Crypto community optimism across Asia following Trump’s election victory

HKMA reflects on retail CBDC pilot phase one completionHong Kong’s Monetary Authority (HKMA), the Chinese territory’s central bank, recently released a report following the completion of phase one of its central bank digital currency (CBDC) pilot, highlighting the potential benefits of a retail CBDC, commonly referred to as e-HKD (digital Hong Kong dollar).Photo by Ruslan Bardash on UnsplashUndecided on full implementationIn a press release published by the HKMA on Monday, the authority clarified that the report underscores that while a retail CBDC could bring value to the payments ecosystem and unlock new economic transaction possibilities, in-depth investigation and evaluation are essential before considering large-scale implementation.At this stage, Hong Kong’s central bank has not committed to introducing an e-HKD, but the report sheds light on the prospects and challenges associated with such a move. The region has been signaling its intent to position itself as a hub for virtual assets, evident in the regulatory framework introduced in June and the granting of licenses to crypto trading platforms in August.Project e-HKD, initiated by the HKMA in 2021, is a significant step toward assessing the feasibility of a digital Hong Kong dollar. The pilot program was launched in November 2022 as part of the HKMA's “Fintech 2025” strategy. However, the HKMA remains cautious, as reflected in the comments of HKMA CEO Eddie Yue earlier this month. Yue told the South China Morning Post that the central bank is still waiting for greater clarity when it comes to the technological, legal and societal aspects of full implementation.Three core attributes identifiedThe report identifies three primary areas where an e-HKD could provide value: programmability, tokenization and atomic settlement. These attributes could lead to faster, more cost-efficient and more inclusive transactions. However, it’s essential to note that the 14 pilot programs conducted with 16 participating firms during phase one were executed on a small scale within a controlled environment.The phase one review highlights that the true potential and prerequisites for implementing an e-HKD on a larger scale depend on market developments and further investigation. It acknowledges that minor issues identified during the pilot phase could become more prominent or even unacceptable in a production environment.Gearing up for phase twoPhase one of the pilot program delved into various aspects, including full-fledged payments, offline payments, tokenized deposits, programmable payments and the settlement of Web3 transactions and tokenized assets. Hong Kong is now gearing up for phase two of the pilot, with plans to explore new use cases for an e-HKD and engage in more focused pilot initiatives. The goal is to understand how the e-HKD can facilitate innovative methods of transacting goods and services while maintaining financial stability.The HKMA’s stance on a retail CBDC places it at the center of a global debate. While the U.S. remains undecided on the issue, with the topic becoming contentious in presidential elections, India has forged ahead with plans for a retail CBDC. Meanwhile, Thailand’s central bank commenced a pilot project for a retail CBDC earlier this year.

In a recent survey conducted by personal finance management solutions provider Seedly, together with global crypto exchange Coinbase, it was discovered that over 56% of Singaporeans currently own cryptocurrency, with nearly half expressing bullish sentiments regarding its future prospects over the 12 months of this year.Photo by Zhu Hongzhi on UnsplashFuture of financeTitled "The Pulse of Crypto Singapore Report," the study surveyed 2,006 Singaporean adults across various age groups and household incomes from October to November 2023. Survey participants were deemed to be “finance forward Singapore-based adults who have a strong interest in personal finance and investments.” It determined that 56% of respondents believe cryptocurrency represents the future of finance. Participants cited short-term profitability, long-term capital appreciation and portfolio diversification as key factors driving their optimism. The report’s authors speculate that this optimism is also due to the city-state’s approach to digital assets and the regulatory framework that has been put in place by the Monetary Authority of Singapore (MAS). Yeap Ming Feng, head of marketing at Seedly, also attributed the optimism towards crypto to Singapore's vibrant Web3 ecosystem, which fosters collaboration among builders, investors and users. When selecting a crypto exchange for trading, crypto owners prioritize security, low fees, regulation and ease of use. Coinbase, one of the report’s facilitators, doubled down on its operations in Singapore in 2023, acquiring a Major Payment Institution (MPI) license from the Singaporean regulator, enabling it to expand its product offering. It extended its offering further last month when it launched USD transfers via SWIFT. Notably, the survey identified staking as the most prevalent use case for cryptocurrency in the city-state.  Non-crypto user concernsHowever, the study unveiled that non-crypto users harbor concerns about market volatility (57%), high risk (53%) and the absence of regulation (45%) in the crypto space. Singapore was disproportionately affected by the demise of a number of crypto platforms in 2022. An outsize number of citizens were caught up in the FTX collapse having utilized that crypto exchange instead of Binance, which had been prohibited from trading within the territory. Singapore was also home to failed crypto lenders such as Vauld and Hodlnaut, failed crypto hedge fund Three Arrows Capital (3AC) and UST stablecoin developer Terraform Labs. These high-profile crypto failures so close to home are unlikely to have put crypto skeptics at ease in Singapore where the consideration of risk relative to digital assets is concerned. That said, MAS is actively working towards implementing additional rules to safeguard Singaporean investors. Despite these reservations, the survey underscores a growing interest in and adoption of cryptocurrencies among the financially aware population in Singapore. This trend aligns with Singapore's commitment to remaining a leader in Asia for crypto readiness and supports the city-state's vision of becoming a global digital asset hub. The study also highlighted the progress that the crypto market in general made recently. Over the course of 2023, crypto market capitalization has gained momentum, from $829 billion at the outset of the year, culminating at $1.72 trillion towards the end of the year, according to a report by CoinGekco.

Hong Kong regulator, the Securities and Futures Commission (SFC), has established guidelines for crypto staking service providers. That’s according to a statement published by the SFC to its website on April 7. The guidance is aimed at licensed virtual asset trading platforms (VATPs) and SFC-authorized funds with exposure to digital assets.Photo by Markus Winkler on UnsplashExpanding service offeringThe regulator points out that the guidance on staking falls in line with its recently announced “ASPIRe” roadmap, which is geared towards ensuring that the Chinese autonomous territory remains relevant in its efforts to maintain its status as a global hub for crypto businesses. Expanding product and service offerings within the crypto sector was one of the five pillars of that plan. Smoothing the way for the offering of staking works towards fulfilling that aspect of the ASPIRe plan. Written approvalIn this guidance, the SFC sets out that licensed service providers must obtain written approval from the regulator before any such product can be offered to investors in Hong Kong. That stipulation applies to both VATPs and authorized funds with digital asset exposure. Additionally, VATPs must retain control over staked assets, with no delegation in the custody of such assets to third parties permitted. In the case of authorized funds that include crypto assets, they must stake virtual asset holdings through licensed VATPs and other authorized institutions. Required disclosuresThe regulator has also stipulated that certain disclosures must be made by licensed exchanges to potential customers in respect of staking products. These include the disclosure of all associated risks, full transparency with regard to fees, minimum lock-up periods and custodial arrangements. Commenting on the provision of this guidance, SFC CEO Julia Leung said that the provision of a greater range of regulated services and products is crucial in order to sustain continued growth of Hong Kong’s virtual asset ecosystem. However, she added that any broadening of the range of services offered “must be done in a regulated environment where the safety of client virtual assets continues to be front and centre of the compliance framework for offering such service.”   The SFC outlined that it recognizes “the potential benefits of staking in enhancing the security of blockchain networks and allowing investors to earn yields on virtual assets within a regulated market environment.” The authorities in Hong Kong are not the only ones who recognize the benefits that the incorporation of staking within crypto investment products can bring. Last month, Robert Mitchnick, head of digital assets at the world’s largest asset manager, BlackRock, told the Digital Assets Summit in New York that Ether ETFs would benefit from the addition of staking.  Mitchnick suggested that the current inability to earn a staking yield within such products is a key limitation. He outlined that such a change is dependent upon relevant regulatory changes being implemented in the U.S. A more crypto-friendly climate in the U.S. since U.S. President Donald Trump took office has resulted in various lawsuits being dropped against companies like Coinbase related to the staking services that had been offered. A number of U.S. Ether ETF issuers, including Franklin Templeton, Grayscale and Bitwise, have put forward proposals to the Securities and Exchange Commission (SEC) to have staking included in these products.