Less than two years ago, China was the world's virtual-currency capital by trading volume. On the eve of the great crypto crackdown in September 2017, China accounted for 90% of the world's Bitcoin trading. Miners capitalized on cheap electricity rates in far-flung provinces to churn out as many digital coins as their power supplies permitted. Crypto bulls lauded Beijing's apparent embrace of distributed ledger technology and decentralization.

As it turns out, the celebration was premature. In a move to control what it perceives as systemic financial risk, Beijing has been gradually squeezing the life out of the China crypto market. The Chinese government has banned ICOs and the use of fiat currency in virtual-currency purchases as well as blocked related websites. Recently, it began working to eliminate crypto mining. At the same time, the WeChat super app banned crypto trading effective May 31.

The Ant Financial empire just keeps expanding. In the past five years, the Alibaba subsidiary has become China's paramount fintech player, offering a suite of digital financial services from simple online banking to wealth-management services powered by artificial intelligence. Ant is now moving into health insurance with a product that has already signed up 50 million users and is aiming to have 300 million within two years. There's one small caveat, however: Ant says that it's not selling health insurance. To do that, it would need permission from China's regulators. Instead, the product is referred to as "a health aid plan."

Foreign banks have a negligible presence in China, the world's largest consumer market. Research by KPMG has found that foreign banks hold about 1.3 % of China's domestic banking assets as of late 2017, compared to roughly 2.4% a decade earlier. Brokerages have not fared better. In 2015, UBS Securities and JPMorgan First Capital ranked 95th and 120th, respectively, among China's 125 brokerages by net income, according to the Securities Association of China.

Published in China Banking Research

China may be the only country in the world able to stamp out cryptocurrency while repurposing its underlying blockchain technology. Decentralization becomes centralized under this scenario, as private enterprises implement blockchain solutions in line with central government directives. It's a bit like the "socialist market economy."  The key to success here is acceptance of seemingly contradictory principles, one of Beijing's specialties.

Paradoxes abound in the Chinese economy, as the long arm of the state regularly collides with resilient entrepreneurial activity. Nowhere is this more apparent than the fintech segment, where Beijing is repurposing technology designed to facilitate freewheeling financial activity as an instrument of state control. We would like to ask enigmatic Bitcoin founder Satoshi Nakamoto to comment - if only we knew how to get a hold of him.

Virtual currency adoption looks set to accelerate in Taiwan as the island plans to establish a mechanism for security token offerings by mid-year. The move is in line with Taiwan's launch of a fintech regulatory sandbox that allows firms to experiment with novel business models but not fall afoul of existing regulations.

Published in Asia Banking Research

In hope of a sustained stock market rally, U.S. President Donald Trump has been pushing for a rapid conclusion to the trade war he started with China almost nine months ago. Treasury Secretary Steven Mnuchin and National Economic Council Advisor Larry Kudlow, ever mindful of investors' concerns, reportedly have The Donald's ear. Trump's patience with the hardline approach of U.S. Trade Representative Robert Lighthizer may be wearing thin, people close to the White House say.

Published in China Banking Research

Japan is the world's No. 3 economy and known for its tech prowess, yet the Japanese people prefer cash over other forms of payment. Just one in five transactions in Japan are cashless. Some analysts say that Japan can learn from its giant neighbor China when it comes to cashless payments. In less than a decade, China has gone from cash reliant to nearly cash free. In 2017, nearly half of the world's digital payments were made in China.

Published in Asia Payments Research

In the late 20th century, Hong Kong became the undisputed financial center of the Far East. Tokyo might have had a larger stock exchange, but the city never saw itself as a global financial hub. It was Hong Kong that attracted large global banks, PE firms and hedge funds to establish regional headquarters.

Published in China Banking Research

China led global fintech funding in 2018 as its tech giants stepped up their bid for global expansion. Data from a new Accenture report show that China raised $25.5 billion of $55.3 billion in fintech funding last year. $14 billion of that cash came from the mammoth Ant Financial fundraising round that closed in June 2018.

Published in China Banking Research
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