First spot bitcoin ETF filed in Hong Kong

Chinese Subsidiary of DBS Bank Launches e-CNY Product OfferingDBS Bank China, a cryptocurrency-friendly bank and subsidiary of the Singaporean multinational financial services firm DBS, has introduced a new solution for its customers in mainland China, facilitating transactions with the digital yuan.The bank has officially launched the digital yuan or e-CNY merchant solution, allowing businesses in mainland China to receive payments in the central bank digital currency (CBDC). The announcement of the new service offering was made via a press release published to the website of the parent company on Wednesday.Photo by Hanny Naibaho on Unsplashe-CNY settlementWith this new service, DBS clients in mainland China can receive the e-CNY and have it automatically settled into their CNY bank deposit accounts. DBS refers to this as a “merchant collection solution,” where the merchant collects the final amount in CNY directly into their bank deposit account. The solution aims to streamline the process by eliminating manual settlement procedures.Enabling CBDC functionalityThis innovative tool offers several advantages. It allows businesses to collect CBDC without the need for manual settlement processes. Moreover, the e-CNY’s capabilities enable users to receive payments in regions with limited internet connectivity, ensuring broader accessibility. The solution also provides reconciliation through consolidated merchant reports, with detailed e-CNY transactions available on DBS’ digital platform for business banking.The CEO of DBS Bank China, Ginger Cheng, announced that the first e-CNY transaction using the new solution has been successfully completed, involving a catering company in Shenzhen. Cheng emphasized that integrating a CBDC collection and settlement method into clients’ existing payment systems would position their businesses for a digital future where e-CNY becomes increasingly prevalent among Chinese consumers. She expressed the bank’s commitment to enhancing user experience and supporting China’s financial market innovation.Adoption pushChina has made substantial progress in promoting and expanding the digital yuan since its launch in 2019. The country’s central bank reported that there were 13.6 billion e-CNY in circulation, equivalent to approximately $2 billion, by the end of 2022.The digital yuan is currently accepted in 26 cities and 17 provinces across China, with further adoption expected as the program gradually expands to more regions. In recent days, another measure was taken to bring about everyday use of the digital yuan when the city of Jinan enabled use of the currency across its public transport system.DBS Bank has become actively involved in the digital assets space. In 2020, the bank launched cryptocurrency trading and custody services for institutional clients. In April of this year, it extended crypto trading services to its premier customers. The bank has also participated in various government-related blockchain initiatives in Singapore, including Project Orchid, Project Guardian, and Project Ubin.DBS is not the first foreign banking entity to collaborate with the Chinese relative to the digital yuan. Earlier this year, France’s BNP Paribas partnered with the Bank of China to promote the digital yuan to its corporate clients. The Chinese are clearly making every effort to promote use of the digital currency inside and outside of Chinese territory.

South Korean credit card companies are preparing to develop a stablecoin-powered payment system, Yonhap Infomax reported. The Credit Finance Association (CREFIA)—a nonprofit comprising credit card firms, leasing companies, and venture capitalists—plans to launch a second task force this month. The group aims to prepare for the anticipated regulatory framework governing stablecoins.Photo by rupixen on UnsplashStablecoin cards, settlement under reviewThe task force will discuss building a comprehensive system covering the entire transaction process, from stablecoin-based card payments to merchant settlements. The agenda also includes testing stablecoin-powered debit cards, which would allow users to pay at standard card terminals just as they would with traditional cards. This second task force will include nine credit card companies—including Samsung Card, Shinhan Card, and KB Kookmin Card—that participated in the initial task force formed last July. At that time, CREFIA and the participating firms held weekly meetings on regulatory and technological issues while gathering input from external advisors. Through that process, the group examined whether credit card companies could legally engage in stablecoin businesses under the current Specialized Credit Finance Business Act. They also jointly filed 30 stablecoin-related trademark applications and reportedly sought consultations with financial authorities on securing payment and settlement accounts for stablecoin transactions. This push into the sector comes despite lingering uncertainty regarding the government’s phase-2 virtual asset legislation. Progress on the draft has been delayed due to disagreements between financial and monetary authorities. The Bank of Korea favors a model where only consortia with majority bank ownership can issue stablecoins. By contrast, the Financial Services Commission opposes setting a specific bank-ownership threshold in law to allow participation by non-bank firms. The forthcoming legislation is expected to comprehensively regulate stablecoins, including their issuance, distribution, and custody, leaving companies to await clearer guidance. Despite the legislative delays, the credit card companies are positioning themselves to move quickly once the rules are finalized. Investor sentiment shifts to U.S. equitiesWhile traditional financial firms explore digital assets to expand their business, South Korean investors are prioritizing U.S. equities over cryptocurrencies for this year. According to a weekly survey of 2,000 respondents conducted by CoinNess and Cratos, 30.8% said they plan to focus on U.S. stocks. Cryptocurrencies ranked second at 25.5%, followed by gold and silver (18.3%), Korean stocks (12.8%), and cash (12.7%). Market sentiment toward Bitcoin also appears cautious. 22.7% of respondents said they expect Bitcoin to rise or surge this week, down from 28.9% the previous week. Meanwhile, 38.3% predicted the price would move sideways, while 39% expected a fall or plunge. Asked about the broader crypto market, 50.8% of respondents said fear or extreme fear was prevailing. 

Hong Kong Adapts Crypto Regulations to Broaden Market AccessHong Kong’s financial regulator has taken a further regulatory step in its evolving stance on cryptocurrency trading, widening the scope of retail access to digital assets through intermediaries.Photo by Chapman Chow on UnsplashResponding to growing demandThe move follows a surge in interest in spot Bitcoin exchange-traded funds (ETFs) and recent investigations into the unlicensed operations of the JPEX exchange. In a circular published by the Securities and Futures Commission (SFC) on Friday, the regulator explained that the policy shift was prompted by changing market dynamics and growing inquiries from the industry.The new guidelines aim to extend access to a broader clientele and facilitate the direct deposit and withdrawal of virtual assets through intermediaries, all while maintaining stringent safeguards. The circular states:”The policy is updated in light of the latest market developments and enquiries from the industry seeking to further expand retail access through intermediaries and to allow investors to directly deposit and withdraw virtual assets to/from intermediaries with appropriate safeguards.”Cautionary notesDespite this welcome expansion, there are a couple of cautionary notes included within the circular. Hong Kong remains circumspect about overseas virtual asset (VA) products, deeming them “complex” and, as a result, riskier. The circular emphasizes that “VA-related products considered complex should only be offered to professional investors.” For instance, an overseas VA non-derivative ETF is likely to fall into this category.The other condition pertains to potential clients, who will be required to undergo a one-off test to assess their knowledge of investing and ensure they possess the financial wherewithal to manage the risks associated with virtual asset trading. Furthermore, intermediaries must furnish clients with comprehensive risk disclosure statements.The regulator also places an onus on the intermediary to set a limit for each retail client, to ensure that a retail client’s exposure to virtual assets is reasonable. The circular outlines that deposit and withdrawal of client funds should only happen through the use of segregated funding accounts on an SFC-licensed platform.Crypto sector aspirationsThis shift in regulation underscores Hong Kong’s ongoing aspirations to solidify its position as a hub for virtual assets. The territory embarked on a new regulatory regime in June, enabling applications for crypto trading platform licenses. By August, the first batch of licenses was granted, allowing exchanges to cater to retail customers. This marked a notable turnaround from Hong Kong’s prior 18 months of skepticism and hostility toward the cryptocurrency sector.The timing of these regulatory changes coincides with surging interest in spot Bitcoin ETFs, with JPMorgan even suggesting that approval in the US could materialize within months. This shift in regulatory perspective in Hong Kong also follows the investigation and accusations made against the JPEX exchange for conducting unlicensed operations, leading to arrests and the promise to disclose details of licensed applicants. The JPEX scandal has also dampened public confidence in crypto in Hong Kong more recently.Hong Kong is adapting its crypto regulations to be more inclusive while maintaining a cautious approach toward complex overseas virtual asset products. This regulatory shift underscores the region’s determination to foster its status as a leading hub for virtual assets, following a change of heart from its previous stance of skepticism and reluctance towards the crypto industry.