Financial services providers in Hong Kong are already taking the first steps to provide services to retail investors, according to local reports. Brokers and fund managers in the region have reportedly asked for advice on licensing requirements ahead of new legislation.
Lawmakers in Hong Kong passed an amendment to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) in December 2022, which aligns with the region’s recent stance on broadening the possibility for crypto trading.
The amendment introduces a new licensing scheme for virtual asset service providers, which will allow retail investors the ability to trade in virtual assets. Currently, virtual asset trading is restricted to professional investors or traders with proof of at least $1 million in bankable assets.
Victory Securities and Interactive Brokers were the first two brokers in Hong Kong with SFC to trade virtual assets for their professional clients.
According to Robert Lui, the digital asset leader at Deloitte Hong Kong, retail investors will most likely be able to trade virtual assets with a large market capitalization and liquidity.
Currently Hong Kong-based brokers do not need specific licence to service clients trading Hong Kong-listed exchange-traded fund futures based on Bitcoin and Ether. Though, those which will provide virtual asset trading will need additional SFC approval.
The new licensing was initially scheduled for Mar.1 of this year, however the date was then pushed until Jun. 1 in order to give virtual asset service providers more time to accurately prepare.
This comes after the SFC recently appointed Julia Leung as its new chief executive. Leung started her term on Jan. 1 and is set to be in office for the next three years. She has previously spoken out about tightening local crypto regulations.
An executive from the Central Bank of Hong Kong also recently said it was looking into investor protection regulations.
New reports into Sam Bankman-Fried and his collapsed exchanges revealed that Alameda Research, the now-bankrupt crypto trading firm, almost collapsed in 2018, even before FTX was in the picture.
A report published in The Wall Street Journal citing former employees revealed that Alameda incurred heavy losses from its trading algorithm. The algorithm was designed to make a large number of automated and fast trades. However, the firm was losing money by guessing the wrong way about price movements.
In 2018, Alameda lost nearly two-thirds of its assets due to the price fall of the XRP token and was in a blink of a collapse. However, Bankman-Fried reportedly managed to rescue the trading firm by raising funds from lenders and investors on a promise of returns of up to 20% on their investment.
As per the report, In Jan. 2019, Alameda sponsored the inaugural Binance Blockchain Week conference, and SBF used the event to get in touch with investors to get funding for his failing trading firm.
Later in April 2019, FTX was launched with a promise to offer a safe haven for institutional investors. With the launch of the FTX, Bankman Fried used Alameda to fuel its growth as the trading company became the major market maker for the exchange. It was always open for other traders to purchase from and sell to. People familiar with Alameda's tactics claim that the exchange occasionally adopted the losing side of a deal to draw clients.
While Bankman Fried had claimed earlier that Alameda and FTX have always operated independently, the recent lawsuit by the United States Securities and Exchange Commission (SEC) suggests otherwise.
The lawsuit revealed that Bankman Fried instructed to create a piece of code to gain an unfair advantage. The code would let Alameda maintain a negative balance on FTX regardless of the amount of collateral it placed with the exchange. Bankman-Fried also ensured that Alameda's FTX collateral wouldn't be immediately sold if its value dropped below a particular threshold.
The recent report established that Alameda was a sinking ship from its early days. However, Bankman Fried not just rescued it in 2018 with borrowed funds but later used it to create the now-collapsed FTX crypto exchange and fuel its growth.
El Salvador, the first country to legalize Bitcoin, has been pushed down yet another spot in total crypto ATM installations as Australia records 216 ATMs stepping into the year 2023.
As part of El Salvador’s drive to establish Bitcoin as a legal tender, President Nayib Bukele decided to install over 200 crypto ATMs across the country. While this move made El Salvador the third-largest crypto ATM hub at the time after the United States and Canada in September 2021, Spain and Australia overtook the Central American country’s ATM count in 2022.
On October 2022, Cointelegraph reported that Spain became the third-largest crypto ATM hub after installing 215 crypto ATMs. However, Spain continued its installation drive and is home to 226 crypto ATMs at the time of writing. El Salvador’s position as the fourth-largest crypto ATM hub was short-lived as Australia stepped up its game over the following months.
In the last three months of 2022, Australia deployed 99 crypto ATMs, confirms data from CoinATMRadar. As of Jan. 1, 2023, Australia recorded 219 active crypto ATMs, overshadowing El Salvador by 7 ATMs at the time of writing.
Australia represents 0.6% of global crypto ATM installations and, at this rate, is well-positioned to take over Asia’s crypto ATM numbers, which stand at 312 ATMs. The total number of crypto ATMs worldwide is 38,602, out of which 6,071 ATMs were installed in 2022 alone.
Nigeria’s drive to impose the adoption of an in-house central bank digital currency (CBDC) — eNaira — forced the government to limit ATM cash withdrawals to $225 (100,000 nairas) a week.
“Customers should be encouraged to use alternative channels (internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions,” noted Haruna Mustafa, the director of banking supervision, while announcing the drive.
This Daily Dose was brought to you by Cointelegraph.