OSL raises $300M to finance expansion

Nexo DWTC, the Dubai arm of the well-known crypto lender, has obtained initial licensing approval from Dubai’s Virtual Assets Regulatory Authority (VARA), marking a significant milestone in the company’s growth and development.Photo by Carlos Alberto Gómez Iñiguez on UnsplashLending, borrowing and broker-dealer activitiesThe approval grants Nexo the authorization to engage in virtual asset lending and borrowing, management and investment relative to digital assets, together with broker-dealer activities within the region. Commenting on the development, Nexo Managing Partner, CFO and Co-Founder Kalin Metodiev, stated:”Nexo is enthusiastic about the pursuit of new market strategies aligned with the transformative guidance of Dubai's Virtual Asset Regulatory Authority." The United Arab Emirates (UAE) has played a pivotal role in promoting the region as a nucleus for global innovation and governance. Dubai's early adoption of blockchain strategies in 2016 and the establishment of VARA in 2022 underscore its commitment to emerging as a global epicenter for digital asset innovation. This initiative mirrors the city's longstanding influence in the traditional finance sector. Seven million worldwide usersFor Nexo, which caters to over 7 million users worldwide, the Dubai market represents a substantial opportunity for regional expansion and the delivery of premium services. Nexo is cementing its position as a leading digital assets institution. However, it hasn’t always been easy for the company. Amidst the broader cryptocurrency downturn post the 2021 market peak, Nexo faced significant challenges. In 2022 prominent crypto lenders faced bankruptcy, drawing heightened scrutiny towards Nexo given its involvement in similar business activities. This prompted speculations about the platform's sustainability. Additionally, Nexo grappled with regulatory pressures, notably agreeing to a $45 million settlement with the U.S. Securities and Exchange Commission (SEC) for failure to register the offer and sale of its Earn Interest Product (EIP). It also faced money laundering charges in its home base of Bulgaria. These charges were later dropped. Subsequently, the company pursued $3 billion in damages from the Bulgarian state, refuting allegations that brought disrepute to the company following an investigation that found no evidence against it. Reflective of a more positive outlook more recently, Nexo Co-Founder Antoni Trenchev took to CNBC on March 1, offering his prediction that Bitcoin is on target for a $100,000 unit price in the not-too-distant future. VARA, established in March 2022 following the enactment of Law No.4 of 2022, assumes the responsibility of regulating, supervising and overseeing virtual assets and virtual asset activities across all zones in the Emirate of Dubai, excluding the Dubai International Financial Centre. VARA's pivotal role in crafting an advanced legal framework is geared towards safeguarding investors, setting international standards for virtual asset industry governance and bolstering the vision of a borderless economy. Nexo's attainment of initial approval from VARA signifies a major breakthrough in its expansion efforts, underscoring its commitment to compliance and innovation in the digital asset space. This achievement positions the company as one of the few crypto lenders making inroads into the influential Dubai market. 

Bitget Claims Debt-Free Status via Proof of ReservesBitget, the Seychelles-based cryptocurrency derivatives exchange, proudly announced that its total proof-of-reserves ratio has reached an impressive 223% in its latest report.Photo by Traxer on UnsplashReserve of $1.44 billionIn a press release published to its website on Thursday, the exchange revealed that it currently holds a reserve of $1.44 billion, encompassing 31 different crypto assets. The reserve ratios for popular cryptocurrencies such as Bitcoin (BTC), Tether (USDT), Ether, and USDC stand at 454%, 135%, 171%, and a staggering 2,604%, respectively.Bitget executives, in an interview with Cointelegraph, emphasized the exchange’s commitment to operating without relying on debt or user funds for transactions or investments. They stated that the company is debt-free and has no outstanding liabilities, nor is it listed as a creditor for any recently bankrupt companies.When questioned about the high collateralization for certain coins, the exchange clarified that the funds originate from profits generated through transaction fees and returns from investments and acquisitions. While Bitget does not have external insurance for its users, it maintains a robust $300 million User Protection Fund.Executives assert that this fund operates more effectively than third-party insurance, enabling them to efficiently safeguard users’ assets without being dependent on external bureaucracy or policy changes.Partnering with third-party auditorsAlthough not yet a regulatory requirement, Bitget aims to enhance transparency by increasing partnerships with third-party auditors to thoroughly examine its assets and reserves. The exchange diligently updates its proof-of-reserves every month, further reinforcing its commitment to accountability and trustworthiness.While proof-of-reserves has gained popularity as a means of disclosing information about exchange assets, experts have cautioned about its effectiveness. Jack Graves, a professor of law at Syracuse University, highlights the challenges in determining the portion of assets pledged as collateral unless one has access to an exchange’s financial services, books, and records.Bitget’s remarkable proof-of-reserves ratio and its commitment to being debt-free demonstrate a greater focus on behalf of cryptocurrency exchanges in providing the crypto trading public with an enhanced level of information relative to the real-time financial position of the exchange.Crypto loansThe move is significant and much needed, following a dreadful 2022 for crypto consumers that saw many of them lose funds due to a complete lack of transparency with regard to funds held on deposit on behalf of customers. That period saw the collapse of platforms such as Celsius, FTX, Voyager, BlockFi, and others as a direct consequence of the mismanagement of user funds.It’s interesting too, that most of the platform failures involved crypto lenders, a space that Bitget recently announced that it was entering. Earlier this month, the company outlined that it would begin to offer crypto lending products to meet a need from users who are seeking alternative funding solutions, backed by digital assets.By diligently managing its funds and actively seeking audits, Bitget is making an effort to foster trust within the cryptocurrency community and ensure the safety of users’ assets.

Hong Kong and Saudi Arabia Collaborate on Tokenization and PaymentsIn an effort to enhance financial collaboration, Hong Kong and the Kingdom of Saudi Arabia are expanding their ties and focusing on agreements related to tokenization and payments infrastructure.Photo by Ketut Subiyanto on PexelsBilateral meetingOn Wednesday, the Saudi Central Bank (SAMA) and the Hong Kong Monetary Authority (HKMA) held a bilateral meeting to discuss various initiatives aimed at integrating financial services between the two nations. During the meeting, the central banks explored areas such as financial infrastructure development, open market operations, market connectivity, and sustainable development. Additionally, they signed a memorandum of understanding (MoU) to facilitate joint discussions on financial innovation.HKMA chief executive Eddie Yue emphasized the potential for cooperation in fields like economy, trade, sustainable development, finance, and fintech between the two nations. He expressed optimism about the continued development of the relationship and the prospects it holds for the future.SAMA governor Ayman Al-Sayari echoed this sentiment, acknowledging the significance of the MoU in fostering stronger ties and assisting them in the future. “HKMA is an important partner for the Saudi Central Bank. Today’s MoU will support our relationship and contribute to the consolidation of efforts in developing the Fintech industry,” he stated.Tokenization and payment infrastructureNotably, the authorities of Hong Kong and Saudi Arabia also used the opportunity to exchange expertise in tokenization, payment infrastructure, and supervision technologies. This collaboration opens up possibilities for both countries to leverage each other’s strengths in these areas.Hong Kong has been actively participating in various inter-jurisdictional tokenization initiatives. In June, the Bank of China’s investment bank subsidiary, BOCI, issued a $28 million tokenized security in Hong Kong using the Ethereum blockchain. The project utilized Goldman Sachs’ tokenization protocol GS DAP and featured cash tokens representing claims on the Hong Kong dollar.Digital assets firm Ripple Labs has also participated in a HKMA pilot program that implicates real estate tokenization.No crypto discussionHowever, the joint announcement did not explicitly mention any joint efforts related to cryptocurrencies like Bitcoin. It is worth noting that Hong Kong recently allowed retail investors to trade crypto, but Saudi Arabia has not shown any specific plans to promote cryptocurrencies in recent years. In 2019, the Saudi Central Bank issued a warning that Bitcoin is not recognized by legal entities within the country.International collaborationRecent months have seen ever greater collaboration between international central banks and regulators relative to digital assets. Last month Japan’s Financial Services Authority (FSA) joined forces with the Monetary Authority of Singapore (MAS) on its Project Guardian initiative to further explore the potential of digital assets.In May, the central banks of Hong Kong and the United Arab Emirates announced a collaboration to work on cryptocurrency regulations and financial technology development. In the same month, MAS partnered with New York’s Federal Reserve Bank on an initiative that examined the use of central bank digital currency (CBDC) for wholesale cross-border payments.As the financial collaboration between Hong Kong and Saudi Arabia strengthens and other such international partnerships continue to unfold, the focus on tokenization and payment infrastructure and digital assets more broadly signifies a step forward in embracing these innovative financial technologies.