Hong Kong Setting High Bar on Crypto Rules

Upbit Operator Dunamu Assists Indebted Youths in Rebuilding Credit ScoresDunamu, the operator of South Korean cryptocurrency exchange Upbit, has announced an initiative aimed at helping indebted youths rebuild their credit scores. The company will accept applications from July 19 through August 20. Eligible individuals must be residents of Seoul, Gyeonggi-do, or Incheon, aged between 19 and 39, and have successfully completed debt workout arrangements.Photo by Towfiqu barbhuiya on UnsplashGiving backThe project, called Dunamu Next Dream, is part of the company’s efforts to give back to the community by using revenue generated from Luna Classic (LUNC) transaction fees. In September of last year, Dunamu committed to allocating the LUNC transaction fee profits of 239.13025970 BTC to investor protection. After consulting with an external advisory committee, the exchange operator decided to donate around 3 billion KRW ($2.3 million) to public organizations and utilize the remaining funds to provide financial and credit support.To implement the Dunamu Next Dream project, Dunamu entered into a memorandum of understanding (MOU) with the Credit Counseling and Recovery Service (CCRS) and the Social Solidarity Bank (SSB) in April.Two componentsThe project consists of two main components: financial consulting and emergency loans. The initial focus will be on financial consulting, which includes support for living expenses. The aim is to assist indebted youths in developing healthier financial habits. Financial experts will provide six sessions of financial consulting, addressing their recurring indebtedness and fostering financial independence. Additionally, each individual will be granted a living expense of 1.2 million KRW ($950) to ensure they can meet timely interest payments.Dunamu will collaborate with the CCRS and the SSB to conduct a comprehensive review of applicants and select 150 deserving beneficiaries. The selection process will involve thorough evaluation through paper screening and interviews, allowing applicants to demonstrate their dedication and financial responsibility.The second component of the project, emergency lending, will launch in September. It aims to provide interest-free loans of up to 2.5 million KRW to individuals facing immediate needs, such as medical fees.Dunamu CEO Lee Sirgoo highlighted the importance of this project, emphasizing the challenges faced by young people who are the future leaders of society. The economic struggles they encounter can have significant repercussions for society as a whole. Accumulating debts has made it difficult for young individuals to achieve financial stability and advance their careers. Lee stressed the need for public awareness regarding this issue, as it is crucial for young people to establish themselves promptly within society.

First ever cross-border settlement achieved for gold using e-CNYThe first ever cross-border settlement for precious metals using China’s central bank digital currency (CBDC), the digital yuan or e-CNY, has been successfully completed.Photo by Jingming Pan on UnsplashA year of e-CNY firstsIn October, Chinese state-owned media reported that the Shanghai Petroleum and Natural Gas Exchange (SHPGX) had been the venue for the first ever significant settlement of an oil contract using the e-CNY. Running along a commodities theme, on Wednesday a similar transaction was carried out once again with Shanghai being the venue, relative to the purchase of gold.A transaction valued at 100 million yuan ($14 million) was facilitated by the Bank of China’s Shanghai branch through the Shanghai Financial Exchange International Board. That’s according to reports from local Chinese media outlets.The Bank of China’s Shanghai branch, a key participant in the ongoing e-CNY pilot testing, orchestrated the transfer of e-CNY CBDC settlement received from overseas for the purchase of the gold. A spokesperson for the Bank of China highlighted the strategic significance of the transaction, stating:“The account will contribute financial strength to support Shanghai’s in-depth implementation of the free trade pilot zone promotion strategy and promote the quality and upgrading of the international trade center.”Oil, gold and iron oreThis achievement follows on from the Bank of China’s Hong Kong affiliate Bank of China (Hong Kong) (BOCHK) facilitating the import of iron ore to China through the e-CNY just last week. As part of that pilot trial, Baosteel Group, a customer of the Bank of China, purchased iron ore from Bao-Trans Enterprises.Further expanding its international partnerships, China signed a $400 million memorandum on CBDC cooperation with the United Arab Emirates on Dec. 1. The move underscores China’s commitment to fostering collaboration in the development and implementation of CBDCs on a global scale.Partnering with foreign banksThe Bank of China is actively collaborating with foreign institutions, including France’s BNP Paribas, to advance the development of the digital yuan CBDC.In July, Singaporean bank DBS Bank launched an e-CNY product for mainland China-based customers. Amid relentless moves to further the use of the digital currency, British banking giant Standard Chartered joined the advanced stages of pilot trials of the CBDC in November.Chinese President Xi Jinping, recognizing the pivotal role of CBDCs in cross-border trade, emphasized their importance during an address to the July 2023 Shanghai Cooperation Organisation (SCO) Summit. Subsequently, foreign banks have joined China’s ongoing CBDC trials, and Singapore announced its decision to allow Chinese tourists to utilize e-CNY for transactions within Singapore.In a related development, the official e-CNY app received an update on Tuesday. The latest version allows users to create an e-CNY wallet using their phone number, provides options to disable the wallet in case of phone loss and enables the resetting of passwords and private keys. Users can also link their personal bank accounts and debit cards to the e-CNY wallet for seamless in-wallet purchases.

Having made significant strides in undertaking testing of the digital yuan in recent times, Hong Kong is expanding its e-CNY pilot testing while at the same time crafting its own central bank digital currency (CBDC), dubbed the e-HKD.Photo by Simon Zhu on UnsplashIntegrating e-CNY with FPSDuring a recent budget speech Hong Kong’s Financial Secretary Paul Chan unveiled plans to empower Hong Kong residents to bolster their digital yuan wallets through the local “Faster Payment System” (FPS), marking another move forward in bolstering cross-border payment efficiency.FPS is a real-time payment settlement system which enables the user to complete payments across banks through the use of recipient mobile phone numbers and email addresses. The move dovetails with the Hong Kong Monetary Authority's (HKMA) successful completion of the inaugural phase of its e-HKD pilot, propelling it into the second phase. The e-HKD pilot is focusing on retail applications such as programmable payments, offline transactions and tokenized deposits. At the same time as the e-CNY garners momentum, the HKMA is progressing the e-HKD in terms of unlocking the full potential of CBDCs in everyday financial transactions. This consists of the exploration of retail applications in the initial phase, coupled with the transition towards more intricate functionalities in the subsequent phase, underscoring Hong Kong's intent towards driving ever greater CBDC innovation within the Chinese autonomous territory. Streamlining transactionsThe integration of the e-CNY with Hong Kong's FPS promises to streamline transactions and elevate the fluidity of cross-border payments between Hong Kong and mainland China. This initiative follows on from an announcement back in September of last year to expand the e-CNY pilot program in Hong Kong. Financial Secretary Paul Chan aims to forge a bridge between mainland China and international markets, potentially setting a global precedent for CBDC interoperability and utilization. Furthermore, Hong Kong's issuance of the world's premier multi-currency tokenized bond, followed by a subsequent batch of tokenized green bonds, signifies the city's leadership in fusing digital finance with sustainable investment strategies, drawing significant interest from global institutional investors. mBridge initiativeThe collaborative efforts of the HKMA with the Bank for International Settlements and other central banks on the mBridge CBDC project further demonstrate Hong Kong's proactive stance in shaping the trajectory of international finance. Last month, authorities in China outlined yet another initiative that is designed to bring about cross-border use of the e-CNY with Hong Kong. The mBridge initiative, a multi-CBDC platform to support cross-border payments is being harnessed to bring about greater trade using digital currency across various jurisdictions. The project involves the central banks of China, Hong Kong, the United Arab Emirates (UAE) and Thailand. This concerted endeavor, coupled with Hong Kong’s array of digital currency ventures, positions the city at the forefront of CBDC innovation. All of this development comes as China has established new milestones recently, with the completion of an international oil deal using the digital yuan together with similar deals involving gold and iron ore.