Shanghai Court Recognizes Unique Traits of Bitcoin

Phoenix rises 50% on ADX debutDubai-headquartered crypto mining firm Phoenix has debuted on its Abu Dhabi Securities Exchange (ADX). The mining equipment hardware retailer witnessed a 50% surge in its share price following a successful initial public offering (IPO) that raked in $371 million.Photo by Marios Gkortsilas on UnsplashFortuitous IPO schedulingIt emerged last week that the company had adjusted its ADX IPO launch date from Monday to Tuesday to account for the holiday schedule in the United Arab Emirates (UAE) and to “ensure comprehensive participation in the IPO.”That adjustment may have been significant in garnering the level of participation that transpired. Bitcoin and to a lesser extent, the broader crypto market, surged to levels not seen since early 2022. From a low of $876 billion on June 15, 2022, overall crypto market capitalization currently stands at $1.6 trillion.With the Bitcoin unit price having exceeded the $42,000 level on Monday for a time, it’s likely that news of a crypto market resurgence would have aided Phoenix Group’s IPO success on Tuesday morning. In trading on Monday, publicly quoted bitcoin miners such as Riot Platforms, Marathon Digital and CleanSpark had recorded share price gains of between 8 and 11% on the Nasdaq in the United States.Surpassing expectationsTuesday’s trading surpassed the expectations of even the most optimistic analysts, with shares opening at 2.25 dirhams and marking a 50% increase from the IPO price of 1.50 dirhams. The ADX, chosen as the platform for Phoenix’s IPO, was strategically selected due to its alignment with the company’s dynamic vision and the rapidly expanding financial market it offers.The overwhelming response from investors resulted in a 33-times oversubscribed offering, translating into orders totaling $12 billion. The retail portion of the offering experienced an even more astonishing over-subscription rate of 180x.Munaf Ali, Co-Founder & Group MD of Phoenix, sees this milestone not merely as a listing event but as a profound declaration of the Middle East’s ascendance in the global tech and blockchain landscape. He attributes the success of Phoenix’s debut to a burgeoning appetite for financial innovations in the Middle East, underscoring the growing interest in exposure to the cryptocurrency sector among investors in the region.Mining to AI pivotPhoenix’s debut on the ADX occurs at a time when other publicly listed companies in the cryptocurrency sector are reorienting their focus from mining digital currencies to supporting the computational needs of the artificial intelligence (AI) industry. In 2022, the sector generated revenues of $6 billion, a slight dip from the record-breaking year of 2021.Industry analysts, including JPMorgan, posit that the high-performance computing (HPC) sector in AI could prove more profitable than Bitcoin mining. This strategic shift is evident in the rebranding of well-known Bitcoin mining entities such as Riot Blockchain (now Riot Platform) and Hive Blockchain Technologies (now Hive Digital Technologies), emphasizing their diversification efforts.Phoenix, acknowledging the potential of the AI-focused sector, believes it could complement its existing operations and contribute to future growth, aligning with JPMorgan’s forecasts regarding the profitability of HPC in the AI industry.

Venture Smart Financial Holdings Ltd. (VSFG), a Hong Kong-based financial services firm, is strategically positioning itself to enter the growing cryptocurrency exchange-traded fund (ETF) market, with its latest reveal being an interest in launching a spot ETH ETF in Q2.Photo by Michael Förtsch on UnsplashIn a recent interview with The Block, VSFG Chairman Lawrence Chu revealed the company's plans to apply for a spot ether ETF in Hong Kong. Executing on that plan is contingent upon the successful launch and approval of its spot bitcoin ETF. Q1 launch for bitcoin ETFLast month, the firm disclosed that it is gearing up for a spot bitcoin ETF launch within the first quarter of this year. VSFG was the first to reveal such an intention within the ETF space in Hong Kong. However, competition is already starting to bubble, as subsequently, Chinese asset manager Harvest Fund announced that it has gone one better and actually filed an application for a spot bitcoin ETF product in the Chinese autonomous territory. Chu shared insights into the firm's current status, mentioning that VSFG is in the final phase of preparing its application for a spot bitcoin ETF to be submitted to the Hong Kong Securities and Futures Commission. He emphasized the rigorous regulatory discussions that precede such submissions in Hong Kong, characterizing the imminent application as being in the advanced stages, stating, “Submission [for application] is almost like when you're 95% there.” Chu acknowledged the importance of ongoing conversations with regulators, expressing readiness by stating, “but that really depends on the conversation we have with the regulator. We will be ready.” Competitive spotlight on ETF feesHighlighting the evolving landscape in Hong Kong, Chu noted that nearly 10 fund companies are exploring the launch of potential spot crypto ETFs in the city. That call echoes similar comments made recently by Livio Weng, CEO of digital assets firm HashKey. The prospect of a potential fee war among asset managers was also discussed, drawing parallels with developments observed in the U.S. bitcoin ETF market. That seems likely, given that downward pressure on spot bitcoin ETF fees in the United States has also spread to Europe where Invesco and WisdomTree have cut fees by 60% on similar products. Global ether ETPsWhile commentators such as Standard Chartered Bank speculate on the likely approval of spot ether ETF products in the U.S. by May and VSFG indicates a potential Q2 launch in Hong Kong, there are already a number of similar products out in the wild around the world. According to data compiled by crypto data aggregator platform CoinGecko, the top 10 ether funds account for $5.5 billion in value. Among them is the XBT Provider ether exchange-traded product (ETP), the world’s first Ethereum-based security made available on a regulated exchange, namely Nasdaq Stockholm in Sweden, by crypto ETP specialist CoinShares. While the race is on in Hong Kong to launch crypto ETFs, on an international basis, competition is heating up as various global fintech hubs look to kindle what is likely to make up a significant part of the ETF sector pie in the years to come.

OKX and Bybit Exclude Sanctioned Russian Banks from P2P ServicesIn response to the mounting pressure on crypto firms to improve general compliance standards, prominent digital asset exchanges OKX and Bybit, based in the Seychelles and Dubai, have decided to delist sanctioned Russian banks from their peer-to-peer (P2P) services.Photo by Eduardo Soares on UnsplashThe move by the two exchange platforms, brought to light by Russian media reports, comes just days after Binance had done the same.Tinkoff Bank and Sberbank, two significant Russian financial institutions, have been expunged from the P2P platforms of OKX and Bybit. This effectively removes the option for Russian crypto users to exchange their assets for fiat through these banks. The decision sees the exchanges fall into line with Western sanctions imposed on the banks due to Russia’s actions in Ukraine.Enforcement difficultiesWhile the removal of these banks from the platforms is a significant step, the nature of P2P transactions introduces complexities in enforcing such bans comprehensively. Reports indicate that certain users are still engaging in P2P transactions with these banks through private channels, showcasing the challenges in regulating this decentralized method of exchange.In the case of OKX, at the time of publication, the platform still allows Russian users to receive fiat through accounts held with the Russian Standard Bank and the Russian branch of Raiffeisen Bank.This action aligns OKX and Bybit with Binance, which faced a similar scenario last week. Binance came under scrutiny when it continued to list the sanctioned banks as part of its payment methods. Following a report by The Wall Street Journal, Binance eventually removed the banks from its platform.Binance’s compliance effortsA spokesperson from Binance conveyed that while the banks have been delisted, the company remains committed to ensuring compliance by continuously updating its systems.“We regularly update our systems to ensure compliance with local and global regulatory standards,” they said. “When gaps are pointed out to us, we seek to address and remediate them as soon as possible.”Despite this stance and the latest action it has taken, users on Binance’s P2P platform are still posting ads for the sale of crypto using the “green bank,” referring to the sanctioned banks, as the preferred method of payment.Western-imposed sanctions have led to significant economic challenges in Russia, pushing individuals and institutions towards cryptocurrencies as a potential solution. In a country that has previously banned private cryptocurrencies, the attraction of decentralized digital assets has grown stronger as a means to break through the sanctions-induced financial stranglehold.Sanctions impactReports from Russian financial institutions reveal dramatic declines in profits, some as high as 90%, as they find themselves cut off from the global payments network SWIFT. Tinkoff Bank, for instance, reported a substantial decline of 67% in the second quarter of 2022, attributing the drop to escalating global tensions.In April, the Bank of Russia introduced a bill that could potentially allow cryptocurrencies to be used in international trade, a measure aimed at mitigating the impact of sanctions. While this could potentially open doors for cross-border transactions involving cryptocurrencies, the restrictions on local transactions remain intact.