Blockchain Research

At long last, Taiwan plans to adopt some basic cryptocurrency regulations beyond requiring crypto firms to adhere to existing anti-money laundering legislation. The Financial Supervisory Commission (FSC) will be responsible for the regulations, though the extent of its role has yet to be decided. In all likelihood, the FSC will continue to take a hands-off approach to decentralized digital currencies due to its limited understanding of them and preference to not get heavily involved in a segment of financial services that remains well outside of the mainstream in Taiwan and thus with relatively few ties to the banking system.

A commentary in collaboration with Banking Circle.

While many countries are enthusiastic about blockchain, or distributed ledger technology (DLT), China is in a class by itself. It has a commanding share of blockchain patents, many companies operating in the space and related investment that is growing exponentially. China’s blockchain investment surged from US$14.4 million in 2017 to USD US$930 million in 2021, according to the research firms IDC and the China Commercial and Industrial Research Institute.

The cryptocurrency industry always runs ahead of regulators while the media builds its narratives based on the stories of exuberant founders and investors. This paradigm helps explain why Singapore has been perceived as the place to be for crypto – “hub” is the word of choice – for several years now even though the city-state’s government has been more modest in its ambitions.

A commentary in collaboration with Banking Circle.

It can be hard to separate the hype from reality when it comes to Web3. After all, on the one hand, it is being heralded as “the future of the internet” and on the other, its actual definition remains fluid.

We reckon Silvergate wishes it had never served as FTX’s bank. The collapse of the once mighty crypto exchange has had massive ripple effects across the entire decentralized digital currency ecosystem. In the last three months of 2022, investors pulled out US$8 billion in deposits from the bank given its heavy exposure to FTX and it posted a loss of US$1 billion in the fourth quarter of the year. Silvergate’s stock is trading at around US$5.40 a share, down 95% from a year ago.

Most Asian countries are mulling the creation of a central bank digital currency (CBDC), but only China and Cambodia have launched one. We think that CBDCs make the most sense for countries with pressing financial inclusion needs, and with that in mind, the launch of Laos’s first CBDC pilot led by the same Japanese blockchain company that developed Cambodia’s Project Bakong can be viewed as a positive development.

The United Arab Emirates (UAE) has emerged as a leading fintech hub of the Middle East, with one of the region’s most dynamic startup ecosystems. From a regulatory standpoint, it is also taking a leading role, with big plans for both cryptocurrency and a central bank digital currency (CBDC). While many countries have adopted one or the other, the UAE is one of the few that seems open to both.

China’s launch of the digital yuan has prompted a scramble in Northeast Asia among central banks to assess the merits of CBDCs. Japan, South Korea and Taiwan are all at different stages of CBDC testing that they likely never would have begun if it were not for Beijing’s determination to develop a digital fiat currency. That begs an important question: Does the rest of Northeast Asia need CBDCs? After all, the respective initiatives of Japan, South Korea and Taiwan are inherently reactive, in contrast to Beijing’s proactive approach.

What crypto bear market? North Korea stole a record amount of digital assets in 2022 despite the industry facing unprecedented difficulties. Perhaps the Hermit Kingdom knows something others do not and is betting all that purloined crypto will appreciate handsomely in the years to come. Or maybe it’s just easier for the country’s formidable cybercriminals to pilfer digital assets than other types of money given that the crypto industry continues to operate in the shadows. Whatever the reason, Pyongyang made off with a quite haul last year.

The whispers about China potentially reconsidering its ban on cryptocurrency are growing. In fact, some credible (not crypto bros) people are starting to openly moot the possibility, albeit in the most cautious way possible. If asked a year or even six months ago, we would have said that it was highly unlikely given the concerns the central government has about the use of decentralized digital currencies to evade capital controls and how they may foment systemic financial risk. Now we would say that there is a real debate occurring, but that the ban will not be reversed unless the Chinese authorities see compelling economic benefits.

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