Our weekly roundup of news from East Asia curates the industry’s most important developments.
Travel rule to take effect in Hong Kong starting January 1, 2024
A new set of rules governing inter-exchange deposits and withdrawals will take effect in Hong Kong on New Year’s Eve, making life a little more difficult for local crypto users.
As an example, deposits to crypto exchange Hashkey of HKD $8,000 or more ($1,000) will now be only credited if they originated from Binance (but not Binance.US.) The exchange said:
“Clients with the same name account undergo an expedited verification process, and no verification documents are required. Deposits from other exchanges is currently not supported. We will be gradually expanding the list of supported exchanges on our platform.”
Exchange deposits under that limit will be supported from 24 entities, but even then users must provider KYC information and screenshots of their accounts on other exchanges. The vice versa applies to inter-exchange withdrawals originating from Hashkey. In one small glimmer of light, the Travel Rule only applies to third-party exchanges and does not affect self-custody wallets.
The exchange warned that if user information doesn’t match for deposits or withdrawals, the transaction will be reversed and users will need to pay the transaction fees.
210 Web3 firms now domiciled in Hong Kong
At the inaugural Hong Kong Web 3.0 Summit on December 21, Paul Chan Mopo, the financial secretary of Hong Kong, said that 210 Web3 firms are now domiciled there due to its friendly regulations. Chan praised blockchain technology as solving “old problems” and “new difficulties.”
“As long as we can provide efficient, fast, cheap and reliable business or transaction models, continuously and extensively solve pain points and create value, the real needs of the market will become the driving force for everyone’s success.”
Despite the optimism, Chan cautioned about the “spillover impact” of the collapse of offshore cryptocurrency exchanges and of “local fraud cases.” He may have been referring to the collapse of the unregistered JPEX and Hounax crypto exchanges which led to investor losses of nearly $200 million.
“Risks must be identified and eliminated more proactively,” said Chan. “In addition, it is also necessary to strengthen investor education in an all-round way.”
In January, Hong Kong launched its digital talent hub, “Cyberport,” as a means of attracting Web3 talent and entities. The Hong Kong government has allocated 500 million Hong Kong dollars ($64 million) for Cyberport’s inaugural “Digital Transformation Support Pilot Programme,” an initiative aimed at helping small and medium-sized businesses to implement digital solutions.
$1.14 billion in 3AC assets frozen
A British Virgin Court has ordered a freeze on $1.14 billion worth of assets belonging to bankrupt Singaporean hedge fund Three Arrows Capital (3AC) co-founders Su Zhu, Kyle Davies, and Davies’ wife, Kelly Chen. The entity currently owes $3.3 billion to creditors after filing for bankruptcy last June, as reported by Bloomberg.
Currently, Su Zhu is in custody in Singapore for contempt of court but is scheduled to be released this month. Kyle Davies’ whereabouts are currently unknown. In early October, Cointelegraph reported that Su Zhu’s $36 million mansion in Singapore had been converted into an eco-farm following his hedge fund’s collapse.
3AC filed for bankruptcy in July 2022 after a series of failed leveraged trades on the Terra ecosystem wiped out the hedge fund and left creditors with over $3.5 billion in claims. This in turn to the bankruptcy of 3AC’s counterparties, such as Celsius, Voyager and FTX. Although bankruptcy proceedings are still ongoing, 3AC’s Davies and Zhu have launched a novel crypto exchange, OPNX, early this year, albeit with significant headwinds. At its peak last May, 3AC managed more than $10 billion in digital assets.
BC Technology Group proposes name change after $90M investment
BC Technology Group, the owner of licensed Hong Kong crypto exchange OSL, will change its name to OSL Group Limited as part of its rebranding after receiving a HKD$710 million investment ($90.1 million) from blockchain firm BGX.
According to a December 18 proposal, board members wrote that the name change “will provide the company with a more appropriate corporate image and better understanding of the company and enhance the company’s brand identity.” The name change would not impact its stock or any of the rights of its shareholders. Along with the investment itself, the name change will be held for a vote during a special meeting of BC Technology shareholders on January 4, 2024.
Along with crypto exchange Hashkey, OSL was one of the first exchanges to receive a license under Hong Kong’s Virtual Asset Licensing Regime (VASP) that took effect this June. In November, Interactive Brokers partnered with OSL to open Bitcoin and Ethereum trading for its retail clients in Hong Kong after the firm, too, obtained VASP approval. Since the BGX investment, shares of BC Technology have gained 150% to 11.60 Hong Kong dollars ($1.49) apiece.
Bitcoiner sex trap extortion? BTS firm’s blockchain disaster: Asia Express