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

China’s National People’s Congress (NPC) Suggests a Government-Backed Blockchain Fund

The National People’s Congress (NPC) in China has proposed the creation of a government-backed blockchain fund in its ongoing annual meeting.

The Chinese legislative body began consultative meetings last week as part of its political advisory role. According to its Deputy Director, Jieqin Tan, a blockchain fund would help spur growth in the industry.

This milestone comes shortly after the People’s Political Consultative Conference (PPC), during which a regional stablecoin was proposed. Basically, the PPC operates as a lower legislative body compared to the NPC; proposals tabled by delegates of the latter are more weighty and likely to be considered.

However, going by the recent blockchain and crypto sunrise wave in China, a regional stablecoin would not be completely out of the picture.

The Government Blockchain Fund Proposal

Jieqin Tan suggested that the blockchain fund could be steered by the Chinese government. Once up and running, the fund would focus on nurturing innovations within the blockchain space. More especially, unicorns and startups with a promising outlook given the current state of blockchain integration and emerging challenges.

Should this initiative be successful, Tan is optimistic that it will improve China’s odds in capitalizing on a first-mover advantage. In addition, blockchain tech has the potential to push China’s oversight towards ‘smart governance’.

Tan, therefore, thinks that funding and supporting the industry would increase the security and sovereignty of the Chinese people. In his view, the industry should be consolidated based on a three-dimensional strategic plan:

“From the bottom technology standard, middle industry application development to the top-level system design, the national blockchain technology, industry and supervision three-dimensional strategic planning system should be well coordinated.”

Despite touting the proposal as a good initiative, Tan was keen to highlight that blockchain tech has had its fair share of challenges. Particularly, scaling issues have emerged as more players join existing ecosystems. Furthermore, the industry is still short of talent and operates on a huge knowledge gap making it hard for information to be impactful.

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Author: Edwin Munyui

Iran’s Fiat, Rial, Becomes Another Victim of Hyperinflation As Govt Releases ‘Toman’

Iran’s national fiat, Rial, has become the latest victim of hyperinflation due to constant trade sanctions from the United States even in times of the pandemic. Now the Iranian government is looking for an alternative to replace Rial in the coming years.

In a report published in a local daily on 4th May, the Iranian parliament has passed a bill titled ‘Reforming Monetary and Banking Law’ which would see the country move from their national fiat rial to the new alternative called toman in the next two years. Each toman is valued at 10.000 rials.

Hyperinflation has wreaked havoc on the economies of many countries in the past, especially those who are not an ally to the United States.

Just a couple of weeks back, Libya saw the value of its national fiat fall by 50% causing a series of protests and the riot-like situation on streets where the citizens were seen attacking the central bank.

Venezuela has become a default example of how hyperinflation can bring even a wealthy country to its knees, and as of today, their national fiat bolivar is not even worth the paper they are printed on.

Iran, on the other hand, has been mostly faced the wrath of the US sanctions which prohibit them to make trades in the international trade market.

Even during these conditions where a virus outbreak has ruined the economies of even developed nations, many thought these sanctions would be lifted on humanitarian grounds, however, that did not happen. In 2018 the official exchange rate for 1 US dollar was set at 42,000 rials and it has continued at the same rate even today.

However, bark markets are seeing exchange rates as high as 156,000 rials due to the ongoing economic crisis created by the sanctions and ongoing pandemic.

LocalBitcoins Selling BTC at $35,000 as per Local Exchange Rates

While BTC is trading under $9k on all of the foreign crypto exchanges, the inflation has skyrocketed the local value of BTC at around $35,000. 1 BTC on LocalBitcoins is available at 1,445,658,900 rials which when converted to USD comes around $34,500.

The new alternative Toman is set to take a couple of zeroes from its inflated currency but, it won’t really change the overall proposition of Rial.

Iran has been also keenly following the crypto space in hopes of regulating it and utilizing it to access the international trade markets. Last year, the country also regulated mining given it has an abundant supply of clean energy and many are hopeful that they would also regulate the use of cryptocurrencies soon.

Decentralized Currency Can Help Countries Overcome Hyperinflation and Trade Sanctions

The recent condition of Iran, Libya, Venezuela and many other nations highlights the flaws of fiat systems and how the monopoly of one currency can ruin several nations.

These issues can be easily overcome with the help of decentralized currency like Bitcoin whose value is not controlled by one particular organization, and since there is only a finite number of these digital assets the chances of hyperinflation is also near impossible.

Iran was discussing Central Bank Issued Digital Currencies (CBDCs) to as an alternative to its existing fiat system, however, the present situation has forced it to look for an immediate alternative at present in the form of toman.

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Author: James W

China Will Dry Run Its DCEP in May By Paying State Employees With The Digital Yuan

China’s national digital currency or ‘CBDC’ or as they call it, “DC/EP” has been in development for 5 years now. And there has been plenty of speculation since the last quarter of 2019, that it will be released anytime soon.

The Chinese President’s call for accelerated adoption of blockchain technology was seen as a big hint that the national digital yuan is ready to launch. However, Chinese officials and the People’s Bank of China have denied these claims.

However, the latest buzz suggests that DCEP is finally past its development stage and is being distributed among the state officials for testing purposes.

According to a report, published in ChinSci-Tech (a board of enterprise and public companies) on April 16, the new CBDC is being tested as a Transport subsidy scheme for local government officials as well as enterprise workers.

Another official report also confirmed that AliPay, a popular mobile payment subsidiary of Alibaba along with Ant Financial, was responsible for the development of digital yuan’s hardware infrastructure including distribution and payment gateway technology.

The Payment Trials Have Begun

According to reports available in local media, the Xiangcheng District of Suzhou would see local enterprises and government officials paying 50% of their worker’s transport subsidies in the digital yuan.

All the enterprises in the Suzhou district have been requested to sign a digital currency distribution agreement with a relevant bank and subsequently install a compatible digital wallet for the workers.

A total of 4 banks have been assigned across the province to make sure the testing phase begins smoothly. The four banks include Commercial Bank of China, the Agricultural Bank of China, the Bank of China and the China Construction Bank.

These reports also revealed that the enterprise must connect with one of the four banks to offer transport subsidies to their workers. The issuance agreement must be signed before the end of May.

The Finer Details of the DCEP

While there is no official statement or update from the government, however. The published letter in the ChinSci-Tec revealed finer details: including 5 patents by the Alipay group.

Examining these patents revealed that the new DCEP would work on a two-layer architecture and delivery system which would allow licensed third-party players to distribute the national CBDC.

By now it’s clear that Alipay would play a major role in the issuance and distribution of these digital currencies along with authorized banks.

A majority of the Chinese population won’t see a difference while using the CBDC, as the majority of the population is already using digital payments. The only difference would be the back-end and working of these CBDC as they are believed to function on top of the blockchain-based network.

It is also important to note that the network used by the government won’t be completely decentralized and has been mentioned by the senior officials of the People’s Bank of China.

Given the governance model of the Chinese government, speculations were high that the use of blockchain was just a facade and the whole idea behind a national CBDC was to have stricter monitoring of the flow of currency in the country.

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Author: James W

Cardano Foundation, South African National Blockchain Alliance Partner To Drive Adoption

The Cardano Foundation has entered in a partnership with the South African National Blockchain Alliance (SANBA) to boost the adoption of blockchain technology across the country. The announcement was made on April 7 and in this partnership, Cardano would leverage Distributed Ledger Technology to improve the socio-economic growth of the country.

Cardano Foundation believes this initiative would help them achieve their long-term goal of blockchain adoption across regions where banking services are hard to get. Cardano Foundation also sees South Africa for building a network across the region constituting of government agencies, institutions, and private firms working the blockchain technology. The official announcement read,

“Cardano believes in empowering individuals and enterprises by putting them in direct control of their information, wealth and value. Blockchain technology lets developing nations break ties with legacy banking systems, costly middlemen and entrenched political structures.”

Cardano Sees Blockchain as a Critical Tool To Help The Underprivileged

When Blockchain came into being after Bitcoin gained traction which opened the market for the use of the decentralized technology. Cardano also believe that blockchain brings transparency, reduce fraud especially in developing economies where corruption and lack of transparency in the society lead to poor getting poorer by the day.

Cardano in its initiative is planning to build a digital identity infrastructure in these developing nations and help the deprived to gain equal opportunity through virtual currencies. The foundation is also hoping to help other nations in the continent through various fintech solutions.

Blockchain has emerged as one of the key technologies that have been used to help these developing economies especially the poor and underprivileged get access to basic human necessities like banking services. Prior to Cardano Foundation’s partnership and work, even Dash was widely used in Kenya to avail a form of money to the poor without the need of a bank. The Dash initiative offered offline Dash coupons to the people since electricity was quite scarce in the region, and those people can redeem their coupon cards at various centred against daily necessity goods.

The outbreak of Coronavirus leading to WHO declaring it as a pandemic, a majority of the markets and industries have either shut their operation or taken a back seat, however, Cardano Foundation has continued its development and partnerships with same zeal and speed.

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Author: James W

National Internet Finance Association of China Warns Against Manipulative Crypto Exchanges

The National Internet Finance Association of China(NIFA) has issued a warning for investors who have been associated with the crypto-verse about the growing risks of the investment in the field especially crypto exchanges who are known for manipulating trading volumes on a regular basis.

NIFA is among the major Chinese Financial watchdog and is affiliated with the Chinese Central Bank. The statement came on Thursday where it noted that the research from their committee has shown many foreign crypto exchanges indulge in faking trading volume and wash trading to show a heightened number to lure new customers.

Given, NIFA is China’s Central Bank affiliated watchdog, it is also trying to push back the narrative that digital assets like Bitcoin are safe haven.

NIFA noted that the recent crypto market crash is a piece of clear evidence that Bitcoin and cryptocurrencies are not safe-haven assets like Bitcoin and Gold. The agency said,

“In our sampling analysis based on trading data from some of the exchanges, the daily trading turnover rate for more than 40 coins is over 100 percent, while more than 70 coins’ rate exceeds 50 percent,” NIFA said.

“Despite the relatively low price and small market value, there have been massive trading volumes.”

NIFA claimed that its analysis report shows that foreign crypto exchanges have divulged in faking their trading volumes with the help of bots while quite a few have blatantly copied the trading volume data of other exchanges and tried to pass it off as their own. The agency further accused these exchanges of misguiding investors on the nature of these digital currencies. NIFA said,

“After tricking investors into investing in crypto, some exchanges will manipulate the market through a range of trading techniques to make the investors’ assets.”

Exchanges are known for abruptly shutting their service citing maintenance reasons to avoid traders from trading on several occasions. While not every exchange do that there have been many prominent ones who have been accused of following this business model to contain their losses.

China’s Regressive Stance on Crypto Getting Stronger?

China has banned foreign crypto exchanges back in 2017 and trading of digital assets has been illegal as long as one can remember. The world’s most populous country is also known for its propaganda though which has been quite evident ever since the prime minister called for increased blockchain adoption.

Right after the PM’s call the state media propaganda machinery cited that Bitcoin is the best use case of blockchain, which gave many crypto enthusiasts high hopes that China might finally recognize the growing influence of these crypto-assets and might regulate crypto trading.

However, these hopes were short-lived as the state machinery in the following days made it clear that despite Bitcoin being the best use-case of blockchain, it has many flaws that would be overcome by their CBDC.

In the following week, the government also witch-hunted many crypto service providers evaporating any ray of hope among crypto enthusiasts. Given China’s authoritarian regime it would be a shocker if they allow the decentralized form of economy to flourish without them having any control. The state machinery has been trying to build a narrative around why crypto is bad for quite some time now.

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Author: James W

Dubai-based National Bank of Fujairah To Use RippleNet For Cross Border Payments

  • National Bank of Fujairah announce partnership with Ripple in a bid to service the Indian Population in UAE that remits money back home.
  • In 2017 the remittances funneled back to India hit a staggering $65 billion.

Through an announcement on their website , the National Bank of Fujairah (NBF) has struck a partnership with Ripple a leading enterprise Blockchain company. The Blockchain alternative will secure the clients real time payments whilst allowing clear end to end transaction tracking.

The NBF based in the UAE was founded in 1982 with main shareholders list including Government of Fujairah, Investment Corporation of Dubai and the Easa Saleh Al Gurg LLC. They have mainly offer Corporate and commercial banking and are well versed with treasury and trade finance.

Ripple to offer seamless cross border transactions

According to the bank’s CEO Vince Cook, the integration of Ripple’s Blockchain solution was prompted by the need to adjust with the dynamism of the banking sector. They also understand the potential of Blockchain technology that is set to align with their key objective of ensuring their clients have a smooth running experience.

“In a fast-moving environment, banks have to act with agility and constantly look for new and improved ways to service their clients. We understand the importance of leveraging Blockchain technology to deliver seamless and frictionless experiences to our clients.”

Notably NBF has been at the forefront in embracing the Blockchain Technology. Last year they became members of the Marco Polo Blockchain network that has been dubbed the largest and fastest growing trade finance network. Supported by Corda Blockchain Technology from R3 and the distributed platform from TradeIX, the network provides a platform that allows for the seamless and secure exchange of data and assets amongst the participants.

Partnership to Capitalize on big Indian population in UAE

NBF’s strategic move will see them capitalize on the large Indian population that is working in the country and make remittances back home to India through the IndusInd bank. The Mumbai based bank partnered up with Ripple in 2018 to focus on cross border remittances. This was after India saw a staggering $65 billion flow into the country in 2017.

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Author: Lujan Odera

Australia’s National Stock Exchange Is Building A DLT-Based Real-Time Trading Platform

Both companies listed publicly, NSX Ltd., which is the owner of the National Stock Exchange of Australia, and the financial institution known as iSignthis (ISX) have announced on Thursday that they’re partnering up to offer a platform for trading digital securities.

The platform will be called ClearPay. It is going to be distributed ledger technology (DLT)-based and at the same time offer almost instant transactions instead of delayed settlement. The know your customer’s customer type of security and other solutions offered by iSignthis will be integrated in it.

ClearPay to Compete with ASX

ClearPay aims to compete with ASX, also known as the Australian Securities Exchange, since the ASX is also working to replace its out-of-date CHESS clearing system with DLT. The exchange is collaborating with the blockchain company Digital Asset to provide same-day settlement solutions, as traditional trades take up to 3 days at the moment. The ASX is thinking about starting to test its new platform in July this year.

NSX’s Time to Act

NSX’s CEO Thomas Price mentioned in an interview that cash equity exchanges all over the world are going through a technological revolution and that the market is in agreement when it comes to challenging settlement and clearing legacy methods. Here are his exact words on what NSX should do in such a climate:

“Having patiently monitored the development of the appropriate technology … we consider that this is the right time for the NSX to act.”

ISX Invested $4.2 Million in NSX

ISX invested through a private placement not less than $4.2 million in NSX. This means the investor gets a 12.96% stake in NSX at a share of $0.145. It’s expected for ClearPay to go live at the beginning of next year. After this will happen, the international and domestic broker network should join through the ISO20022 electronic data interchange standard while using a standard blockchain for participation. Share registry operators and participants will gain access to the DTL platform that is going to have the National Stock Exchange of Australia as a central authority.

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Author: Oana Ularu

Intelligence Community Is Prepping For Black Swan Events That May Crush The US Dollar

It looks like the US Office of the Director of National Intelligence (ODNI) is looking to sponsor a researcher who can conduct a study on what would happen if the dollar would no longer be a global reserve currency.

The agency posted at the end of last year a job listing with the deadline on February 28, listing in which it’s saying that it’s looking for people with a background in economics. It also mentions the research is the first one of its kind for the intelligence’s post-doc program and that it’s meant to help with preparation for a black swan eventuality in which the US dollar would no longer be globally dominant.

The Research to Be Shared with the Intelligence Community

The study would fall under the National Counterproliferation Center’s purview. The National Counterproliferation Center is functioning under the ODNI and tries to combat weapons of mass destruction from being proliferated, mostly by stopping terrorist financing. The results of the research will be shared with the intelligence community.

While not attributed to any event or trend, the job listing does say it’s looking for cryptocurrency enthusiasts because there is the eventuality in which a digital currency undermines the US dollar, for example the digital yuan scheduled to be issued by China. This is exactly what the listing reads:

“If either of these scenarios or others come to pass, the U.S. would lose both its status in the world and its global authorities.”

A Researcher with Black Swan Events Knowledge

The researcher who will be involved in the post-doc program will receive sponsorship from ODNI, access to IT and advanced computing, plus funding. His or her work would be checked by the agency periodically in order to be understood. The researcher would collaborate with ODNI experts and other governmental entities.

The agency wants someone who knows how to work with statistics, artificial intelligence and who has knowledge about black swan events that happened throughout history, all while thinking all sort of scenarios of such events happening in the future.

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Author: Oana Ularu

Australia Releases Roadmap To A ‘Blockchain-Empowered Future’

The Australian government will release its national blockchain roadmap on Friday, February 7, after almost a year of preparations.

It’s been about a year since the Ministry for Trade, Tourism and Investment and the Ministry for Industry, Science and Technology in Australia have made the announcement for the country’s national blockchain strategy that aims for global leadership and focuses on the wine, finance and banking sectors.

Domestic Wine to Receive Special Attention

Talking about the development of the program, Karen Andrews from the Ministry for Industry, Science and Technology mentioned the 5-year blockchain will highlight the work of researchers, startups, and regulators.

Since the wine sector in the country is set to have the AU$259.4 billion ($175 billion) worth, Andrews said blockchain technology is capable of strengthening export opportunities, seeing manufacturers will be able to trace their goods, especially when it comes to wine labeling and exports. 2,000 wine exporters in Australia ship to 123 destinations all over the world.

How Much Did Australia Spent on Blockchain?

The Australian government hasn’t yet allocated funds for the blockchain roadmap implementation. As it was noted in March 2019, some previous investments made by the liberal national government of Prime Minister Scott Morrison helped fund the Digital Transformation Agency in 2018-2019 with AU$700,000 (approx. $500,000) to explore what benefits the use of blockchain would bring to government payments.

It also funded Standards Australia with AU$350,000 (approx. $250,000) to create a set of guidenance for international and standardized blockchain standards.

How Much Other Countries Spent on Blockchain

The science and technology multi-stakeholder operation Centre for the Fourth Industrial Revolution UAE, together with the World Economic Forum and the Dubai Future Foundation, has released in January this year a paper that says deploying blockchain technology can save the United Arab Emirates (UAE) over $3 billion.

In the meantime, an important firm in Russia has recently decided to cut the country’s spending on blockchain development by half. The government-backed company Rostec wants to spend only 28.4 billion Rubles ($453.2 million) for developing blockchain technology by 2024, and not 55 billion ($877.8 million) or 85 billion Rubles ($1.3 billion), as it initially said it would.

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Author: Oana Ularu