Crypto.com Forks Uniswap & Launches DeFi Swap on Ethereum

Hong Kong-headquartered Crypto.com has launched a DeFi Swap service, which allows users to swap and farm DeFi tokens.

A fork of Uniswap V2, the platform is powered by its native token CRO, the 10th largest cryptocurrency by market cap, which is trading at $0.160, up nearly 6%.

Other coins supported are Wrapped ETH (WETH), Tether (USDT), USDC, DAI, Chainlink (LINK), and Compound (COMP), with more to be introduced in the future.

One can start farming by using any WalletConnect enabled mobile wallet, which the company says will soon be coming on its DeFi Wallet.

Gains & Losses

The liquidity providers (LPs) will be rewarded with 0.3% of the respective liquidity pools’ trading volume. For selected pools, LPs will also receive tokens that are redeemable for coins of the participating DeFi projects.

Crypto.com is guaranteeing a minimum reward pool of 14 million CRO for the first 14 days on this Ethereum-based decentralized protocol.

Meanwhile, those who stake CRO can “boost their yield by up to 20x and harvest the daily yield in as little as 30 days.”

These services, however, are restricted to the residents & citizens of over 30 countries, including the US, Mainland China, Hong Kong SAR, Iran, Iraq, and Venezuela.

Much like any DeFi project, the company clearly states using it at your own risk as it cautions of risks involved that aren’t limited to the loss of virtual assets, collapse in liquidity, changes in the smart contacts, extreme volatility, counterparty risk, attacks, hacks, defects, loss of private keys, and regulatory uncertainty.

“Not a Bubble”

The ongoing mania has resulted in the DeFi space exploding with the total value locked in it amassing nearly $10 billion, which after the recent correction, is currently under $8 billion.

However, “DeFi is not necessarily a pure bubble about to burst,” said Crypto.com in its report on decentralized finance. The report continued,

“It might deflate once the hype subsides, but as globalisation progresses and the business ecosystem further shifts towards new-generation business models built upon shared governance and decentralisation, there will be a growing demand for solutions like DeFi which will provide new ways banking, trading and investing – perhaps even setting the standard for economies to climb out of the shadows.”

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Author: AnTy

Equos Parent Company, Diginex, Raises $20M Ahead of Planned Nasdaq Listing Later This Month

Diginex, the Hong Kong-based parent company of the cryptocurrency exchange Equos has raised $20 million ahead of its panning listing on the Nasdaq stock market later this month.

The funding was raised from a group of private investors through the placement of convertible notes, including family offices in Hong Kong and London, and a hedge fund reported Bloomberg.

Diginex chief executive officer, Richard Byworth said the private placement was necessary from the standpoint of investors assessing the company’s upcoming takeover by 8i Enterprises Acquisition Corp. He said,

“This fundraise was an important initiative to ensure we are well capitalized to invest in our core businesses as we embark on our journey to become one of the world’s leading digital asset firms.”

The private fundraising announcement came before its shareholder vote on Sept. 15 on its takeover by 8i Enterprises.

The funds raised meanwhile will be used for capital expenditures. Diginex is also planning to shrink its Hong Kong office of 80 people, which is two-thirds of its global staff, and relocate them to Singapore along with its exchange business.

As for the exchange’s listing on Nasdaq, the company is seeking to get listed on Sept. 23rd if it gains approval from the Nasdaq and 8i shareholders. The US Securities and Exchange Commission (SEC) has already approved the listing.

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Author: AnTy

Hong Kong Regulator to Grant Fidelity-backed OSL Digital the First Crypto Exchange License

The Securities and Futures Commission (SFC) of Hong Kong will be issuing a license to cryptocurrency firm OSL Digital Securities, reported Reuters.

OSL, a unit of Fidelity-backed BC Group, became the first firm in November last year to apply for a digital license under the market regulator’s new rules allowing cryptocurrency exchanges to opt into regulation.

The company revealed in its exchange filing on Friday that the financial regulator has agreed in principle to grant the license.

The final approval, however, is subject to certain conditions, which “you’d expect from a conservative regulator in a financial hub,” said BC Group CEO Hugh Madden.

OSL and some of its competitors to welcome the regulation as it would enable the regulated institutions to reduce their risk by engaging with other regulated risks.

In the first half of 2020, BC Group made a net loss of 90.8 million yuan ($13.13 million). Besides its crypto business, which accounts for the company’s bulk of revenue, it also provides business parks and advertising services.

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Author: AnTy

BIS and HKMA Launch ‘TechChallenge’ Seeking Trade Finance Innovations; DLT & IoT Included

The BIS Innovation Hub (BISIH) has partnered with the Hong Kong Monetary Authority to hold a trade finance digitization competition to spur innovative solutions for the sector, especially in Asia. BIS announced on August 3 that global innovators are invited to submit their applications by the end of the month, after which successful participants will be invited to develop full prototypes in a sandbox environment throughout 2021.

Research conducted by the HKMA before embarking on the ‘Tech challenge’ revealed that over 70% of stakeholders in traditional financial institutions believe that most global trade finance needs are yet to be addressed. Notably, the Asian Development Bank (ADB) has, in the past, presented similar facts, highlighting a $1.5 trillion global trade finance gap.

With such stakes in play, the BIS and HKMA have since taken the initiative to find solutions for this potential market. Other prominent stakeholders backing this project include the People’s Bank of China (PBOC), International Institute of Finance (IIF), and International Chamber of Commerce (ICC).

Blockchain and DLT Highly Considered

Interestingly blockchain, which is among the latest emerging tech featured, has been regarded as a solution to some of the problem statements tabled by BIS and HKMA. For starters, distributed ledgers can be instrumental in connecting ‘digital islands’; this is where tech becomes akin to specific jurisdictions, or is limited such that every party runs its centralized platform.

The BIS now suggests that blockchain can be used for linking global trade finance platforms for better communication, hence connecting the digital islands from the point of trust and verifiability.

In addition, blockchain can also be considered in delivering efficient B2B or B2C ecosystems for SME’s to thrive. According to the explainer materials by the BIS, novel tech such as Artificial Intelligence (AI), Machine Learning (ML), and IoT will further complement efforts towards the SME environment.

Finally, innovative solutions in line with onboarding emerging markets were featured in the BIS and HKMA problem statement. On this one, decentralization, which most actors approach with an open infrastructure perspective, could assist in the integration of developing markets through seamless interface connections. The organizers highlighted,

“To leverage the diversity of innovation and digitization underway on this topic globally, solution providers are free to suggest any technology approaches they consider suitable to address one or more of the problem statements, including decentralized approaches based on blockchain/ Distributed Ledger Technologies (DLT).”

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Author: Edwin Munyui

International Banks Reportedly Enhance Due Diligence in Hong Kong Following New Security Law

Global banks have begun scrutinizing their Hong Kong clients to filter out pro-democracy individuals following the new national security law backed by mainland China.

A recent report by Reuters has revealed that the likes of HSBC, Credit Suisse, and Julius Baer are among the international banking giants that have since increased their diligence process, screening for government and political ties.

With the new security law in place, such a move was anticipated, given more exposure to regulatory risks. Citing anonymous sources, the report notes that banks have, in turn, introduced a new ‘sub-class’ of threat dubbed ‘politically exposed persons.’

“The designation, called politically exposed persons, can make it more difficult or altogether prevent people from accessing banking services, depending on what the bank finds about the person’s source of wealth or financial transactions.”

It goes on to detail that wealth managers are relying on social media posts by the individuals and their affiliates in the recent past. A key stakeholder in this industry revealed that his clients’ AUM, which currently totals $200 billion, could be audited as far as 2014 to determine a person’s stand in the Hong Kong pro-democracy ‘umbrella’ movement, which kicked off in the same year. Should a party be found to be a pro-democrat, they may end up being excluded from Hong Kong’s entire financial ecosystem.

Though none of the global banks has yet to comment on the matter, they appear to be towing the line as they look to maintain and probably scale business in Hong Kong.

Surprisingly, this is not the same reaction from parent governments that have since called out China for the new security law. The U.S senate, for instance, has already passed some sanctions under the ‘Hong Kong Autonomy Act,’ which could eventually affect financial service providers that link Hong Kong’s liquidity with the dominant dollar-system.

China CBDC Implementation takes on Crypto Decentralization

At the same time, China is fast-moving to play an ace card on the emerging decentralized economy whose fundamentals are pegged on crypto assets. The country banned cryptocurrencies earlier but has aggressively developed its own PBoC backed digital currency, an initiative that is now a reality in the pilot phase.

Also dubbed ‘DC/EP,’ the Chinese digital yuan will be an integral part of its financial network, given most of its population already transacts via Alipay or WeChat. Notably, the CCP will be able to exercise further its authoritarian approach in this new central bank digital currency.

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Author: Edwin Munyui

Hong Kong Passes Limited Partnership Funds (LPF) Bill Including Investment in Digital Assets

Last week, “Limited Partnership Fund Bill” was passed by the Legislative Council of the Hong Kong Special Administrative Region. The bill that aims at attracting private equity, real estate and venture capital funds to set up and operate in Hong Kong also covers investment in digital assets.

The bill will come into operation on August 31st, 2020.

With this bill, Hong Kong has established a new regime for investment funds to be registered in Hong Kong in the form of limited partnerships. It was first introduced in March to provide an alternative investment vehicle for private fund managers raising funds or investing in Asia.

Under this new regime, investment managers need to be licensed by the SFC (Securities and Futures Commission), ensure proper custody of assets, annual audits of independent funds, and be compliant with the AML/CFT.

“Major jurisdictions waking up to regulated Bitcoin products. Great progress in Hong Kong!” noted Gabor Gurbacs, digital asset strategist at VanEck.

The definition of “fund” in the Bill covers, but not limited to, Venture capital, Private equity, and M&A funds, Real Estate Fund, Infrastructure and project funds, Special circumstances fund, Mixed Fund, Non-performing asset fund, Credit Fund, and Funds invested in digital assets such as cryptocurrencies and virtual assets.

Fully Regulated Bitcoin Fund

Today, MV Index Solutions GmbH announced that in partnership with CryptoCompare, it had licensed the MVIS CryptoCompare Bitcoin Index (MVBTC) for its recently launched Bitcoin fund which is available only to institutional and professional investors.

“We are pleased that our Digital Asset Indices continue to be popular and that we are now also the underlying index or Hong Kong’s first regulated cryptocurrency fund,” said Thomas Kettner, Managing Director at MV Index Solutions.

“This will help to strengthen the status of digital assets as an asset class and fulfills the needs of institutional investors.”

The licensing is part of the broader push to bring institutional-grade fund products to investors looking to gain exposure to bitcoin and other cryptos.

“With the launch of their fully regulated Bitcoin fund, VSFG and Arrano Capital will help further the adoption of digital assets that fulfil the needs of institutional investors,” said Charles Hayter, CEO, and Co-Founder of CryptoCompare.

Hong Kong & Bitcoin

Not long back, bitcoin got really popular and increasingly in use in Hong Kong; however, lately, there hasn’t been any major capital flight out of it.

While crypto ATM Genesis Block Hong Kong seeing its volume doubling, no such spike can be seen on P2P platforms LocalBitcoins or Paxful.

While Nic Carter of Coin Metrics says, “unencumbered access to the financial system isn’t guaranteed,” Matthew Graham, CEO of Sino Global Capital, points out that “HKD is freely convertible” and as such doesn’t see it as a big use case.

They may not be using Bitcoin but seem to be using stablecoins as the trading volume between Hong Kong dollars and USD pegged USDT has been seeing a surge in June on fiat-to-crypto trading platform TideBit. This could be attributed to the national security law enacted by China on June 30.

However, much of trade happens over-the-counter (OTC) in mainland China and Hong Kong, so it’s hard to know the real trading volume and interest in stablecoins and digital assets.

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Author: AnTy

U.S Senate Sanctions Following the Hong Kong Security Law Could Affect Crypto Brokerages

The U.S Senate sanctions that were passed in response to the Hong Kong security law might affect crypto brokerage operations.

Dubbed the ‘Hong Kong Autonomy Act,’ this senate bill aims to reprimand China for eroding the city’s autonomy, which had long favored its position as a financial hub. According to the new security law, Hong Kong’s freedom of expression has been infringed to the extent of not being allowed to criticize the Chinese Communist Party (CCP).

With the U.S acting as the leader of the free world, a counter move on this infringement was to be expected. Now that the Senate has already given the green light; the U.S government can now move to limit its foreign registered subsidiaries in Hong Kong from providing access to the dollar ecosystem. These limitations will be in situations where the other party is undermining Hong Kong’s autonomy. However, the bill did not specify what criteria would be used to arrive at such decisions, leaving this to the U.S Treasury.

The Effect on Crypto Brokerages

These moves by the U.S senate and CCP could have a significant toll on crypto brokerages operating in Hong Kong. The city has long been a link between mainland China crypto businesses and international markets, given its friendly nature towards digital assets. This link has since motivated mainland China-based crypto exchanges such as Huobi and OKCoin to set up in Hong Kong.

While their operations are majorly in Asia, access to the dollar ecosystem is fundamental for liquidity and other aspects. According to the president of Hong Kong’s Bitcoin Association, Leo Weese, a move to curtail liquidity provision would be catastrophic for the Hong Kong-based exchanges:

“The most successful cryptocurrency companies here are dependent on their access to the U.S. dollar system … They move money around, they are big brokers, and if they somewhat lose that access, they are in trouble.”

Weese’s sentiments were seconded by other stakeholders in this market, including Genesis Block’s chief trader, Charles Yang, who noted that reliance on U.S banks for dollar settlements is inevitable. Consequently, the ongoing friction puts their business at more risk.

“If there is any further friction from the U.S. policy, it could be very damaging to our business.”

Hong Kong’s Financial Dominance in Limbo

While the new security law doesn’t intend to change Hong Kong’s financial status, this could quickly change, according to Weese.

“I think for now there is no intention to mess with Hong Kong’s financial system and scare companies away, but of course things could quickly change.”

As both the CCP and U.S continue to fine-tune their stance on this development, a move to Beijing as China’s financial hub will mean more scrutiny by the government. This might, in turn, make wire transfers and other financial services expensive and slower compared to the autonomy that preceded business in Hong Kong.

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Author: Edwin Munyui

Hong Kong Residents Rushing to US Dollars as the US-China Cold War Intensifies

China is moving closer to impose a new national security law in Hong Kong following months of violent pro-democracy protests last year.

This has expats and anyone who can afford to flee Hong Kong and move to other countries. Amidst this, the residents of Hong Kong have been exchanging more and more of their HKD holdings into US Dollars at banks and money exchange counters.

This rush for USD is forcing many exchangers in Hong Kong to turn away hundreds of customers after they ran out of currency amidst the fears that the US could end the preferential status of the city.

Last week, President Donald Trump said the US will end its preferential treatment of Hong Kong as a customs and travel territory from the rest of China. This announcement came just days after the Secretary of State Mike Pompeo said Hong Kong was no longer autonomous from China to warrant special treatment.

China said on Monday that any attempt by the US to harm China will be met with countermeasures.

“Any words or actions by the U.S. that harm China’s interests will meet with China’s firm counterattack,” said Chinese foreign ministry spokesman Zhao Lijian.

HKD’s 36-year-old peg to the US dollar

There are also fears that the Trump administration might break the 36-year-old peg system that fixes the exchange rate of currency at 7.8 Hong Kong dollars per US dollar. HKD was first pegged to USD in 1983.

City’s finance secretary Paul Chan said on Monday that they have no plans to change its currency peg to US dollar and the Asian financial hub hasn’t seen any “obvious” capital outflows yet.

The Hong Kong Monetary Authority (HKMA) along with local banks and investors, all can buy and sell US dollars in the open market.

Moreover, a temporary repurchase agreement was introduced by the US Federal Reserve in March that made it easier for central banks to get USD. This arrangement which is to last six months is part of the efforts to combat the economic effects triggered by COVID-19.

In April, the HKMA introduced a $10 billion liquidity facility to provide all 162 banks in the city with access to USD made available by the Fed.

US dollar is out of stock

Last week, the demand for US currency surged after Chain’s new legislation endorsed to craft a law for Hong Kong that would criminalize acts and activities of secession, subversion of state power, terrorism, and foreign interference.

In response, HK residents rushed to convert their local currency into US dollars, which they view as more stable.

Demand for currency actually increased 10 times last week. More and more customers are looking to switch large sums, “hundreds of thousands or even millions of Hong Kong dollars – at a time.”

“The US dollar is out of stock everywhere. We’ve offered every last bit of our supplies to our customers,” said Eric Wong Wai-lam, who runs Rich Bird Currency Exchange in Sham Shui Po and was forced to turn away 600 customers.

Residents are also looking for alternatives like the pound, Euro, and Australian dollar. “People will take anything you have,” he said.

City’s largest banks, HSBC also had some of the automated teller machines run out of US dollars.

Increased adoption for Bitcoin and Stablecoins

Last year, when protests surged in Hong Kong, the city turned to bitcoin, which traded at a premium. On Paxful, the demand for BTC in the city has been growing throughout 2020 which like last time could see another spike.

Now that there are uncertainties over the city’s economic future, Hong Kong residents may flock to the decentralized, censorship-resistant cryptocurrency and even to USD pegged stablecoins which have been seeing immense adoption during the recent market sell-off.

During the first quarter of 2020, as the USD became a hot commodity so did the stablecoin in the crypto market. One of the reasons for the increased adoption of USD-pegged digital currencies was the global shortage of US dollars.

Moreover, the stock and crypto market could see the effect of the US-China jitters, although for now, both are stable.

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Author: AnTy

OKCoin Exchange Moves COO to CEO to Oversee Expansion In The US, Asia, and Europe

The OKCoin chairman Hong Fong has been named as the crypto exchange’s new CEO, seeing as a US, Europe and Asia expansion is in the cards.

The announcement was made on Friday. Fong is also the company’s chief operating officer. She will take CEO Tim Byun’s place starting March 31. Her main objective will be to develop the firm’s cryptocurrency-related products in the US states, Europe and Asia.

Byun to be a GGRO for the OK Group

Byun will become a global government relations officer (GGRO) for the OK Group, the parent company of OKCoin. He will be in charge of maintaining the communications open with governments and regulators from all over the world, and of global growth. Before starting to work for the OK Group, Byun was BitPay’s chief compliance officer. Prior to that, he was the head of credit settlement risk and an anti-money laundering officer of Visa. According to his profile on LinkedIn, he worked here for 5 years. Here’s what an OK Group spokesperson said about the changes that are being made:

“As a foremost regulatory expert in the crypto industry, Tim Byun will take on the new GGRO role. We will be able to better leverage his expertise across all units of business within the Group.”

Fong Joined the OK Group Only Recently

The OK Group was founded in China and includes many blockchain and crypto businesses related to enterprise blockchains, trading and mining. It has started shifting its focus towards blockchain technology ever since the government of China banned crypto trading, back in 2017.

Fong came at the OK Group in September 2019, after being the Chinese gaming company Giant Network’s leader of investment portfolios and strategic growth. Besides, she has also contributed to the Goldman Sachs’ mergers and acquisitions, restructuring and capital markets division.

Byun was of great help for the San Francisco-based OKCoin’s US office opening from 2017. He also supervised the exchange’s operations in the US. OKCoin has money transmitter licenses in many US states, offering its fiat-crypto trading services in the country since 2018.

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Author: Oana Ularu

Hong Kong Financial Authorities To Apply FATF Regulations To Crypto Exchanges, Brokers

  • Hong Kong proposes new regulations to target Virtual Asset Service Providers (VASP) in accordance with FATF recommendations.
  • This is despite Hong Kong being miles ahead of its Asia-Pacific peers and receiving high ratings from the financial agency.

Reports have emerged that the Hong Kong government is looking to increase its efforts in the regulation of the crypto space. This is in a bid to increase adherence to the global Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) guidelines.

In a speech by Paul Chan, Hong Kong’s Financial Secretary the government is going to use the recommendations by Financial Action Task Force (FATF) assessment to better their AML/CTF agenda. Notably, they plan to include Virtual Asset Service Providers (VASP) and precious metal merchants into their AML/CTF framework with plans to include the public’s input on the same.

The new regulations are to unsettle crypto exchanges and Over the Counter Brokers (OTC) in Hong Kong which has so far been crypto-friendly. In a memo from Hong Kong Money Authority (HKMA) official Carmen Chu to heads of all Authorized Institutions (AI) where she indicated that AI should treat the VASP’s different depending on the risk assessment for individual VASPs.

“Assessing the AML/CFT controls of the VASP as appropriate The extent of customer due diligence measures should be commensurate with the assessed ML/TF risks of the VASP”

In June last year, the FATF updated its guidelines in regards to the AML/CTF standards. The proposal stipulated that countries would now hold virtual assets to the same regard as property or funds.

The FATF would also obligate VASP’s to share detailed transactional information such as the sender and destination of funds for transactions above USD/EUR 1000. This information should be readily available for the next five years in case the regulators come calling.

Hong Kong rated highly compliant by FATF

This is despite Hong Kong ranking highly in the global watchdog’s FATF assessment. They rank as the first jurisdiction in Asia-Pacific to have aced the FATF assessment. Countries are now racing towards achieving FATF compliance standards with reports of private partnerships among countries to collaborate efforts to monitor cryptocurrency transactions.

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Author: Lujan Odera