Japanese Crypto Firm Pafin to Introduce DeFi Asset Management Platform

Midas Investments Founder Launches Locus FinanceIakov Levin, the founder of the recently failed Dubai-headquartered custodial crypto investment platform Midas Investments, has unveiled his latest project, Locus Finance, a DeFi platform.Photo by Shubham’s Web3 on UnsplashStarting overThat’s according to a recent report published by The Block. Locus Finance’s main focus lies in providing connectivity with high-yield tokenized vaults. In its initial stages, the company will introduce three yield-generating products, centered around Ethereum staking, DeFi expansion, and Arbitrum trading.Levin believes that investors are not interested in the intricacies of blockchains, protocols, or daily portfolio management. This is where vaults play a crucial role, catering to the retail yield market and generating profits for retail investors. In a statement Levin said:“Investors don’t want to worry about blockchains, protocols, transaction costs, and daily portfolio management. They need specific exposure in a set-and-forget style. Vaults represent a unique approach necessary for maturing the retail yield market, allowing for optimal wealth generation for retail investors.”With Locus Finance, Levin aims to learn from past experiences and provide a platform that meets the demands of retail investors seeking a more simplified and profitable DeFi experience. The company’s approach centers around yield generation and a seamless user experience, allowing users to focus on their investments without being bogged down by complex technicalities.Midas downfallMidas Investments, established in 2018, had seen significant success as a custodial crypto investment platform which offered yields on a range of digital assets. It managed assets worth over $250 million at its peak in 2021. However, the volatile market conditions in 2022 led to losses exceeding $50 million, forcing the company to close its doors in December 2022.The loss incurred accounted for 20% of the $250 million assets under management (AUM). The platform’s demise followed the collapse of prominent projects like Terra, FTX, and Celsius earlier in 2022. Those collapses prompted Midas Investments users to withdraw over 60% of their assets. That run on the platform rendered its fixed yield model unsustainable.Midas faced total liabilities of $115 million in Bitcoin, ETH, and stablecoins, with assets valued at $51.7 million. At the time of the platform’s collapse, Levin expressed his optimism about future plans. He disclosed plans to introduce an offering that would feature new investment strategies. Fast forward seven months and it appears that those plans have taken shape in the form of this newly-launched Locus Finance platform.However, Locus Finance’s success will be closely monitored in light of the challenges faced by its predecessor. A former Midas Investments customer took to Reddit three months ago to warn people to stay away from the new platform once launched.At that time, Midas Investments management had advised customers of its intention to start over via Lotus Finance. “Users lost tons of money and Midas got away with the bags. . . . I’d recommend staying as far away from them as possible,” the former customer warned.

Hong Kong regulators consider opening up crypto ETFs to retailHong Kong regulators are now exploring the possibility of allowing retail investors to participate in spot crypto exchange-traded funds (ETFs).The CEO of Hong Kong’s Securities and Futures Commission (SFC), Julia Leung, was cited by Bloomberg on Sunday as having indicated that provided that the necessary regulatory approvals and checks are in place, the regulator may be open to the notion of retail participation where spot crypto ETFs are concerned. Leung emphasized the regulator’s openness to innovative technology that enhances efficiency as long as it addresses potential new risks.Photo by Markus Winkler on Pixabay‘Happy to give it a try’She stated: “We welcome proposals using innovative technology that boosts efficiency and customer experience. We’re happy to give it a try as long as new risks are addressed. Our approach is consistent regardless of the asset.”While both the United States and Hong Kong currently permit futures-based cryptocurrency exchange-traded funds (ETFs), the adoption of such instruments has been relatively modest in comparison to the broader fund industry.In Hong Kong, there are currently ETF listings for products like Samsung Bitcoin Futures Active, CSOP Bitcoin Futures and CSOP Ether Futures, with a total combined asset value of approximately $65 million. In June, Hong Kong’s largest ETF manager, Hang Seng, suggested that it too was considering a crypto product offering.In accordance with the SFC’s digital asset regulations, individual investors already have the opportunity to trade prominent cryptocurrencies like Bitcoin and Ether on licensed cryptocurrency exchanges since June 1. Presently, BC Technology Group Ltd.’s OSL and HashKey Exchange are the only platforms in Hong Kong with permits for cryptocurrency trading. Additionally, there are expectations that mandatory regulations concerning stablecoins will be introduced over the course of the next year.Prioritizing investor protectionLeung expressed the regulator’s cautious approach, stating:“As the crypto ecosystem evolves step-by-step to the point where we’re comfortable, then we’re happy to open up more access to the wider investing public.”Notably, Hong Kong also recently unveiled its Web3 plans, highlighting its commitment to embracing blockchain and decentralized technologies.Hong Kong introduced a specialized regulatory framework for virtual assets in June which are designed to attract businesses while prioritizing investor protection. That need to protect consumers has been underscored recently by the alleged fraud that has subsequently been uncovered involving HK$1.6 billion ($204 million) at the unlicensed JPEX cryptocurrency exchange in the city.Market reactionThe significance of such a move isn’t lost on crypto market participants. Taking to X, one wrote: “Seismic shift. Hong Kong’s play could reshape the Asian crypto landscape. #Bitcoin ETFs? A strategic move to anchor HK as the digital nexus of Asia.” Another claimed that this “might redefine the crypto landscape and fuel the next bull market.”A report published by the Hong Kong Stock Exchange in April found that crypto ETFs have the potential to play a significant part in the next phase of digital asset innovation in Asia.Leung emphasized the importance of a strong and comprehensive regulatory structure, highlighting the SFC's efforts to enhance transparency in processing license applications for virtual asset exchanges.Moreover, the Hong Kong Monetary Authority (HKMA), the Chinese autonomous territory’s central bank, is actively exploring the possibility of offering guidance to banks regarding the provision of digital asset custodial services. These services are considered vital for nurturing the growth of a digital asset ecosystem and ensuring investor security.

Following December's release of proposed fiat-referenced stablecoin regulations, the Hong Kong Monetary Authority (HKMA) has progressed further with the introduction of a stablecoin sandbox.Photo by Nextvoyage on PexelsFormulating a regulatory regimeThe regulatory sandbox, announced through a press release published to the regulator’s website on March 12, encompasses stablecoin currencies beyond the Hong Kong dollar, although the HKMA refrained from specifying particular currencies. Eddie Yue, CEO of the HKMA, emphasized the sandbox's role as a platform for constructive dialogue between the regulatory authority and the industry. Yue stated:"The sandbox arrangement serves as an effective channel for the HKMA and the industry to exchange views on the proposed regulatory regime.”Yue further noted that such engagement is pivotal for formulating regulatory requirements conducive to the sustainable and responsible growth of the stablecoin issuance business. The stablecoin sandbox finds its digital footprint within the International Financial Centre on the HKMA's website. The documentation accompanying the sandbox outlines several key requirements for potential participants. These include demonstrating genuine interest and a feasible plan for issuing fiat-referenced stablecoins in Hong Kong, as well as a concrete strategy for engagement within the sandbox. Additionally, applicants must exhibit a reasonable prospect of compliance with the proposed regulatory framework. Minimum capital requirementsOne notable regulation proposed stipulates that issuers must be Hong Kong-based entities with a minimum capital requirement of HK$25 million ($3.2 million) or 2% of the stablecoin issuance, whichever is higher. The HKMA remains vigilant regarding public announcements by sandbox participants, ensuring that such declarations do not misconstrue endorsement or accreditation from the regulatory authority. In late January, reports suggested discussions between Harvest Global Investment, RD Technologies, Venture Smart Financial Holdings and the HKMA regarding their potential entry into the sandbox. Harvest Global Investment, boasting over $200 billion in assets under management, signifies a significant player in this evolving digital assets space.RD Technologies took to the X social media platform to publicize its approval of the HKMA’s stablecoin sandbox. It also availed of the opportunity to outline that it’s in the process of launching a Hong Kong dollar (HKD)-based stablecoin, which will be known by the short-code HKDR.Hong Kong-based fintech firm AnchorX also chimed in, stating that the sandbox is “a pivotal step forward for the industry, enabling informed dialogue and collaboration between regulators and fintech innovators.” Like RD Technologies, AnchorX is also looking to get involved in the stablecoin business, having developed the AxHKD Hong Kong dollar-based stablecoin, which it is currently beta testing, in collaboration with Conflux Network. Juan Leon, crypto analyst with Bitwise Asset Management, suggested that the move is a great initiative, while calling on the U.S. Federal Reserve Chair Jerome Powell to follow Hong Kong’s example. On the tokenization front, Hong Kong made headlines in 2023 with the issuance of the world's largest native digital bond — a green bond exceeding $750 million. Late last year, it also proposed regulations relative to tokenization of real-world assets.Guidance provided to banks on tokenization, coupled with plans for forthcoming legislation, further solidifies Hong Kong's position as a trailblazer in the realm of digital finance.