China’s president Xi Jinping expands CBDC cooperation at SCO, Hong Kong’s crypto licensing costs surge, and Multichain is hacked yet again.
Chinese president shills CBDCs
On July 4, Xinhua News Agency, China’s state broadcaster, published a transcript of President Xi Jinping’s address to the 2023 Shanghai Cooperation Organisation (SCO) Summit. The SCO is one of the world’s largest regional organizations for political, economic and security cooperation, and was established by China and Russia in 2001.
During the speech, President Xi welcomed Iran as a full organisation member and praised the move for Belarus to join. He also talked up the importance of central bank digital currencies (CBDCs):
“The Chinese side proposes to expand the share of local currency settlements of SCO countries, expand sovereign digital currency cooperation, and promote the establishment of SCO development banks.”
In January, the People’s Bank of China reported that there were 13.61 billion digital yuan CBDCs in circulation, representing around 0.13% of the monetary supply. Since then, the CBDC’s use has expanded to the country’s Belt and Road Initiative, various consumer airdrops, and as a means of payment for everyday transportation. However, experts have warned that, despite the constant promotion, the currency has struggled to gain traction.
On July 10, local news outlet East Money reported that a SIM card linked to the digital yuan CBDC will soon be available to Chinese consumers. Because the digital yuan CBDC digital wallet is embedded in the SIM card itself, individuals can pay for their phone bills via a point-of-sale machine even if their phone has no power.
Hong Kong crypto licensing costs surge to HK$100M
According to a July 5 report by Tencent News, the combined labor, material and technical cost associated with obtaining a Hong Kong crypto exchange license has surged to 100 million Hong Kong dollars ($12.77 million) since its inception on June 1.
However, even if the infrastructure is in place, insiders noted that the license application could still be denied or that the business opportunity will disappear once the license is approved. Tencent News wrote:
“Teams that left Hong Kong settled down in Malaysia last month. They can rent a large-floor work space at a monthly rent of 60,000 RMB ($8,296) in the local city center, and there are very cheap IT technicians in the local area. These emigrated teams believe that compared to Hong Kong, it is even more advantageous to do crypto projects in Southeast Asia.”
All crypto exchanges in Hong Kong must obtain a regulatory license or cease operations in the administrative region by the middle of next year. Since the announcement, exchanges such as Huobi, OKX, BitgetX, Hashkey Pro and Gate.io have all applied for licensing in Hong Kong.
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Chinese cross-chain protocol hacked yet again
On July 7, the developers of Chinese cross-chain bridge protocol Multichain shared a worrying message, stating: “The Multichain service stopped currently, and all bridge transactions will be stuck on the source chains. There is no confirmed resume time. Please don’t use the Multichain bridging service now.” The same day, blockchain security firm PeckShield warned that over $126 million in funds had been drained from Multichain.
Circle promptly froze $63 million USD Coin (USDC) in suspected stolen funds, while Tether froze $2.5 million in USDT. Changpeng Zhao, CEO of cryptocurrency exchange Binance, said that the hack did not affect its users as the firm had withdrawn all funds a while back.
It appears that malicious actors breached the protocol’s private keys and subsequently moved protocol assets elsewhere, although it took until July 10 for the funds to make another move, with a wallet address identified as “Fake_Phishing183873 ” receiving a stunning 10.2 million USDT and 67.76 wrapped Bitcoin (wBTC) from the Multichain address. Immediately after the hack, the price of Multichain tokens dropped by 20% from its highs and now trades at $2.62 apiece.
Multichain was previously hacked for $7.9 million in July 2021 due to another private key exploit. Interestingly, Zhao Jun, CEO of Multichain, has been missing for nearly two months, with rumors claiming that he had been arrested by Chinese police back in May. Around the same time, users reported that the on-chain transactions had abnormally long transaction times following a recent backend node upgrade. The protocol currently has a total value locked of $1.26 billion.
Singapore tightens grip on crypto activities
The Monetary Authority of Singapore (MAS) will require Digital Payment Token (DPT) providers to place clients’ assets in a statutory trust by the end of the year. In addition, DPTs will be prohibited from issuing crypto lending and staking services to retail investors. The MAS wrote:
“These measures are introduced following an October 2022 public consultation on regulatory measures to enhance investor protection and market integrity in DPT services. The consultation received significant interest from a wide range of respondents, with broad support.”
Crypto lending and staking services will still be allowed for institutional and accredited investors. Despite the new regulations, the MAS warned that “while the segregation and custody requirements will minimize the risk of loss of customers’ assets, consumers may still face significant delays in recovering their assets in the event of insolvency of the service providers.” The regulator is seeking public feedback on the proposed rule changes until Aug. 3.
Thai crypto exchange raises $17.1 million
According to a recent filing, Thai cryptocurrency exchange Bitkub has sold 9.22% of its equity, amounting to 600 million baht ($17.1 million), to Thai conglomerate Asphere Innovations PLC. During the transaction, it was disclosed that Bitkub held 31.9 billion baht ($910 million) in assets and customer deposits, as well as 31.4 billion baht ($890 million) in liabilities. The company recorded a total gross profit of 314.87 million baht ($8.97 million) in the first quarter of 2023.
Bitkub is Thailand’s largest cryptocurrency exchange, with nearly 90% in market share in 2021. Thai-based Siam Commercial Bank had previously signed an agreement to acquire 51% of the company that year for 17.85 billion baht ($510 million). However, the bank canceled the deal in August 2022. Bitkub’s total assets decreased by 64% from Dec. 31, 2021, to Dec. 31, 2022.
Japanese video game conglomerate moves into blockchain gaming
On July 10, South Korean nonfungible tokens firm Line Next revealed it had signed a memorandum of understanding with Japanese video game giant Sega to remake one of Sega’s classic games on its Web3 gaming platform, Game Dosi.
Launched in May, Game Dosi currently has six titles, including its in-house game, Project GD. Through the platform, players can buy and sell NFT heroes and challenge other players.
Founded in 1960, Sega is one of the largest video game conglomerates in Japan, with nearly $2 billion in annual video game sales. Its most iconic franchise is Sonic the Hedgehog, the titular hero of which also serves as the company’s mascot.
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