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Having introduced its swift licensing process late last year, Hong Kong's Securities and Futures Commission (SFC) has extended access to the process to all new virtual asset trading platform (VATP) applicants. In a statement published on its website on Jan. 16, the regulator outlined that it is extending the swift licensing process to new applicants. Back in December, the SFC approved licensing relative to four exchanges under the expedited process. Those additions included Accumulus GBA Technology Co., DFX Labs Company, Hong Kong Digital Asset EX and Thousand Whales Technology (BVI).Photo by Ruslan Bardash on UnsplashSeven licensed VATPsThat has brought the total number of licensed exchanges to seven, as HashKey, OSL and HKVAX were the first exchanges to be approved. In November, fifteen licensing applications relative to virtual asset platforms, had been pending. According to SFC CEO Julia Leung, the regulator had hoped to issue licenses to eleven VATPs by the end of 2024.  The new expedited process requires applicants to “implement their policies, procedures, systems and controls before conducting an external assessment on these measures.” The regulator decided to extend the swift licensing process due to the effectiveness of the SFC’s engagement with other applicants, relative to the regulatory standards being put in place, implemented through on-site inspections being carried out. Fostering a healthy ecosystem Commenting on the development, Dr. Eric Yip, the SFC’s Executive Director of Intermediaries, stated:“The SFC is committed to fostering a healthy ecosystem and a robust regulatory framework for the development of virtual assets in Hong Kong. With the new approach, we will enhance our collaboration with VATP applicants, providing them with constructive and timely feedback, thereby enabling fully compliant VATPs to bring their services to investors more swiftly.” While the regulator is awarding licensing on an expedited basis through the swift licensing process, licensing is conditional. The VATP can operate on a restricted scope of business once it has completed rectification actions following feedback provided by SFC inspectors.  In October Yip outlined the SFC’s plans to create a consultative panel consisting of senior management executives from licensed VATPs. The objective of the panel is to gather feedback and concerns from licensees, adjusting the regulatory framework where deemed appropriate, relative to that feedback. Commenting on the initial introduction of the expedited approval system last December, Yip stated: “We have been proactively engaging with VATPs’ senior management and ultimate controllers, which helps drive home our expected regulatory standards and expedite our licensing process for VATPs. We aim to strike a balance between safeguarding the interests of investors and facilitating continuous development for the virtual asset ecosystem in Hong Kong.” The Hong Kong government has also been working towards incorporating a stablecoin bill, which will establish a regulatory framework with regard to fiat-referenced stablecoins. The SFC also intends to introduce licensing for crypto custodians in 2025.

Binance Takes P2P Service Measures in Response to Sanctioned Russian BanksGlobal crypto exchange Binance has removed the option for users to conduct transactions via sanctioned Russian banks on its peer-to-peer (P2P) platform, a decision that comes on the heels of a Wall Street Journal exposé published earlier this week, shedding light on the platform’s involvement in facilitating the movement of funds for Russian users.Previously, Binance’s peer-to-peer service featured five Russian banks under sanctions as a method for ruble transfers between users. However, the company swiftly acted to address potential compliance concerns. Fittingly, this latest news was also broken by the Wall Street Journal on Friday.Dmitry Sidorov on PexelsSailing too close to the windWhen approached regarding the omission of these banks, a Binance spokesperson stated: “We regularly update our systems to ensure compliance with local and global regulatory standards. When gaps are pointed out to us, we seek to address and remediate them as soon as possible.”The Wall Street Journal’s article outlined how Binance’s peer-to-peer platform facilitated ruble-to-crypto trades that frequently involved the sanctioned Russian banks, with Rosbank and Tinkoff Bank being prominent examples.These trades often utilized layers of intermediaries to convert funds from these banks into Binance balances, as detailed by various company resources, user screenshots, and messages in official chat groups. Despite these revelations, Binance’s exchange had continued to handle significant volumes of ruble trading, according to data compiled by digital asset research firm CCData.US DoJ probeBinance’s activities in Russia could potentially contribute to its ongoing legal challenges in the United States. The US Justice Department (DoJ) has been probing the company’s actions for potential violations of American sanctions on Russia. In response to such concerns, the Binance spokesperson emphasized:“Binance aims to diligently comply with the global sanctions rules and enforces sanctions on people, organizations, entities, and countries that have been blacklisted by the international community, denying such actors access to the Binance platform.”WorkaroundsTraders, however, had reportedly found workarounds to the bank removals, as observed in the official Telegram chat group for Russian clients. Many shared that they could still engage with sanctioned banks by selecting alternative payment methods and then manually inputting their Rosbank or Tinkoff bank details.Earlier this year, an investigative report by CNBC alleged that employees of the company had told it that Binance staff regularly helped Chinese customers to bypass Know Your Customer (KYC) controls in order to access the platform. More recently, another report, once again by the Wall Street Journal, found that business in China was booming, which surprised many given that China banned crypto trading within the country in 2021.It’s apparent that the company is reacting to regulatory and legal pressures in taking the decision to make these changes to its P2P service. Perennial crypto critic US Senator Elizabeth Warren took to X (formerly Twitter) on Friday, stating:“I rang the alarm about sanctions evasion by Russia using the crypto platform Binance — and urged [the DoJ] to investigate potentially false statements it made to Congress. We need stronger crypto regulations to rein in illicit finance.“

Huobi Co-Founder Acquires 10 Million CRV TokensJun Du, Chinese Co-Founder of Seychelles-headquartered global crypto exchange Huobi, has recently completed the purchase of 10 million curve tokens (CRV) from Curve founder Michael Egorov.Photo by Growtika on UnsplashCurve protocol loan exposureThe transaction amounted to $4 million and is part of Egorov’s ongoing efforts to mitigate his at-risk loan exposure, a further consequence of last week’s $52 million hack of the Curve DeFi protocol.Initially, Du expressed his interest in acquiring 10 million CRV tokens at the prevailing rate of $0.40. This price aligned with multiple over-the-counter (OTC) agreements between Egorov and various cryptocurrency individuals. According to a report by The Block, Du later confirmed the purchase through a Twitter direct message, revealing that he had chosen to lock up the acquired tokens as veCRV. This lock-up mechanism grants voting rights within the Curve platform while requiring the tokens to remain locked for a specified duration.“I intend to uphold this lock-up for at least a year, with optimism for continuous improvements within the Curve ecosystem,” Du stated, highlighting his commitment to the project’s long-term growth.On his Twitter account, Du emphasized his unwavering support for Curve, drawing parallels to his past backing of BendDAO during a liquidity crisis. He clarified: “Challenges faced now are transient, and collective support will foster a stronger industry.”Alongside being a Co-Founder at Huobi, Du holds the positions of CEO at New Huo Tech, a digital asset service platform, and Co-Founder and General Partner (GP) at the Web3 fund ABCDE.Ongoing token sell-offIn actively managing liquidation risk, Egorov is persistently offloading CRV tokens to bolster his loan position, given his significant exposure. He has utilized multiple DeFi lending platforms to secure loans, predominantly employing CRV tokens as collateral to borrow stablecoins. His borrowing activity on platforms like Aave alone has involved $56 million in stablecoins against $149 million worth of CRV collateral.Egorov’s health ratings on these platforms have improved recently, hovering around 1.67 or higher. Nonetheless, there remains a lingering risk associated with potential liquidation of his positions if CRV’s price were to dip substantially. This could potentially lead to bad debt scenarios for the platforms, particularly due to the substantial proportion of CRV supply involved.Sales of 72 million CRVEgorov’s token sales have amounted to 72 million CRV, according to Nansen analyst Sandra Leow. Notable recipients of these tokens include Tron Founder Justin Sun, crypto trader “DCFGod,” and Andrew Kang, Co-Founder of Mechanism Capital.Aave Chan Initiative, an entity tied to the Aave protocol, has proposed that the Aave treasury allocate funds to purchase up to $2 million worth of CRV tokens. The intention is to lock up these tokens as veCRV for an extended period, potentially up to four years. This move is aimed at further reinforcing the stability of CRV’s market dynamics.