🔺Heroes and Villains
Blockchain & Crypto Asia #39
Welcome back to Blockchain & Crypto Asia, I am Coco Kee.
In this issue, I start with a dissenting view from CZ’s bullish sentiment toward Mainland China about cryptocurrency.
I also point out that China’s Web3 is not your Web3.
Tether is a big winner and so are offshore (non U.S.) crypto exchanges.
Battered at home, U.S. companies are finding a warm welcome abroad.
You will also read about deals in Asia, why a South Korean VC firm sets up a fund dedicated to India’s Web3 and a newly launched $50M global Web3 incubation program.
If you find this newsletter helpful, please subscribe and share it with others.
Enjoy the read.
CZ, there is no deal here
I can’t find the video clip online by CCTV (China Central TV) about cryptos. It is said to have been taken down. And I don’t think it is a big deal. It is not the first time people overreact to a short TV report.
Although Hong Kong relaxes its control over crypto trading, it does not mean Mainland China will in the near future. Here is why:
China does not recover from the three-year Covid lockdown as fast as the rest of the world expects. It faces contracting consumption, slower manufacturing growth, and a severe correction of the real estate market.
On top of slower economic growth, the hike of the U.S. interest rates widens the yield differentials between the dollar and RMB, putting mounting pressure on the RMB. The direct consequences are less inflow of foreign capital and higher interest payout by Chinese companies which have US dollar-denominated debt.
Geopolitically, U.S.-China tensions continue to ratchet up over the Russia-Ukraine war and Taiwan.
With all this in consideration, it will be the last thing for China’s central government to lift the ban on cryptocurrency trading; instead, it will tighten up capital controls to preserve its foreign reserve.
Then, how about the Web3 white paper? No need to get too excited either.
On May 29, the city of Beijing released a white paper dubbed “Web3 Innovation and Development White Paper (2023)”.
Looking closer at the white paper, one thing is obvious Beijing’s Web3 is different from Web3 in our sense. It is more of Internet 3.0., lumping all the new technologies together. In the 95-page white paper, not a single time is cryptocurrency mentioned and in only two places are virtual assets referenced.
Another thing to keep in mind is that this white paper is not endorsed by the central government, but an initiative from Beijing's local government, among other projects in other provinces in China. These local governments are fully aware that only pure technology plays avoiding cryptocurrency can survive the scrutiny of the central government.
As the White Paper illustrates, “it (Internet 3.0) encompasses the concepts of the metaverse and Web3, reflecting the development trend of human society and the economy shifting from the real to the virtual, empowering the real with the virtual, and integrating the virtual and the real. In the future, Internet 3.0 will fully embrace the achievements of the information revolution, the internet revolution, AI, as well as VR/AR and other technological advancements. It will become the culmination of modern science and technology, leading the development of the future internet industry.”
Read the original white paper and report by the Block
Hong Kong
On June 1, the Guidelines for Virtual Asset Trading Platform Operators (together with the Consultation Conclusions), published by the Securities and Futures Commission (SFC) took effect in Hong Kong.
Patricia Ho did a good job of highlighting the key points. Read her post.
Hong Kong and UAE regulators are going to collaborate on crypto regulations. Read Blockworks
Hong Kong-based custodian and trust company First Digital Group introduced the US dollar-pegged stablecoin FDUSD. Read its press release
If you find yourself taken aback by Hong Kong’s 180-degree shift in attitude towards crypto, Sean Lee, Co-founder of Odsy Network, provides a compelling explanation of why he is not surprised at all. Here is an excerpt from my interview with him several weeks ago.
News about exchanges
While domestic exchanges are battered by SEC, overseas exchanges have a much easier life.
“Offshore exchanges remain the dominant venues across the entire crypto landscape, making up a whopping 86% of all trading volume; this dynamic is likely to only accelerate with regulatory uncertainty in the United States,” according to Will Clemente
Binance tapped high-profile Richard Teng to head all its regional markets outside of the US. after announcing layoffs and seeing its market share slide to 56%. At the same time, it may start segregating some major institutional clients’ funds from its platform by letting them deposit in banks. Read Bloomberg
Crypto.com receives the Major Payment Institution License from Singapore’s MAS, which allows it to extend its Digital Payment Token (DPT) services to customers in Singapore. Read Crypto.com announcement
HashKey Pro has applied to offer retail services in Hong Kong. Read announcement.
Japanese exchange BitFlyer becomes compliant with the Travel Rule. Read Cointelegraph
OKX is applying for regulatory approval to establish its European operations in Paris. Read Bloomberg
South Korea, home, sweet home for Altcoins
The highest trading volume goes to XRP, Dogecoin and Sandbox, according to Kaiko.
UAE Wooing Global Crypto Key Players
Dubai’s Virtual Asset Regulatory Authority (VARA) rolled out the red carpet to CEOs of leading crypto companies and held its first closed-door symposium “The Future of Virtual Assets.” Look at their beaming smiles!
See Henson Orser’s Linkedin Post
Photo credit: Hensen Orser
Tether is the winner
On June 1, USDT’s market cap passed its previous ATH $83.2B set in May 2022. The payment app built on Lightening Network Strike announced the integration of USDT onto its platform. Tether will enter energy production and bitcoin mining in Uruguay.
Investments and Deals
Following the close of HashKey Capital’s Fund III raise of $500M, its holding company HashKey Group is eyeing to raise $200M at a $1 billion valuation. Read Bloomberg
Singapore-based Hogwarts Labs, an accelerator of dApps and Appchain for Web3 and AI raised $8M from HashGlobal, MatrixPartner, Xin Family and DHVC, among others.
Layer 1 Anoma’s third raise is led by CCMC Global, which claims to be one of Asia’s first venture capital funds focused solely on blockchain investments.
Singapore-based DeGame, one of the largest GameFi/NFT aggregators closed its second raise of $6.5M, led by Folius Ventures, Kenetic Capital and A&T Capital, followed by NGC Ventures, Hack VC, Hashkey Capital, and Avalanche, among others.
NFT Art market in Asia
The growth of NFTs has led Sotheby’s to create a Metaverse for primary and secondary NFT trading, according to Nicolas Chow, Chairman of Asia, Worldwide Head & Chairman of Chinese Works of Art. Sotheby’s auctioned off some NFT collections previously owned by Three Arrows for $2.5M.
Future3 Campus
Wanxiang Blockchain Labs and HaskKey Capital jointly launch a worldwide incubation program with a $50M seed fund, focusing on Web3.0 Massive Adoption, DePIN and AI. Announcement
Views and Research
Tokenized Funds, The Next Investment Trend? Regulatory Developments in the UK, EU, and UAE by Morgan Lewis
Hashed Emergent, a Web2.5 fund launched by Hashed dedicated to builders from emerging markets with a focus on India, recently published a report to explain why India will lead Web3 adoption in emerging markets.
It is a packed issue. A lot of exciting things going on outside of the U.S. Thank you for reading. Until the next issue.
About the author
I am Coco Kee, the co-founder of Kee Global Advisors and author of Blockchain & Crypto Asia. In the past three years, I have been following innovation and developments in Asia’s blockchain, digital & crypto assets with the belief that this industry is inherently global and Asia is the other side of the coin. Blockchain & Crypto Asia covers regulation, investments, and company highlights to help you stay on top of what is going on in the East. The curated content is selective and serves as information and contains personal views only, not investment advice.
Please email me with any ideas or thoughts. I’d love to hear from you! You can also follow me on Linkedin and Twitter.