The Latest News on Cryptocurrency in East Asia

The Latest News on Cryptocurrency in East Asia

Crypto exchange HashKey, which is the first licensed virtual asset provider in Hong Kong, has announced that it will open its doors to residents for retail trading on August 28. However, there are certain restrictions in place. According to local news reports, investors will only be allowed to invest up to 30% of their net worth into cryptocurrencies when using the platform. This is to mitigate risks associated with volatile crypto markets. If the investment limit is exceeded, a risk control warning will be displayed. It is worth mentioning that the exchange cannot validate users’ net worth and relies on self-verification of assets. Additionally, the exchange will assess users’ investment background based on information submitted during know-your-customer verification. This means that beginners may be limited in what they can purchase initially. At the moment, the platform only supports trading of Bitcoin (BTC) and Ether (ETH), as Hong Kong regulators have yet to allow margin trading and crypto derivatives.

China seems to be on a mission to eliminate private blockchain firms operating within its borders. This crackdown comes as the country faces an economic downturn and an increase in the use of cryptocurrencies as a means of capital flight. Local media reports suggest that blockchain projects in China have bounties on their heads. Third-party tracking firms are tipping off the police on undercover crypto projects, which can result in their arrest and asset forfeiture. The tracking firms stand to make significant commissions from such cases. After arrest, crypto executives are reportedly coerced into handing over their project’s private keys and access to servers. Police then allegedly get third-party payment processors to convert the confiscated coins and tokens into Chinese Yuan. The executives are then charged with operating illegal schemes, such as multi-level marketing or money laundering, which leads to the seizure of all protocol-related assets. This profit-seeking behavior by law enforcement agencies in crypto-related cases has eroded trust in the Chinese justice system. As a result of this crackdown, several protocols have been terminated, leaving non-Chinese users with funds stuck on these platforms. Unsurprisingly, this has led to a wave of emigration among Chinese Web3 founders, and overseas law enforcement agencies are now trying to recover the “stuck” funds.

While private crypto activities are facing a crackdown, 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 funds raised from this bond will be used to finance solar panel facility expansion projects in Wuxi. The e-CNY CBDC has been promoted as a means of stimulating domestic spending and has gained significant traction. In the City of Tianjin alone, e-CNY transaction volumes have exceeded $17.5 billion in the first half of 2023, with over 302,000 merchants accepting the CBDC as a means of payment.

The U.S. Federal Bureau of Investigation (FBI) recently announced the identification of 1,580 BTC ($41 million) that was stolen by North Korean hackers. The stolen funds were traced to six displayed wallets, including those involved in the Alphapo hack, CoinsPaid hack, and Atomic Wallet hack, all of which occurred in June. The FBI has advised private sector entities to examine blockchain data associated with these addresses and be vigilant in guarding against transactions involving them. The agency believes that North Korea intends to cash out the stolen funds. The investigation into North Korean hackers’ involvement in previous exploits is still ongoing.

Yi Xiao, a former vice chairman of the Jiangxi Provincial Political Consultative Conference Party Group, has been sentenced to life in prison for corruption and abuse of power in a Bitcoin mining enterprise. Xiao operated a Bitcoin mining enterprise under the corporate name Jiumu Group Genesis Technology from 2017 to 2021, disregarding the ban on cryptocurrencies. He amassed a large number of Bitcoin miners and consumed a significant amount of electricity. Xiao used his public office to secure subsidies, capital, and electricity supply for his mining operation. He also fabricated statistical reports to hide the true nature of his activities. This case highlights the crackdown on crypto activities in China and the consequences faced by those who defy regulations.

The cryptocurrency landscape in East Asia is facing significant regulatory challenges. While there is a crackdown on private crypto activities in China, government-led efforts, such as the e-CNY CBDC, are flourishing. The identification of stolen Bitcoin by the FBI and the sentencing of a former official involved in Bitcoin mining fraud further exemplify the ongoing legal battles and consequences associated with the cryptocurrency industry. As the regulatory landscape continues to evolve, it is crucial for investors and industry players to stay informed and adapt to the changing environment.

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