End of an Era - China and Bitcoin Mining

Blockchain Asia #21

Photo credit: Blockbeats

Summary:

- Timeline of major events leading to the shut-down of Chinese mining farms

- Reasons behind the Central Government’s forceful clampdown

- After the events of June 20, what does the future hold for Chinese miners


June 20, 2021 will be remembered in bitcoin history. It marks the end of an era. A video went viral showing Chinese miners turning off their mining machines.

Suddenly, on June 20, Sichuan unplugged the power supply to bitcoin miners.  Southwest of China, Sichuan has been the largest bitcoin mining hub and home to about 90% of Chinese mining hash power during the wet season.  During this season, hydropower provides abundant electricity to miners.  Most of the electricity used in mining in the region is from wasted or excess hydropower. The cut-off of power is a fatal blow to Chinese miners.

This is not the first time that the government has come down hard on bitcoin mining.  In the past, the storm would pass with the passage of time.  The central government had not been as hostile towards bitcoin mining as towards crypto trading.  This time, however, it really is different

From the following timeline, one can tell that the crackdown had been planned for a while, was well-coordinated between the public and private sectors.  

  • In April, a former central bank governor warned people to be cautious and careful about digital currencies such as bitcoin; and he stated any financial innovation should serve the real economy;

  • Also in April, a scientific journal “Nature Communications” published an article composed by a group of academics from Tsinghua University and the Chinese Academy of Sciences.  It concluded that “in the absence of legal curbs, bitcoin could by 2024 become a “non-negligible” barrier to China’s efforts to decarbonize its economy”;

  • Government controlled Chinese media followed suit criticizing bitcoin mining’s energy use;

  • Social media shut down major crypto influencers’ accounts;

  • Chinese search engines blocked search results containing crypto-related keywords;

  • May 21, at the 51st meeting of the State Council Financial Stability and Development Committee, the Chair of the Committee Liu He, Vice-Premier, called for forceful efforts to identify and prevent financial risks, and to clampdown on bitcoin mining and trading to prevent individual risks spilling over to social risks.  The official report can be seen here;

  • Right after that, the provinces of Inner Mongolia and Xinjiang, two major mining hubs during the dry season, shut down data centers and mining farms;

  • June 2, the Sichuan Energy Regulatory Office of the National Energy Administration hosted a round table with miners to understand how the elimination of bitcoin mining would affect the consumption of wasted electricity generated by hydropower stations in the region;

  • June 20, Sichuan unplugged the power with 24 hours’ notice.  Most mining farms had to shut down;

  • June 22, Payment & Clearing Association of China, an organization under the central bank, summoned major Chinese banks and payment service providers including ICBC, CCB, ABC, Postal Savings Bank of China, the Industrial Bank, and PayPal, urging them to stop providing any on-ramp/off-ramp services for crypto activities. 

What triggered the central government to decide to eradicate bitcoin mining with such resolution? There are several reasons which have not been discussed by the media.

First, China is transitioning to a more controlled economy from one of socialism with China characteristics, i.e., a mix of centrally planned economy and market economy.  The importance of tighter central control has been evidenced and strengthened by the perceived success of the Chinese government’s control of and response to the pandemic. 

One of the manifestations is that the central government has less tolerance to any circumvention of its orders by entrepreneurs or local governments.  The days of “the higher ups have policies while the lower downs have their own ways of getting around them” are over.  The cancellation of Jack Ma’s Ant Group IPO and the investigation of DiDi just 2 days after its IPO are two obvious examples.

Although bitcoin mining has operated in a gray zone for many years, until recently it has benefited from the protection of local governments in Sichuan, Inner Mongolia, and Xinjiang.  Pressure from the central government has now ended this support.

Second, it is about timing.  July 1 saw the celebration of the Centennial Anniversary of the Chinese Communist Party (CCP). Local governments wanted to show fealty to the central government before the celebration. What’s more, two equally important occasions will occur in 2022.  In the winter, China will host the Winter Olympics, and in the fall, the CCP will hold its 20th National Party Congress.  The congress meeting will complete the power transition of CCP’s senior leadership.

To maintain social and financial stability between now and the fall of 2020 is the central government’s top priority.  It will eliminate any potential threat with a heavy hand.  Speculative investments such as crypto and real estate are at the top of the list of threats. Now bitcoin mining has been officially added to the list.

Another reason, which seems far-reaching on the surface, but in fact is very relevant, is the Yuan CBDC.  China’s central bank digital currency, DCEP, plans to make its official debut at the Winter Olympics early next year.  Cryptocurrencies, including bitcoin, stablecoins, and any related activities such as trading and bitcoin mining, are considered distractions, even threats because they have little value to the real economy and are believed to only spur unwanted speculative financial activities which may lead to unacceptable social and/or financial instability.

Photo credit: Tuoluo Caijin

On June 20, when the mining rigs turned dark, most miners lost hope.  Some started the exodus to overseas locations.  Let’s take a closer look at some major Chinese miners, mining machine suppliers, and mining pools to find out what they are doing now in response to recent definitive government actions. 

BIT Mining

NYSE listed BIT Mining, which acquired Jihan Wu’s BTC.com and its related businesses, such as Bitdeer, this past April, announced that by July 1, 2,920 mining machines will be deployed in and/or delivered to Kazakhstan, with a total capacity of 120.5 PH/s.  BIT Mining also announced a $9.33 million investment to set up a joint venture data center in Kazakhstan with a local partner.  Additionally, it has entered into two service agreements for mining machines. 

Besides Kazakhstan, BIT Mining is investing $25.74 million in a data center in Texas.

Canaan

Canaan has set up an after-sales service center in Kazakhstan and started bitcoin mining using its own mining machine “AvalonMiner”.

The9

Nasdaq listed The9 (NCTY), Shanghai-based online gaming turned mining company, has announced it will acquire Montcrypto LTD, a Canadian company, and build a 20MW supply of electricity in Calgary, Canada. The carbon-neutral infrastructure of Montcrypto will provide a greener and more environmentally friendly power supply to the cryptocurrency mining business of The9. According to the agreement, The9 will pay a hosting fee to Montcrypto at a rate of CAD0.037/kWh for a period of 5 years.

The9 has chosen Coinbase as the custodian of its digital assets, including bitcoin, and will make its first deposit of 200 bitcoin into its segregated cold storage account at Coinbase Custody.

The9 also invested $4 million for a 9.9% stake in the Canadian company Skychain Technologies (OTC MKTS: SKTCF) listed on TSX Venture Exchange.  With the investment Skychain will create a 12 MW cryptocurrency hosting facility in Birtle, Manitoba, in which The9 will deploy its mining machines.

Poolin:

One of the largest mining pools Poolin posts pictures of their Chinese team in Austin, Texas.

Setting up new mining farms overseas is not easy and, thus, not for everybody.  The cost to build 1 KW load in Texas is 7 times that of China.  Also, it may be difficult to find maintenance personnel to support mining machines and the Pandemic has only served to make this even more challenging.  It takes weeks for miners to get their equipment out of China as they locate containers and ship equipment around the world.

Some regions pose different challenges to Chinese miners including a lack of legal infrastructure to protect their businesses and property.

Smaller miners do not have the resources to move overseas.  Some of them are liquidating machines and their bitcoin holdings to pay off debts while others pack up and store mining rigs with the distant hope that the central government may change its mind, someday.

Unfortunately, things will not revert back to normal this time.  The era of China as the home of the largest concentration of bitcoin miners is over.  It’s finally time for the miners either to move their operations to other parts of the world and say goodbye or simply close up shop.


In the innovative blockchain/crypto & digital asset ecosystem, Asia is the other side of the coin. Blockchain Asia helps you stay on top of what is going on in the Far East.

Blockchain Asia covers exclusively blockchain and crypto & digital asset developments in Asia, including regulation, investments, new deals, and company highlights. Content is selective and curated.

I am the co-founder of Kee Global Advisors. For the past 2+ decades, I have been working in both the U.S. and Asia. A bilingual, I enjoy writing “Blockchain Asia” here in English, while blogging on WeChat’s mobile publishing platform in Chinese.

For previous posts, please visit here. Please email insight@keeglobaladvisors.com with any ideas or thoughts. Would love to hear from you!

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Blockchain Asia | #20

SBI Crypto Pool/Foundry/Filecoin/Xend Finance/Binance Smart Chain/Valo Labs/Huobi/India to ban crypto/South Korea's new crypto bill taking effect

Hello, I am Coco Kee. Welcome to #20 Blockchain Asia.

Quick take:

  1. SBI Crypto Pool

  2. Foundry participating in the HashCon in China

  3. Filecoin receives more support from China investors

  4. Asian investors are leading some impactful investments, including acquiring Interstellar

  5. Indian and Korean regulators are taking stronger stances on cryptocurrency

Mining

SBI Crypto Pool

SBI Crypto Pool, a wholly-owned subsidiary of SBI Holdings, Inc., has officially opened its crypto mining pool to the public. SBI Crypto Pool has been self-mining since 2017. The pool ranks #11 in mining power. More detail

SBI Crypto Pool’s partner Northern Data AG, a German company that merged with its U.S. competitor Whinstone, trading on the OTC of Deutsche Börse’s Xetra, is planning to go IPO this year.

Foundry and China

DCG’s Foundry has opened its mining pool to the public in March. Its CEO Mike Colyer will be addressing HashCon’s conference attendees in Chengdu, Sichuan Province, PRC, April 17-18.

Filecoin

Chinese stock exchange-listed company New Universal disclosed its move into Filecoin mining. The industrial factory equipment manufacturer is purchasing $90 million worth of computing and storage equipment. The9 Limited, Nasdaq listed Chinese company NCTY, also announced its plan to purchase $10 million worth of Filecoin mining machines. More detail

The majority of Filecoin’s storage power comes from Chinese companies. Will this create another scenario similar to the concentrated bitcoin mining power?

Asian Investors

  • Fenbushi Capital closed the raise of its Filecoin Ecosystem Fund of 300,000 FILs, approximately $27.6 million @91.8/FIL.

  • The first decentralized finance platform Xend Finance is launched in Africa, helping more Africans save, earn yields and address currency depreciation challenges. Most of the early backers are Asian investors, including Binance, NGC Ventures, HashKey, AU21 Capital. Xend Finance is built on Binance Smart Chain. More detail

  • South Korean VC fund #Hashed Ventures led the investment of $2 million in Vancouver-based blockchain data provider Covatent to launch a decentralized data query network. Other investors include Binance Labs, Coinbase Ventures, Delphi Ventures. More detail

  • Hong Kong-based Crypto.com announced the launch of a $200 million fund to invest in crypto startups from Seed to Series A stages. More detail

  • Different from U.S. publicly listed companies which tend to have an exclusive favor for bitcoin, Meitu, a Hong Kong-traded company, through two purchases, has accumulated about $90 million of bitcoin and ether, $50.4 million in ether and $39.5 million in bitcoin. Meitu also expressed interest in moving into the blockchain business. More detail

  • Crypto exchange Huobi’s wholly-owned subsidiary is going to launch 3 crypto funds - bitcoin fund, ether fund and a multi-strategy fund. Huobi aspires to be the Grayscale of Asia. More detail

  • Thai company Valo Labs bought San Francisco-based Interstellar for a 9-figure sum. Interstellar is created out of a merger of Lightyear Corporation, the for-profit arm of Stellar, and Chain, Inc., which is backed by Khosla Ventures, RRE Ventures, Thrive Capital, and strategic partners including Visa, Nasdaq, Citi, Capital One, Fiserv, and Orange. Valo Labs, owned by a son of the Thai billionaire Chearavanont family, is behind Lightnet, which aims to build a cross-border payment and settlement system in Southeast Asia. Lightnet is built on Stellar protocol. Last January, Lightnet completed Series A raise of $31 million. More detail

Regulations

India

Indian regulators have been flip-flopping over whether or not to outright ban cryptocurrencies. Now it appears certain the country will enforce a blanket ban on cryptocurrencies, from trading to mining. However, exchanges have seen a dramatic increase in new customers. More detail

South Korea

South Korea is tightening up regulations on exchanges. Following the withdrawal of Binance from South Korea last December, OKex will be closing down its operations there.

South Korea’s crypto bill “Act on Reporting and Use of Specific Financial Transaction Information” passed last March is taking effect this week. It requires virtual asset operators to get certified for Information Security Management System and to conduct trades through real-name accounts opened via local banks. But not all banks are open to working with the operators. Right now, only 4 exchanges have secured partnerships with banks. Huobi is one of them. More detail

Lastly, I want to recommend a video “A Deep Dive on Asia’s DeFi Market” to conclude this issue. The differences in tax structure in Asia and the U.S. dictate the differences in investors’/speculators’ behavior.

Blockchain Asia | #19

"Asia's Crypto Landscape" report/Risks facing Tether/Mining in China/Thai SEC to decide qualifications for crypto investment; SCB 10X investment in Anchorage/SBI's ambition/S. Korea ready for CBDC

Hello, I am Coco Kee. Welcome to #19 Blockchain Asia. This is the first newsletter of the Year of the Ox, a Zodiac sign that symbolizes strength, hard work and gentleness. May the Year of the Ox be rewarding for all of you.


Market snapshot

Asia’s Crypto Landscape” authored by Mira Christano of Messari is by far the most comprehensive report that covers exchanges, market makers, funds, regulations and trends in key Asian markets.

Here are some highlights from the report:

  • 6 out of the top 10 largest crypto unicorns were located in Asia by the end of 2020

  • Asian companies account for 98% of ETH and 94% BTC futures volumes

  • As of January 12, of the top 20 token projects with headquarters, 42% of the market capitalization is based in Asia

  • China controls 65% of bitcoin’s hashrate

For those who do not have time to go through the report, I highly recommend Laura Shin’s podcast interview with Mira Christano “Why Asia is Critical to Crypto

Risks facing Tether. The legal case of Bitfinex and Tether had been like a Sword of Damocles hanging over the crypto industry. Tether is the most used stablecoin in the world, in particular, in Asia. If investors for some reason, are not willing or able to use Tether, that would affect the liquidity of the crypto market. What a relief to see the case is settled with New York State’s Attorney General’s Office.

It does not mean Tether is 100% out of the woods. Another potential risk may come from China’s CBDC DC/EP. Once DC/EP is officially launched China’s central bank may then move to root out Tether outright. Since China has banned its citizens from trading crypto with fiat, Tether has served as an intermediary through OTC markets.


Chinese mining business

BTC.com merged into 500.com

Bitmain’s CEO and Chairman Jihan Wu resigned from the company, ending an extensive dispute with one of the co-founders. Shortly after that, mining pool BTC.com and its related businesses, valued at around $1.8 billion, mostly owned by Jihan Wu, is acquired by 500.com through a stock swap.

500.com, an NYSE-listed Chinese online sports lottery service provider(ticker: WBAI), after struggling for years, started to pivot to being a crypto mining-related business a couple of years ago through the acquisition of Loto Interactive and mining rigs. BTC.com’s latest hashrate is 18.65 EH/s.

With the completion of a stock swap in April, Jihan Wu will become the second-largest shareholder and the company will change its name to BIT Mining Limited.

Through this publicly traded entity, Jihan Wu would be able to further consolidate the businesses of mining rigs, mining pool, crypto wallet, and mining financing. His priority is to reclaim the leading position of bitcoin mining hashrate.

MicroBT eyeing IPO in the U.S.

One of Bitmain’s major rivals MicroBT plans to go IPO in the U.S. in 2021. MicroBT and Bitmain have been engaged in legal battles for some time. MicroBT expects to see its revenue grow to $1 billion in 2021.

China’s Inner Mongolia to ban mining activities

To reduce energy consumption, Inner Mongolia’s local government has issued a decree to shut down crypto mining businesses by April.

Different from Sichuan, where abundant hydropower supports the mining business in rainy seasons, Inner Mongolia relies on coal to generate electricity.

Besides, most of the mining companies operate as data centers in disguise, evading income tax from crypto mining, which does not motivate local governments to support their operations.

Will other provinces such as Xinjiang, another place that miners relocate their mining farms to in the dry season, follow in the footsteps of Inner Mongolia? If so, where else can miners go in dry seasons? Right now, most Chinese miners are not concerned, believing the case of Inner Mongolia is an isolated situation. Let’s see.


Rundowns by country

Thailand
SCB 10X invested in Anchorage

The venture arm of the oldest Thai bank Siam Commercial Bank invested in Anchorage, a crypto custodian and digital asset platform that received the first federal digital asset conditional bank charter from OCC.

Thai SEC conducting public hearing about crypto investors qualifications

A public hearing hosted by Thai SEC is underway to finalize requirements for Thai people who want to trade crypto.


Japan
SBI’s investment in Swiss digital asset bank Sygnum

Sygnum received an 8-figure investment from SBI Digital Assets Holdings.

SBI’s reveals its global ambition for digital assets

SBI plans to link Osaka Digital Exchange it has been building with London Stock Exchange.

SBI eyeing the formation of a JV

SBI is considering either form a joint venture or acquire a leading foreign company to be a dominant player in the crypto space.


South Korea
South Korea ready for CBDC

Shinhan Bank has developed a pilot blockchain-based platform in preparation for the central bank to issue CBDC.

Gain from crypto taxed by 20%

South Korea set the date Jan. 1 2022 to start collecting tax from crypto investment gains above $2300. The tax rate is 20%.

Thank you, till next issue.


In the innovative blockchain/crypto & digital asset ecosystem, Asia is the other side of the coin. Blockchain Asia helps you stay on top of what is going on in the Far East.

Blockchain Asia covers exclusively blockchain and crypto & digital asset developments in Asia, including regulation, investments, new deals and company highlights. Content is selective and curated.

I am the co-founder of Kee Global Advisors. For the past 2+ decades, I have been working in both the U.S. and Asia. A bilingual, I enjoy writing “Blockchain Asia” here in English, while blogging on WeChat’s mobile publishing platform in Chinese.

For previous posts, please visit here. Please email insight@keeglobaladvisors.com with any ideas or thoughts. Would love to hear from you!

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Blockchain Asia | #18

CCB Malaysia tokenized bond issuance/Chinese bitcoin mining equipment sold out/SBI entering crypto lending/MUFG & Akami launching high-speed payment network/Singapore & Thailand banks embrace crypto

Welcome back. In this issue, I am doing a recap of major events in China, Japan, Singapore and Thailand in the past few weeks.

Wishing you a joyous and healthy holiday season!

~ Coco

China

$4.2 billion worth of cryptocurrencies confiscated by the Chinese government

Chinese courts confiscated 194,775 BTC, 833,083 ETH, 487 million XRP, 79,581 BCH, 1.4 million LTC, 27.6 million EOS, 74,167 DASH, 6 billion DOGE, and 213,724 USDT from a massive Ponzi scheme. Report

Chinese Construction Bank canceled a blockchain-based bond issuance

China Construction Bank (CCB) in Malaysia’s Labuan branch unexpectedly halted a blockchain-based bond issuance valued at $3 billion, perpetually. The bond offering was designed for both institutional and retail investors who could purchase the bond with US dollars or bitcoin. Report

Although CCB was not the issuer, only a lead arranger and listing sponsor, it faced two regulatory challenges which led to the unsuccessful attempt. First, as early as 2013, the People’s Bank of China (PBoC), together with other regulators, jointly issued a notice to restrict banks from using or circulating bitcoin in the marketplace as a currency. On Nov. 6, right before CCB’s listing of the tokenized bond, PBoC published “the 2020 Financial Stability Report”, which emphasizes the importance of risk-prevention in China’s financial market in the face of an increase in external pressure on China’s financial system, in particular, the importance of curbing default risks of large Chinese companies. It is widely speculated that the Report is also behind Ant Group’s halt of its IPO in both Mainland and Hong Kong.

China’s CBDC to challenge data monopoly in the marketplace

On Nov. 21, in a speech delivered at a conference in Guangzhou, Guangdong Province, former Vice President of PBoC Yongli Wang told his audience that the anonymity feature offered by DC/EP, China’s central bank digital currency, may enable the central bank to take back the control of consumers’ data from commercial banks and third-party payment solution providers e.g. AliPay, WeChat Pay, and thus, break their data monopoly.

Chinese crypto companies look to Hong Kong and Singapore for opportunities

Chinese crypto-related financial services and asset management companies continue to diversify their businesses to Hong Kong and Singapore in the face of increasing scrutiny from Chinese regulators. Report

Huobi launches a regulated exchange in Malaysia

After receiving a digital asset trading brokerage service license from Malaysian regulators in Sept. 2020, Huobi announced the launch of an exchange which will support crypto spot and derivative trading. Report

China’s mining-related companies

Ebang, Nasdaq listed Chinese ASIC chip design and manufacturer of mining rigs, entered into a technology license agreement with a Korean company for its proprietary patent ASICBoost, which may help improve mining performance by 20%. Report

Ebang’s competitor Canaan, also listed on Nasdaq, just announced its financials for the 3rd quarter including revenue of RMB163 million ($25 million), down from RMB670.6 million ($102 million) for the same period last year.

Bitcoin mining equipment from leading mining manufacturers sold out

While Canaan and Ebang had a struggling 3rd quarter, the two major leading mining equipment manufacturers are taking preorders for next spring. Due to increasing demand from overseas institutions and limited wafer capacity of chip manufacturers, Bitmain and MicroBT have sold out of their equipment and are taking preorders for next spring. Report

U.S. intelligence community raising concerns about China’s dominance in bitcoin mining

The director of National Intelligence John Ratcliffe sent a letter to SEC Chairman Jay Clayton calling for his attention to China’s dominance in bitcoin mining hash power as well as the launch of its central bank digital currency DCEP. Report


Japan

SBI introduces crypto lending business

Japanese financial services firm SBI recently began allowing its customers to deposit bitcoin and earn an annual interest of 1%. It plans to extend the services to XRP and ETH. Report

MUFG and Akami launching high-speed blockchain-based payment network

The joint venture Go-Net between Japanese bank MUFG and Massachusetts based Akami is set to launch a high-speed payment network based on blockchain sometime next year. Their original plan was for 2020. The venture claims that the network will be able to process 100,000 transactions per second vs. 70,000 by Visa. The two companies announced the formation of the joint venture in February 2019. Report

Japan trying to move from a cash country to a digital currency one

With its neighbor China aggressively pushing out CBDC, Japan is feeling the urgency to reduce its reliance on cash and to transform into a digital currency country through efforts from its private sector and the Central Bank. Report


Singapore

Singapore ready for a CBDC for institutions

Monetary Authority of Singapore’s Chief Fintech Officer Sopnendu Mohanty said in an interview that Singapore is developing a central bank digital currency (CBDC) that will exclusively enable settlements of securities and payments among financial institutions. Report

Singapore banks competing to get into crypto business

The third largest bank in Singapore, United Overseas Bank, is speculated to be getting into the crypto asset custody business after DBS publicly announced its plan to launch a crypto exchange and custody. Report


Thailand

Thai SEC introduces new regulations regarding crypto assets

To support the fast growth of crypto trading activities in the country, Thai SEC revised its Net Capital rule to help securities and derivatives brokers better manage liquidity and risk. The revisions may boost crypto/digital asset trading in Thailand. Report

Thai Fintech company challenging SWIFT and Western Union

Lightnet, a Thai Fintech company headquartered in Singapore, strives to be the primary cross-border intermediary of payment and settlement for banks and other institutions, replacing SWIFT and Western Union in Asia. After closing a $31 million Series A round in January Lightnet expects to complete $1 billion in transactions by the end of this year. Report

Defi incubator partnering with SCB 10X

SCB 10X, the venture arm of one of the largest commercial banks in Thailand, Siam Commercial Bank, is working with DeFi product incubator Alpha Finance Labs to jointly create a suite of Alpha DeFi products that will bridge the gap between the traditional and decentralized financial sectors. SCB 10X’s portfolio companies include Ripple and BlockFi. Report



In the innovative blockchain/crypto & digital asset ecosystem, Asia is the other side of the coin. Blockchain Asia helps you stay on top of what is going on in the Far East.

Blockchain Asia covers exclusively blockchain and crypto & digital asset developments in Asia, including regulation, investments, new deals and company highlights. Content is selective and curated.

About myself, I am the co-founder of Kee Global Advisors. For the past 2+ decades, I have worked with both Western and Asian companies. Peking University and UC Berkeley grad. A bilingual, I enjoy writing “Blockchain Asia” here in English, while blogging on WeChat’s mobile publishing platform in Chinese.

For previous posts, please visit here. Please email insight@keeglobaladvisors.com with any ideas or thoughts. Would love to hear from you!

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Blockchain Asia | # 17

China's aspiration behind DC/EP/AntChain launches Trusple/Chinese crypto mining companies competing for North America/Kakao's Klaytn partnering with Chinese/VC fund listed security tokens

October 1, 2020

Welcome back to Blockchain Asia. In this issue, we mostly cover Chinese companies.

  1. China warming up to cryptocurrencies?

  2. China’s aspiration behind its CBDC - DC/EP

  3. JD.com helping with DC/EP integration

  4. Ant Group making rapid strides in blockchain-based applications

  5. Chinese crypto mining companies Ebang, MicroBT & Bitmain competing for North America

  6. HashQuark and Klaytn partnering to build out staking ecosystem in China and Korea

  7. Singapore-based tokenization VC fund listing its security tokens on Fusang, an Asian digital securities exchange

  8. Two great video interviews about cryptocurrency in Asia

  9. 2020 Shanghai Blockchain Week & Conference Oct. 23-28

China warming up to cryptocurrencies?

Shocking to Chinese, last week, the central government’s TV station CCTV reported that cryptocurrency had outperformed gold and, in particular, pointed out that the prices of Bitcoin and Ether had increased 49% and 169%, respectively, in 2020. At the end of the report, the announcers toned things down by warning the audience of the relatively high risk of investment in cryptocurrency. Cryptocurrency has been a taboo since 2017 when the Chinese regulator banned and shut down exchanges in the country.

China’s aspiration behind CBDC - DC/EP

The latest issue of “China Finance” (17th issue, page 65), a magazine owned by China’s central bank PBoC published a research report about China’s CBDC - DC/EP written by two researchers/professors from Shanghai Fudan University.

The report calls attention to the challenges facing the global monetary system, which manifest primarily in 1) excessive supply of US dollars, which is to blame for negative externalities (a cost suffered by a third party as a consequence of the excessive money supply) to other countries, esp. developing countries; and 2) SWIFT, which is controlled by the U.S.

The report alludes to the argument that China sees the need and has the capability to chip away the monopoly status of U.S. dollar with the help of DC/EP.

JD.com partnering with China’s central bank on DC/EP

China is accelerating the preparation to launch DC/EP. JD Digits, the Fintech arm of JD.com, one of the largest eCommerce companies in China, has entered into a partnership with the central bank to develop mobile apps and other applications for the digital currency.

Others joining JD to help PBoC by integrating DC/EP onto their operational platforms include DiDi, China’s Uber, and video-sharing company Bilibili. The central bank hopes to achieve fast adoption of DC/EP by tapping into the massive user bases of these companies. Read more on PYMNTS

AntChain launching blockchain-based trade platform partnering with international banks

Ant Group unveiled Trusple, a smart contract-based cross-border trade platform for SMEs. Trusple is powered by AntChain, a blockchain consortium the group officially introduced to the public in July (refer to Blockchain Asia #14 for more details of AntChain). Banking partners on Trusple include BNP Paribas, Citibank, Deutsche Bank, Standard Chartered Bank and DBS. Read more on Straits Times

Ebang getting a license in Canada to grow its digital business

A Chinese ASIC chip designer and mining rig manufacturer, Ebang announces that its new subsidiary in Canada has received a Money Service Business License from the Financial Transactions and Reports Analysis Centre of Canada on September 16, 2020. This will allow the company to engage in foreign exchange trading, digital currency transferring and dealing in virtual currencies in Canada. SEC filing here

The Nasdaq-listed company’s revenue dropped 50.6% in the first 6 months of 2020, blaming COVID-19. Ebang was listed in June. For more about Ebang, refer to Blockchain Asia #12.

MicroBT setting up a factory outside of China to supply to the U.S. and partnering with Foundry

On September 25, Shenzhen-based Chinese crypto mining rig maker MicroBT announced the set-up of an offshore factory in Malaysia to supply the U.S. market. By doing so MicroBT can avoid the 25% tariffs imposed by the U.S. due to the trade war between the U.S. and China.

According to the announcement, through the partnership with Foundry, MicroBT will distribute its mining rigs to institutional miners that Foundry serves in North America. New York-based Foundry Digital LLC is a wholly-owned subsidiary of Digital Currency Group.

September 10, MicroBT’s competitor Bitmain announced the partnership between Foundry and Bitmain.

Zuoxing Yang, the founder of MicroBT, used to play a key role in Bitmain’s chip R&D.

HashQuark partnering with Klaytn

HashQuark, a member of HashKey Group in Asia, enters into a strategic partnership with Klaytn, a blockchain developed by Korean internet company Kakao, to jointly build out the staking ecosystem in both China and Korea. Kakao owns KaKaoTalk, KaKaoPay and KaKaoBank. Read more on Medium

Venture capital fund SPiCE listed on the first fully licensed digital securities exchange Fusang in Asia

SPiCE, the first tokenization VC fund in Singapore investing in the tokenization ecosystem, listed its fund’s security tokens on the exchange Fusang. Fusang with operations in Hong Kong, Malaysia and Singapore, has received its securities exchange license from the Labuan Financial Services Authority, Malaysia and TCSP license for its custody business from Hong Kong. Read more on Yahoo Finance

Recommended video interviews

  1. Institutional Bitcoin in Asia, an interview with Dave Chapman of OSL

  1. SFF Green Shoots Series - Cryptocurrency, hosted by Monetary Authority of Singapore

Upcoming Blockchain conference in Shanghai

2020 Shanghai International Blockchain Week hosted by Wanxiang Blockchain Labs, Oct. 23-28. The conference on Oct 27-28 will be in person but will also offer live streaming to those not able to attend in person. More information on its website

Thank you,

~ Coco


In the innovative blockchain/crypto & digital asset ecosystem, Asia is the other side of the coin. Blockchain Asia helps you stay on top of what is going on in the Far East.

Blockchain Asia covers exclusively blockchain and crypto & digital asset developments in Asia, including regulation, investments, new deals and company highlights. Content is selective and curated.

About myself, I am co-founder of Kee Global Advisors. I work with both Western and Asian companies in the past 2 decades. Peking Univerisity and UC Berkeley grad. A bilingual, I enjoy writing “Blockchain Asia” here in English, while blogging on WeChat’s mobile publishing platform in Chinese.

For previous posts, please visit here. Please email insight@keeglobaladvisors.com for any idea or thought. Would love to hear from you!

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