbaseMeanwhile, Moody’s, the American credit rating agency, recently revised Coinbase’s outlook from stable to negative, citing uncertainties surrounding the impact of the US Securities and Exchange Commission’s (SEC) charges on Coinbase’s operation as an unregistered securities broker.

Shares in Moon Inc. (formerly HK Asia Holdings Limited), a publicly listed Hong Kong-based firm that acts as an investment holding company while engaged in activities such as wholesale and retail sales of prepaid products such as SIM cards, have surged following the company’s symbolic purchase of one Bitcoin (BTC).Photo by Thought Catalog on Unsplash93% share price increaseThe stock (1723.HK), which is listed on the Hong Kong Stock Exchange (HKEX), closed at HKD 5.50 following Monday’s trading. That represents a 93% increase compared to the closing share price following the previous day’s trading. The share price has settled somewhat following Tuesday’s trading, pulling back 16% to HKD 4.60. However, it jumped again on Feb. 21, closing at HKD 6.48. Bitcoin adoptionIt’s believed that the stock has been influenced by a decision taken by the company to adopt Bitcoin. The firm bought just one Bitcoin. However, the move has led to speculation as to whether Moon Inc. will become the MicroStrategy (now rebranded as “Strategy”) of China.  Michael Saylor’s Strategy has pioneered the use of Bitcoin as a corporate treasury asset. The company has positioned itself as the frontrunner in terms of the corporate adoption of Bitcoin. The company has amassed 471,000 Bitcoin within its reserves. This accounts for 2% of all Bitcoin. With Strategy’s Bitcoin playbook having been well documented, other companies now appear to be following its lead.  In recent weeks, Metaplanet, a Japanese Bitcoin treasury company, has demonstrated that it is pursuing the same strategy, outlining its ambition to build a reserve of 21,000 Bitcoin by 2026. On Feb. 18, it announced a 10-to-1 stock split in an effort to improve liquidity while executing on that overall Bitcoin treasury goal. Metaplanet shares have surged 3,900% over the course of the past 12 months on the back of its Bitcoin treasury pivot. On Feb. 16, Moon Inc. announced the purchase of its first Bitcoin at a unit price of $96,150. In a statement, the company said that the purchase was financed by way of the firm’s “internal resources.” An evolving global financial landscapeThe company’s board noted the increasing popularity of cryptocurrencies in the commercial world, with particular emphasis on the use of Bitcoin as an investment portfolio asset. It believes that Bitcoin acts as a dependable store of value. It added: “The Board believes that this initial investment is symbolic in scale, and marks a significant step toward aligning with the evolving global financial landscape, and would diversify the Group’s investment portfolio and enhance its asset value.” The company’s stock rose significantly last month when details emerged of a 70% stock position in the firm, taken by UTXO Management, in collaboration with Sora Ventures and other investors. Recently appointed board member John Riggins of BTC Inc. said that this recent Bitcoin purchase by Moon Inc. “is more than a transaction.” He stated, “It’s a bold step toward creating a vision for the future of the company.”

An analysis of data recently published as part of Chainalysis’ Global Cryptocurrency Adoption Index demonstrates that Hong Kong has recorded a year-on-year crypto transaction value growth rate of 85.6%.  On that basis, the territory accounts for the sixth-largest crypto economy in the world. Furthermore, Hong Kong ranks 30th in terms of global crypto adoption. That’s an improvement of 17 places, as it was ranked 47th in 2023. Regulatory framework aiding crypto adoptionAn excerpt from the 2024 Geography of Cryptocurrency Report by Chainalysis was published on September 18. It found that the steps taken in the Chinese autonomous territory in terms of laying down a regulatory framework for digital assets has led to this uptick in transactional activity, due to the increased adoption of digital assets by institutions.  Over the course of the past eighteen months, Hong Kong has launched crypto trading licensing. Earlier this year, exchange-traded funds (ETFs) were given the green light, with the subsequent launch of Bitcoin and Ethereum ETF products.  On the topic of ETF’s, Kevin Cui, CEO of digital asset trading platform OSL said that “as market conditions improve, we are seeing indications of a growing institutional interest that could lead to increased capital inflows in the near future.” Meanwhile, the Chinese autonomous territory is working towards the establishment of regulations that cover the issuance and trading of stablecoins.lil artsy on PexelsHong Kong key to Chinese crypto resurgenceIn terms of crypto adoption, mainland China ranked 11th this year, dropping down one place by comparison with last year. The report notes the complicated history China has had with cryptocurrency in recent years, given that a crypto trading ban remains in place. However, last year’s report pointed to the strong usage of centralized crypto exchanges by mainland China residents, which suggests that the ban has either been ineffective or poorly enforced.  The Chainalysis report speculates that “Hong Kong may finally influence China to re-open its doors to crypto.” This is not the first time that Chainalysis has made such an assertion. In last year’s report, it made a similar claim, suggesting that the development of Hong Kong as a crypto industry hub would lead to a softening in the stance of mainland China towards crypto. This year’s report suggests that mainland China residents have turned to over-the-counter (OTC) platforms in order to access crypto as a means towards preserving their wealth. The report quoted Ben Charoenwang, associate professor of finance at the INSEAD Asia Campus as stating: “Nowadays, if you want to move money out of China through traditional unofficial means like using mules, fees can be as high as 25 to 30 percent. The increasing use of OTC crypto in China suggests that people are looking for faster options to move money.” The report finds that five of the top 50 grassroots adopters of crypto, South Korea, China, Japan, Hong Kong and Taiwan, are located in East Asia. South Korea leads the region in terms of the most crypto value transacted metric. Chainalysis suggests that South Korea’s strong interest in altcoins signals that it will remain a leader in the region from a cryptocurrency innovation perspective.