KuCoin invests in cross-chain inscription protocol

First Digital to Introduce USD-Backed USD StablecoinFirst Digital Trust, a Hong Kong-based qualified custodian and trust company, is set to introduce a new stablecoin called “First Digital USD,” with the short-code $FDUSD. This stablecoin will be pegged to the US dollar but regulated within Asia.Photo by Alexander Grey on UnsplashIntroducing $FDUSDAccording to First Digital, $FDUSD will be backed by one US dollar or an asset of equivalent fair value on a one-to-one basis. The reserves supporting FDUSD will be held in segregated accounts at institutions in Asia.$FDUSD aims to provide stability and will be programmable, enabling the execution of financial contracts, escrow services, and insurance without the need for intermediaries. In a statement published on Thursday, First Digital emphasized its commitment to full compliance with current and future laws and regulations. The company also expressed its intention to participate in shaping the regulatory landscape for $FDUSD and First Digital itself.The announcement of $FDUSD is particularly significant in light of the new “Guidelines for Virtual Asset Trading Platform Operators” set to take effect in Hong Kong on June 1. These guidelines outline rules for safe asset custody, client asset segregation, conflict of interest avoidance, and cybersecurity standards, as mandated by Hong Kong’s Securities and Futures Commission (SFC).Hosted on BNB Smart ChainFDUSD will operate on the BNB Smart Chain and will be issued by First Digital Labs, a subsidiary of First Digital Trust, a regulated digital asset custodian under the Hong Kong Trustee Ordinance. The law ensures that $FDUSD will be fully backed by US dollar reserves or highly liquid, high-quality assets held in regulated Asian financial institutions, with no commingling with other assets of First Digital.Vincent Chok, CEO of First Digital, emphasized the company’s commitment to regulatory compliance and setting a new standard for legitimacy in the industry. First Digital intends to comply with all applicable laws and regulations and actively contribute to the shaping of regulatory regimes for $FDUSD and First Digital in the future.The $FDUSD stablecoin will be redeemable for US dollars, providing users with a reliable bridge between the digital and fiat currencies.Biden administration's own goalAs regulatory uncertainty persists in the United States, some industry players are expressing concerns about losing the country’s leadership position in the crypto sector. They warn that the industry may be offshore to more favorable jurisdictions.News of First Digital Trust’s US dollar stablecoin intentions brought scathing criticism of US policy from US commentators within the crypto space. Austin Campbell, Managing Partner at Zero Knowledge Consulting, a firm that advises on crypto payments and stablecoins, stated that the US government and US regulators had created a paradigm where they now have less control over distribution and regulation while the product they were suppressing continues to exist and scales elsewhere.Nic Carter, Partner at venture capital firm Castle Island Ventures, wrote that “the wise sages in US government took one look at the onshore registered stablecoin market and decided they’d much prefer unaccountable offshore crypto-eurodollars.”Macro-economist Luke Gromen described this consequence of US policy as the “monetary equivalent of deciding they would prefer making their goods in China rather than paying US workers and deal with union labor.” Meanwhile, Caitlin Long, Founder and CEO of digital asset-focused Custodia Bank, suggested that US federal regulators “thought they could kill USD stablecoins” but that “they miscalculated.”

The CEO of Hong Kong’s central banking institution, the Hong Kong Monetary Authority (HKMA), has outlined that the introduction of the Chinese autonomous territory’s Stablecoins Ordinance on Aug. 1 will criminalize the unlicensed promotion of stablecoins. In an article published on the HKMA website on July 23, CEO Eddie Yue stated:”According to the Ordinance, starting from the commencement date, it will be illegal for any person to offer any unlicensed fiat-referenced stablecoin (FRS) to a retail investor, or actively market the issue of unlicensed FRS to the public of Hong Kong.”Photo by Manson Yim on UnsplashSubject to fine & imprisonmentIf an individual is found to have promoted an unlicensed stablecoin, they will be subject to a fine of HK$50,000 ($6,400) and imprisonment of up to six months. Yue warned the public to remain vigilant and to exercise caution if they come across marketing material related to an unlicensed stablecoin offering. The HKMA CEO is conscious of the fact that stablecoins are an emerging payment instrument that is being gradually integrated into the mainstream financial system. However, he feels that some discussion on stablecoins has been overly idealistic. Yue outlined that interactions with the few dozen institutions that have reached out to the HKMA with regard to stablecoin licensing have led him to believe that “many proposals remain conceptual.” He claimed that many of the institutions putting forward these proposals “fail to put together viable and concrete plans as well as implementation roadmaps, let alone demonstrate their awareness of risks and competence in managing them.” Limited license issuanceYue believes that in many instances, these institutions would be better served to collaborate with stablecoin issuers rather than becoming stablecoin issuers themselves. It’s on that basis that the HKMA will only grant a handful of stablecoin issuer licenses. Bloomberg reported that in the region of 50 companies have been seeking to apply for stablecoin licensing in the city, with the HKMA likely to approve around 10 licenses. It referenced particular interest from Chinese brokerages and a related move recently by asset management firm ChinaAMC in launching a yuan-denominated tokenized money market fund that facilitates subscriptions via stablecoins.  Significant Chinese businesses such as JD.com and Ant Group have been preparing to acquire stablecoin licensing in Hong Kong. Chinese stablecoin urgencyIn its Asia Morning Briefing, CoinDesk pointed out that in 2021, the Chinese authorities had been critical of the development of global stablecoins, preferring instead to concentrate on their own central bank digital currency (CBDC), the digital yuan. However, it asserts that “Beijing’s caution on stablecoins is giving way to a sense of urgency.” Animoca Group President Evan Ayuang told the publication that China’s interest in stablecoins is on the rise. Ayuang asserted that actions taken by the Trump administration in the U.S. related to stablecoin policy are “pressuring China to act a lot faster.” Developments in Hong Kong are relevant in the context of China’s newfound interest in stablecoins. Lily King, chief operating officer (COO) at crypto custodian Cobo, stated recently that Hong Kong continues to be a testing ground for mainland China.  In keeping with that outlook, analysts at Morgan Stanley recently asserted that yuan-denominated stablecoin projects launched in Hong Kong would potentially serve as a developmental stablecoin sandbox for mainland China.

OKX Ventures, the investment wing of the Seychelles-based cryptocurrency exchange OKX, has disclosed a strategic A-round investment in Polyhedra Network. Details of the investment have been outlined through a press release published via PRNewswire on Tuesday. Specializing in the creation of Web3 infrastructure, Polyhedra Network places a premium on interoperability, scalability and privacy, leveraging advanced zero-knowledge (ZK) proof technology.Photo by Precondo CA on UnsplashInteroperability with privacyA ZK proof provides the ability for one party to cryptographically prove to another party that it possesses a certain piece of information without having to reveal the actual underlying information to the other party. Central to Polyhedra Network's product offering is its zkBridge protocol, a system facilitating trustless and efficient cross-chain infrastructure for both layer-1 and layer-2 interoperability. The protocol empowers the receiving chain to verify specific state transitions on the sending chain. This approach ensures robust security without external assumptions, effectively reducing the costs associated with on-chain verification. Polyhedra Network made an initial impact in 2023 with the launch of the "zkBridge Mainnet Alpha." That product enabled interoperability over 20 layer-1 and layer-2 blockchains, including well-known networks such as Bitcoin, Ethereum, BNB Chain and Arbitrum. Distributed proof systemThe innovative strides of Polyhedra Network, which was founded in the United States by James Zhang, Tiancheng Xie and Nikhil Shah, continued in 2023 with the introduction of deVirgo, a novel distributed proof system expediting proof generation. The deVirgo protocol also incorporates recursive proofs which trim on-chain proof verification costs associated with zkBridge. Last month, Polyhedra Network unveiled its Bitcoin messaging protocol with zkBridge, ushering trustless interoperability into the Bitcoin ecosystem through the use of ZK-proof technology. Asian backingBy championing entrepreneurs contributing to the blockchain industry's advancement, OKX Ventures is helping to build innovative companies, bringing global resources and historical experience to the forefront of blockchain projects. It is one of many Asia-centric venture firms to do so. Polyhedra has secured backing from Hong Kong’s Animoca Brands and HashKey Group, Singapore’s UOB Venture Management, NGC Ventures, Signum Capital and Foresight Ventures, alongside KuCoin Ventures. In an initial funding round in February 2023, the UC Berkeley team attracted $10 million in funding. By April, a pre-Series A round had raised a further $15 million. Dora Yue, the founder of OKX Ventures, expressed their honor in participating in the investment in Polyhedra Network's interoperability infrastructure. Yue lauded the creativity demonstrated by Polyhedra Network's team in developing advanced ZK-proof mechanisms, emphasizing the balance achieved between ZK interoperability and scalability. OKX Ventures, with an initial capital commitment of $100 million, is committed to supporting Polyhedra Network's vision of seamlessly connecting the Web2 and Web3 worlds, aiming to attract a more extensive user base to the industry. As the investment arm of the global crypto exchange platform, it dedicates itself to exploring top-tier blockchain projects on a global scale. Its focus is on fostering cutting-edge blockchain technology innovation, aspiring to support the healthy development of the global blockchain space and investing in long-term structural value.