The cryptocurrency industry in East Asia continues to see significant developments and regulatory changes. In this article, we will discuss some of the latest news and trends in the region, including the opening of a new crypto exchange in Hong Kong, the crackdown on private blockchain firms in China, the issuance of a digital yuan central bank digital currency (e-CNY CBDC) green bond, and the identification of stolen funds by North Korean hackers.
Crypto exchange HashKey, the first licensed virtual asset provider in Hong Kong, is set to launch its retail trading platform on August 28. Investors will be allowed to invest up to 30% of their net worth into cryptocurrencies. The exchange will display a risk control warning if the limit is exceeded, although it cannot validate users’ net worth. HashKey will also assess users’ investment backgrounds based on information submitted during the know-your-customer verification process. The exchange will initially support trading of Bitcoin (BTC) and Ether (ETH), as margin trading of crypto products and crypto derivatives are not yet allowed by the Hong Kong Securities and Futures Commission.
China has intensified its efforts to eliminate private blockchain firms operating within its borders. This move comes in response to the increased use of cryptocurrencies as a means of capital flight during economic downturns. Undercover crypto projects in China are being reported by third-party tracking firms, leading to arrests and asset forfeitures. The tracking firms stand to make significant commissions from these reports. After arrest, crypto executives are allegedly coerced into handing over private keys and server access. Police then work with third-party payment processors to exchange the seized coins and tokens for Chinese Yuan. The executives are subsequently charged with operating a “multi-level marketing scheme,” “pyramid scheme,” or “money laundering.” If convicted, the state seizes all protocol-related assets. This crackdown has resulted in the termination of several protocols, as well as prompted the emigration of Chinese Web3 founders.
In contrast to the crackdown on private crypto activities, government-led blockchain efforts in China are thriving. On August 18, the first digital yuan central bank digital currency (e-CNY CBDC) green bond was issued with a principal amount of 100 million Chinese Yuan ($14 million). The loan will finance the expansion of solar panel facilities in Wuxi. The e-CNY CBDC has gained traction as a means of stimulating domestic spending in China. Transaction volumes in the City of Tianjin alone have surpassed $17.5 billion in the first half of 2023, with over 302,000 merchants accepting the CBDC as payment.
The U.S. Federal Bureau of Investigation (FBI) recently announced the identification of 1,580 BTC ($41 million) stolen by North Korean hackers. These funds were taken from various projects, including the Alphapo hack, CoinsPaid, and Atomic Wallet. The FBI has called on private sector entities to be vigilant in guarding against transactions with the identified addresses. It believes that North Korea will attempt to cash out the stolen funds. Meanwhile, criminal investigations into North Korean hackers’ involvement in other exploits, such as Harmony’s Horizon Bridge and Sky Mavis’ Ronin Bridge, are ongoing.
Yi Xiao, a former vice chairman of the Jiangxi Provincial Political Consultative Conference Party Group, has been sentenced to life in prison for unrelated charges of corruption and abuse of power in a Bitcoin mining enterprise. Xiao operated a large-scale Bitcoin mining operation despite the ban on cryptocurrencies in China. He used his public office to secure preferential subsidies, capital, and electricity supply for the enterprise. Xiao’s case is an example of China’s stringent crackdown on crypto activities, aiming to combat data theft and money laundering incidents involving digital assets.
The cryptocurrency landscape in East Asia is constantly evolving, with both regulatory actions and government-led initiatives shaping the industry. The opening of HashKey’s retail trading platform in Hong Kong provides new opportunities for investors, while China’s crackdown on private blockchain firms highlights the government’s determination to control and regulate the sector. The success of the e-CNY CBDC and the identification of stolen funds by North Korean hackers further illustrate the diverse trends in the region. As the crypto industry continues to mature, it is crucial to stay informed about the latest developments in East Asia.
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