Coco again. Welcome back to Blockchain Asia. In this issue, for China, I will highlight the white paper recently released by China’s central bank about e-CNY, China’s CBDC; Bitmain has spun out its mining pool Antpool. For Japan, in a competition with eBay, Yahoo! Japan dives into NFTs. The regulatory landscape in Asia is mixed. In terms of investments, Western money increasingly being invested in Asian companies.
China
China’s central bank PBOC releases the white paper for its central bank digital currency, which is now branded as e-CNY. This 16-page report clearly defines e-CNY as a retail CBDC, a substitute for M0 and pays no interest. It circulates in the same way as the physical RMB in a two-tier system under which commercial banks exchange e-CNY for the public. PBOC has the sole right to issue and supervise the circulation of e-CNY. Although the report does not specify an official launch date, it provides an extensive list of cities and regions participating in the pilot projects. It is likely e-CNY will be tried at the 2022 Winter Olympics.
Bitmain’s mining pool business Antpool completed its spin-off into an independent company to be run by Micree Zhan, co-founder of Bitmain. Antpool will be operated from outside of China. Meanwhile, BIT Mining (NYSE ticker: BTCM) majorly owned by Jihan Wu through a reverse merger has been busy cleaning up the entity including a plan to remove VIE structure and a closing of $50 million private placement.
NFT
Yahoo! Japan partners with LVC Corporation, a subsidiary of Japanese messenger and social network platform Line, to launch a secondary trading marketplace for NFTs using Line’s blockchain, LINE BITMAX Wallet and Yahoo! Auctions. eBay has also expressed interest in NFTs.
Regulations
Singapore has not issued any licenses, yet, to Digital Payment Token (DPT) service providers. They are operating under an exemption granted by the new Payment Services Act (“PS Act”) until their applications are approved or rejected. PS Act gives the authority to MAS (Monetary Authority of Singapore) to govern the payment system that is crucial to the financial stability of Singapore. Most crypto activities fall under DPT and require DPT licenses to be approved and issued by MAS. “Around 170 applicants have applied to provide DPT services. To date, 30 DPT applications have been withdrawn after engagement with MAS and two have been rejected. Thus far, MAS has not issued any license to DPT service providers, but several applications are in the final stages of review.” More details here.
South Korea’s Ministry of Finance proposed “the 2021 Tax Law Amendment Bill”, which will give tax authority to seize and liquidate, without the approval of courts, cryptocurrencies that belong to the owners who evade tax payment. The bill will be submitted to lawmakers for approval before enforcement.
With the September 24 deadline approaching most of the South Korean crypto exchanges are facing the risk of having to shut down. The Specific Financial Information Act requires all exchanges to have a bank as the partner which will be held accountable for any compliance and other issues if any. Most banks are reluctant to accept such a harsh requirement.
Some background about South Korea. “According to Messari’s Asia Crypto Landscape report, South Korea has the highest penetration of crypto investors with a third of workers invested in crypto. Moreover, unlike neighboring Japan, crypto is not primarily for millennials, as up to 8% of older residents in their 60s and 70s are supportive of the market. Demand for exposure was so intense that South Koreans paid “kimchi” premiums up to 50% for bitcoin in 2017 due to capital controls and a ban on servicing foreigners.” Some people are lamenting that kimchi premiums could evaporate if the regulator does not ease up on their bank partner requirements.
CZ of Binance at a recent fireside chat hosted by SCB10X commented that he sees good potential for cryptocurrency development in Southeast Asia because of its more friendly regulatory landscape. However, his company and subsidiaries have been reprimanded and warned by the regulators in such countries and regions as Malaysia, India, Thailand, Hong Kong in the past few months. He states he is going to shift his mindset from running a technology company to a financial service company and will try to be more regulatory compliant. He is looking to replace himself as CEO with an individual with a strong regulatory background to lead the whole organization. He believes the industry needs to be aware of the regulatory landscape shift and pivot to prepare for more regulations.
Investment
Peter Thiel’s VC fund Valar Ventures led the Series A round of $20mm in a crypto trading and lending platform Vauld, headquartered in Singapore with most of the team in India.
Mastercard launched a program “Start Path global startup engagement program” to incubate early-stage companies of blockchain, crypto & digital assets. Of the 7 companies that joined the program, 2 come from Asia, which are Mintable, an NFT marketplace and STACS, a blockchain infrastructure for the financial industry.
Fireblocks’ Series D round received investment from SCB 10X, the venture arm of Thailand’s Siam Commercial Bank.
FTX completed Series B $900 million raise at $18 billion valuation. The company started in 2019 in Hong Kong.
Galaxy Digital’s new crypto Venture Fund of Funds has deployed capital in Spartan Group, a boutique blockchain investment fund in Asia. The fund will invest in DeFi, NFTs, Web 3.0, and infrastructure and services, with a focus on pre-seed and seed rounds.
Thank you and enjoy the rest of the summer.
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.
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