The crypto industry in East Asia has been grappling with a series of alarming scams and regulatory challenges, shaking investor confidence in the region. One such incident involved Hong Kong-based crypto exchange Hounax, which was allegedly involved in defrauding 145 victims of $18.9 million. Scammers posing as investment experts lured investors with promises of high returns and minimal risks. However, once the funds were deposited, users found themselves unable to withdraw their money, leaving them stranded. Hounax had already come under scrutiny when it was listed as a suspicious exchange by the Securities & Futures Exchange (SFC) of Hong Kong. This follows the collapse of another unlicensed exchange, JPEX, which resulted in massive losses for investors. Despite these scandals, Hong Kong regulators remain committed to establishing the city as a major hub for the Web3 revolution.
The SFC CEO, Julia Leung, emphasized the need to address fraud while acknowledging that even after the grace period for crypto exchanges ends, fraudulent activities are still likely to occur. Consequently, there are no immediate plans to modify the grace period and other measures. The current regulations provide a grace period for crypto exchanges to operate without registration until June 2024. In an attempt to generate more revenue for the national budget, the SFC also aims to legitimize initial coin offerings (ICOs) in Hong Kong. Additionally, major financial institutions like Interactive Brokers and Victory Securities have recently obtained crypto licenses, enabling them to offer Bitcoin (BTC) and Ethereum (ETH) trading services to their Hong Kong clients. Furthermore, the Hong Kong Monetary Authority announced a multinational effort, mBridge, to create a cross-chain bridge for China’s digital yuan central bank digital currency (e-CNY CBDC). This protocol aims to streamline cross-border transactions and enhance transaction speed and cost efficiency.
The central banks’ digital yuan, otherwise known as e-CNY, has been gaining traction in cross-border transactions. Standard Chartered, HSBC, Hang Seng Bank, and Fubon Bank have begun testing transactions involving the digital yuan. Moreover, these banks will integrate e-CNY transfer services for their clients, allowing them to deposit and withdraw digital yuan. Yuesheng Song, President, and Vice Chairman of Hang Seng China, expressed his support for the central bank’s digital currency, emphasizing its importance in exploring the development of digital currencies and promoting the internationalization of the RMB. Recent reports indicate that the digital yuan’s use in transactions has increased by 35% year-on-year, surpassing $1.39 trillion in the first three quarters of 2023. In a notable milestone, e-CNY student loans were issued for the first time, with $26,230 worth of loans directly deposited into the digital wallets of 13 recipients in Suzhou province.
The HTX exchange, formerly known as Huobi Global, has recently experienced a devastating hack, resulting in a loss of $30 million. However, the exchange has managed to resume deposits and withdrawals on the Bitcoin, Ethereum, and Tron networks. The platform has assured its users that it will fully compensate for the losses and guarantee the safety of user funds. To reward loyal users, HTX will conduct a special airdrop in December, distributing tokens from high-quality projects based on a user’s average net assets denominated in Tether (USDT). It is worth noting that this hack is not an isolated incident for the HTX ecosystem. In the past two months, the ecosystem has been targeted multiple times, with exploits involving the HTX Ecosystem Chain (HECO) bridge and Poloniex, another exchange owned by Justin Sun.
As East Asia’s crypto landscape continues to grow and evolve, it faces both opportunities and challenges. The rise of scams and regulatory issues threatens to erode investor trust and hinder the region’s progress. However, efforts by Hong Kong regulators to establish a robust framework and embrace innovative technologies demonstrate their commitment to supporting the crypto industry. The expansion of the digital yuan in cross-border transactions signifies China’s determination to lead the global race for central bank digital currencies. Additionally, exchanges like HTX must strengthen their security measures to prevent further exploits and protect their users’ assets. By critically examining these developments, it is clear that East Asia’s crypto landscape holds immense potential, but stakeholders must remain vigilant to navigate the obstacles and ensure sustainable growth in the region.
Leave a Reply