Upcoming Regulatory Framework in Taiwan Sees Crypto Exchanges Unite

Financial regulators in Hong Kong are moving towards the presentation of stablecoin legislation following the completion of a consultation process. In February of this year, that consultation process, which received 108 submissions from professional bodies and industry stakeholders, was completed. It was run jointly by The Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA), culminating in the publication of the results of the process.Photo by Pat Whelen on UnsplashLegislative proposal publishedOff the back of that prior body of work, the regulators have now published a legislative proposal, incorporating responses to issues that were brought to light via the consultation process. The regulators concluded that going forward, stablecoin regulation should be considered primarily in terms of those stablecoin assets which operate on a ledger which runs on a decentralized basis. Additionally, no individual or unilateral entity should have the ability to tamper with or control those assets or the network upon which they exist. On this basis, the regulators intend to submit a bill relative to fiat-referenced stablecoins for consideration to the Legislative Council at a later stage in 2024. Before submitting any legislative proposal, the regulators plan to once again consult with stakeholders prior to finalizing any such proposal. As part of what they have set out thus far, regulators are looking to include a requirement for any stablecoin issuer to obtain a license in Hong Kong.  Reserve asset requirementsThey remain open to the idea that reserve assets backing an issued stablecoin could be held in an overseas jurisdiction. However, if the issuer is an overseas entity, it will be required to establish a local corporate entity in Hong Kong, with relevant management personal based within the Chinese autonomous territory. In light of feedback received during the consultation process, the regulator is looking at reducing the attestation frequency that each stablecoin issuer will be required to provide via an independent auditor in order to verify that the stablecoins issued are backed by the requisite amount of liquid assets.  Such reserve assets must be segregated from the working capital of the stablecoin issuer’s business, with the HKMA expressing a preference for a trust-like structure following input via the consultation process. Furthermore, reserve assets must be deemed to be both high quality and highly liquid, which would include cash, bank deposits and government issued securities where counterparty risk is minimized. On the basis that the Hong Kong dollar is pegged to the U.S. dollar, the regulator is content to allow issuers to use USD-denominated reserve assets if they prefer to do so. The legislative proposal also stipulates the need for issuers to have a minimum share capital of HK$25 million or 1% of the value of stablecoin in circulation.  The HKMA foresees crypto exchanges, securities firms and regulated banks having the ability to offer stablecoins to customers, so such offerings won’t be confined to dedicated stablecoin issuers.Back in March the HKMA introduced a stablecoin sandbox with a view towards learning what works best from a regulatory standpoint. It’s understood that a list of participants will be announced in the near future. Participating entities will be able to issue stablecoins in Hong Kong within that controlled sandbox environment, prior to full scale implementation once stablecoin regulation has been fully legislated for.

Gate.io Shrugs Off Withdrawal Concerns Amid Multichain CrisisGate.io, a prominent cryptocurrency exchange, has refuted rumors circulating within the crypto community about withdrawal issues on its platform. On Wednesday, the exchange reassured users that its operations remain unaffected by recent events.Photo by Keller Chewning on UnsplashGate.io confirms smooth operationsGate.io is one of the oldest Chinese Bitcoin exchanges. It moved its corporate headquarters to the Cayman Islands once the Chinese authorities took a hardline stance on cryptocurrencies a few years ago. It also maintains offices in Seoul, South Korea, and is currently preparing to launch a bespoke Hong Kong-based platform.According to the exchange, withdrawals are functioning properly, and the overall operations of the exchange are healthy. It explicitly stated, “There are no issues with our operations or withdrawals as rumored.”Multichain concernsSpeculation emerged on social media on May 24 when Arkham Intelligence reported that members of the separate blockchain project Multichain had transferred $3 million worth of the $MULTI token to Gate.io. Arkham also mentioned other transactions involving Multichain-related tokens, some of which were subsequently suspended for deposit on the leading exchange, Binance.While Arkham did not directly suggest any risks to Gate.io itself, the combination of market activity and other events led to rumors. ‘Coinsumption,’ a Twitter account with nearly 31,000 followers, suggested on May 31 that Gate.io might be facing insolvency problems and advised users to withdraw their funds from the exchange.The ongoing issues with Multichain may well be unrelated to Gate.io. Multichain’s team members recently stated that they are unable to contact their CEO or access project servers. The project has experienced transaction delays over the past few days.Native token price impactGate.io’s native token ($GT) has reportedly been affected by these rumors, as its value has declined by 6.59% over the past 24 hours. In contrast, Bitcoin has only experienced a 1.4% decrease.The $GT token losses can be attributed, in part, to a period of several hours during which the token’s price dropped from $4.92 to $4.49. In isolation, this change represents an 8.7% loss, although there have been partial recoveries and other fluctuations to offset the decline. At the time of publication, the $GT token unit price stood at $4.36.Despite the recent challenges, Gate.io continues to demonstrate significant trading volume. On the most recent day, the exchange recorded approximately $525 million in trading volume, solidifying its position as one of the largest centralized exchanges with sub-billion daily trading volumes.The almost ten-year-old exchange is among several cryptocurrency exchanges preparing to comply with upcoming regulations in Hong Kong. It aims to operate alongside other platforms, such as CoinEx, OKX, Huobi, and BitMEX, as they adapt to the regulatory framework being implemented in the region.Gate.io has dispelled rumors of withdrawal issues, assuring users that its operations are functioning normally. Notwithstanding that, as with everything in the crypto space, the facts and circumstances can change in an instant. Therefore, it’s a topic that is worthwhile watching as further news emerges relative to ongoing issues on the Multichain project.

Worldcoin, the startup co-founded by OpenAI CEO Sam Altman, has encountered setbacks in its eye-scanning initiatives just six months after its international expansion. A recent report by TechCrunch indicates that the company’s signature orb eye-scanner is no longer available to users in the Indian market. According to that report, the Worldcoin Foundation clarified that its activities have also been suspended in France and Brazil. The company clarified that its offerings in those markets were only intended to be limited-time product previews as opposed to long-term roll-outs.Photo by Big G Media on UnsplashTemporary service haltIn India, the World App is experiencing widespread adoption, but the orb-verified proof of personhood services has been temporarily halted. The pause aims to allow the protocol to develop and implement a bespoke, safe and orderly process to meet the growing demand. The setback comes after Tools for Humanity, the organization behind Worldcoin, announced the expansion of World ID, its digital identity program linked to iris scans, in July. The startup had ambitious plans, intending to make 1,500 orbs available in over 35 cities globally. Recently, the company unveiled a program offering $5 million in grants to developers utilizing its eye-scanning technology. Regulatory investigationsSam Altman and his co-founders established Worldcoin in 2020 to help individuals prove their digital identity amidst the rise of AI. Over the years, Worldcoin has secured $250 million in funding from notable venture capitalists, including Andreessen Horowitz. However, the startup has faced regulatory challenges, including investigations by French and German regulators and an Argentinian government agency. Altman, himself, has navigated recent challenges. In November, the OpenAI board temporarily removed him as CEO, reinstating him two weeks later. More recently, Fortune reported that Altman quietly received $75 million from the University of Michigan for a new venture capital fund, raising questions about transparency, particularly following the launch of OpenAI’s signature product, ChatGPT. Asian tourIn recent weeks, the project development team behind Worldcoin had engaged in a tour of Asia. The objective of that mission was to gather market feedback prior to engaging in greater efforts to expand the reach of its World ID verification system within the region. To gauge market receptiveness to its product offering, the tour included meetups in major Asian cities such as Hong Kong, Seoul, Singapore and Tokyo. Up until mid-November, the Asian region accounted for 1.4 million World App sign-ups.The introduction of World ID 2.0 by the company on Dec. 13 led to a surge in the price of WLD. Over the course of the 48 hours that followed, it jumped from $2.47 to $4.23, a 71% increase. At the time of writing, the token unit price stood at $3.66. As Worldcoin navigates these challenges, the cryptocurrency industry will closely monitor developments, recognizing the broader implications for the startup’s innovative approach to digital identity verification.