Category Archives: Asia

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Hong Kong Firm Launches Stablecoin, Defying China Ban

A Hong Kong-based blockchain investment firm is planning to launch a new stablecoin backed by the Japanese yen. The company, Grandshores Technology Group, will launch the funding round in late 2018 or early 2019.

Despite the optimism of the group’s founding partner Yongii Yao, there is concern among possible investors due to China’s continued scathing stance on cryptocurrency in general and its current ban on ICOs on the Chinese mainland. Hong Kong officially remains a special administrative region of the People’s Republic of China.

Currently, Hong Kong is going ahead with a push to promote blockchain in the territory. A “talent list” was recently issued by The Government of the Hong Kong Special Administrative Region in which it states that it wants “quality people from around the world in a more effective and focused manner to support Hong Kong’s development as a high value-added and diversified economy”. Among the 11 professions on the new list, those with DLT skills were cited.

This isn’t really surprising given a new focus on innovation and technology China’s Administrative Region, given a recent push that has seen the promotion of blockchain in the public arena through generous grants through its local universities of USD 20 million for blockchain and fintech research.

Yao’s optimism leads him to feel that the stablecoins will have mileage on release. He argues:

“We believe cryptocurrency traders and exchanges will be potential takers of these stablecoins… We are entering the next stage of blockchain evolution, a stage which is akin to when computer operating system was transiting from MS-DOS to MS-Windows.”

This is the second recent statement concerning the release of a stablecoin this month after New York state in the US approved two new US dollar-linked stablecoins. Two companies, Gemini Trust Company and the Paxos Trust Company, are the first stablecoin providers to receive the go-ahead to list on exchanges in New York state. The Gemini Dollar, launched by the Winklevoss twins, will allow users a one-to-one exchange on the US dollar on the Ethereum blockchain.

There appears to be a degree of mixed feeling in the industry concerning stablecoins, illustrated by recent remarks by Berkeley professor of economics Barry Eichengreen who suggests that stablecoins, seen by some as highly attractive for investment due to their being pegged to the US dollar, aren’t so stable as the name suggests.

 

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Singapore’s Central Bank Doesn’t Think Tokens are Securities

Singapore’s central bank, the Monetary Authority of Singapore (MAS), has said that cryptocurrency tokens do not fall under the definition of securities.

Speaking at CoinDesk’s Consensus Singapore 2018 conference Wednesday, Damien Pang, who heads the MAS’s technology infrastructure office for fintech and innovation, said that after carefully analyzing the nature of tokens, the bank will not regulate them as securities.

This is because utility tokens that are used to enable access to specific services do not share the same characteristics as securities that promise future earnings to investors, Pang explained. If tokens do begin to reflect the nature of securities in the future, Singapore’s central bank will choose to regulate them.

He made a point to highlight that every jurisdiction has a different definition of what defines an asset as a security and that it is to be expected for the US Securities and Exchange Commision to reach a different conclusion than Singapore’s regulators.

By the end of the year, MAS hopes to have enacted a payments service bill that will be applied to tokens that have ”storage and payment values.”

Pang spoke more to the audience about MAS’s 2017 guidelines for cryptocurrency startups, “A Guide to Digital Token Offerings“, which divides tokens into three categories depending on their use case. These comprise of utility tokens, payments tokens, and securities tokens.

While he currently stands by MAS’s stance, he acknowledged that the industry is ever-changing, and depending on the future direction it takes, regulations may be applicable at a later time.

When Pang was asked why the central bank does not call out specific tokens or companies for going against the state law, he replied saying that would quite possibly create an environment detrimental to positive development: “The moment you start naming names, people take it very literally – these are and those are not. But in fact, there are more than 1,000 tokens.”

 

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Alibaba Founder: Blockchain Meaningless Without Greener, Inclusive Future

The founder of Chinese multinational retail conglomerate Alibaba, Jack Ma, has said that blockchain needs to prove it can push a greener, more inclusive future forward for society, else it is ”meaningless”.

Speaking at the World Artificial Intelligence Conference in Shanghai, China on Monday, Ma said that the ”data age” is a great opportunity for the supply side of the economy to transform the landscape of money and finance. Referencing artificial intelligence, blockchain and Internet of Things technology, Ma said that this modern reformation should not be promoted unless these innovations can bring a greener and more inclusive direction for society.

This is a big call coming from the man who founded the world’s number one company in terms of blockchain patent applications. Although it is reported that Ma has plans to retire from the company, his attitude will surely carry influence within the company and their own blockchain developments.

Ma has defended blockchain on previous occasions, earlier this year refuting claims that the technology is a bubble waiting to burst, although he did claim that Bitcoin in fact was. At this time he also referenced a concern for social improvement, saying new technologies should be questioned on ”what value can it bring to society, government, enterprises, and consumers in the data age”.

Social enterprise with blockchain

Some circumstances show that blockchain has already had a positive impact on social enterprises, with companies utilizing the new technologies to promote their causes of financial, social and environmental well-being.

In one case of this, Finnish start-up Moni created a blockchain-backed card that tackles the issue of refugees economic exclusion due to a lack of personal identification they hold. Each card is linked to an individual’s identity that can be used by refugees to purchase products, pay bills and receive payments from employers.

Swytch is an example of a blockchain company promoting the use of sustainable energy. Right now the pilot project is looking to distribute around 3.5Gw of solar, wind, hydro and bio-gas energy, enough to power over 500,000 homes.

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South Korea Looks to Blockchain With Samsung Tech to Improve Customs Service

Electronics giant Samsung is to develop a blockchain powered platform for use by the Korean Customs Services.

The IT arm of Samsung, Samsung SDS is basing the platform on Nexledger, currently used by businesses as a way of reducing expenses in managing financial transactions and data exchange.

Along with some other 48 organizations, including shipping and insurance companies, the South Korean Customs Service has signed up for the platform in order to streamline and track exported goods passing through customs. The blockchain platform will also aid the customs service in detecting forged documentation.

Samsung is not new to the blockchain industry and appears to be on a drive towards research and development in the new technology. It is currently committed to several new projects in the industry. Samsung is joining a number of other companies in exploring the idea of using blockchain logistics to streamline global supply chains. It is reported that the tech giant has already begun developing a distributed ledger system to monitor international shipments.

The blockchain is set to help shippers, ports, customs offices and many other parties in the global supply chain by replacing paperwork with irrefutable digital records. Blockchain could provide proof of provenance for goods by tracking them globally from the point of origin, manufacture, until the retail store shelf. Import details, fees, and taxes could all be programmed into smart contracts that release payments automatically once the conditions were met.

Recently, Samsung developed Cell 3.0, a platform which combines AI tech with company knowhow, and Banksign, a blockchain-based certification system. The adoption of this new platform is an indication that Samsung may envisage blockchain having a major role to play in the future of the company.

U.S. Customs and Border Protection (CBP), has announced that it will be testing a new blockchain shipment tracking system by combining a newly developed application, Legacy, and other system developed by the Department of Homeland Security (DHS)

Also, in the past month, IBM linked with Danish logistics company Maersk to launch its own blockchain shipping project, “TradeLens” involving 95 other organizations.

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Asia and Australia: Crypto and Blockchain News Roundup, 7th to 13th September 2018

Asia and Australia

Welcome to our weekly roundup of all important blockchain and cryptocurrency news from around the world. Follow the latest developments in the cryptocurrency space continent by continent, country by country.

Japan

Financial regulator adds more experts for crypto license applications: The Japanese financial regulator Financial Services Agency (FSA) has announced that more individuals are being added to its 30-strong team for cryptocurrency exchange license applications in the country.

Cryptocurrencies and exchanges are doing a roaring business right now with more and more players looking to enter the market. FSA is trying to strike a balance between newcomers to promote competition and security of Japanese investors.

According to reports from Japan, there are over 160 applications pending from companies in the space with some big names looking to enter the market.

South Korea

Firm offering insurance against hacking of crypto exchanges: Cryptocurrency exchange operators in the country can now get their exchanges insured against hacking attempts to cover for sizable losses that happen from time to time.

The new offer from Hanwha Insurance means that domestic South Korean exchanges will now have an option for an additional layer of security.

A representative of the Insurance company said:

“It is not a product that has to be compulsory, but it can be outlined if we discuss how much demand there will be. Even if the exchange wants to join, it will require as much coordination as the insurance and reinsurance companies need to meet in order to get insurance.”

Hacked exchanges are a big problem in South Korea as more than USD 500 million worth of coins have already been hacked from major exchanges in the country this year alone.

China

Government to track donations with the help of blockchain technology: The Chinese government is planning to implement blockchain technology to track charitable donations made in the country through their Ministry of Civil Affairs (MCA).

The Chinese government has always been wary of donations and charities that could be misused against the integrity of the country. The ministry has announced a four-year plan for charities to enhance governmental outreach and transparency in the field. NGOs and other charitable organizations will be made to held accountable for all donations through this under-development system.

Uzbekistan

Government looking for South Korean blockchain expertise: South Korea’s blockchain expertise has found overseas admiration and demand as other countries like Uzbekistan are looking to them for developing blockchain industry in their own country.

The Central Asian country recently legalized cryptocurrency trading in the country and has announced initial regulations for mining and trading in the country as well as a state-owned coin trading platform. It is in that regards that the government has sought help from the Korean Blockchain Business Association for help. The government is also looking to offer specialized educational courses in its local universities.

Australia

Driver’s license to be based on blockchain technology: The Australian government has announced that blockchain technology will now be incorporated into public services as part of its forward-thinking approach. The government will trial a digital drivers’ license backed by blockchain in Sydney.

The move is part of a concerted effort to deploy blockchain for better governance. The move will give 140,000 license holders an access to the newly-developed secure Logic TrustGrid license.

The tech behind the blockchain drivers’ license was developed by Australian data security company Secure Logic’s platform. The company is looking to partner with the government for further projects because of the potential of the technology.

 

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China Tracks Charity Donations with Blockchain

The Ministry of Civil Affairs (MCA) in China has commented that the government is planning to implement blockchain technology in order to track charitable donations.

The Chinese plan is very much in line with many governments and NGOs around the globe, many of whom are already utilizing the technology in the sector.

While technological innovations have been boosting capital in practically every other industry, the charity sector has fallen behind. Millennials especially just don’t seem to have confidence in an industry that has had scathing media coverage of improper practice, damaging commercial partnerships and a lack of transparency when it comes down to seeing how donations are distributed.

MCA has just released its four-year blockchain plan for charities, principally to enhance supply chain transparency in the sector, promising to integrate blockchain into charitable institutions systems by the end of the year. The ministry appears to be moving very quickly on this, suggesting that online charities will be connected to government charity databases in the oncoming months, promising to build:

“… a tamper-proof charity organization information query system and enhance the authority, transparency and public trust of information publishing and search services.”

A report conducted by independent think tank Charity Futures concluded that charities have yet to engage with blockchain with the kind of urgency required to keep up with technological advances. The study, ‘Nothing to Lose (But Your Chains)‘, was clear in pointing out that the charity sector had as yet failed to tap significantly into available blockchain technologies.

The report recommends the use of DLT by creating a transparent, end-to-end supply chain for each project. This means that all those involved – government departments, NGOs, funders, charities, local offices, delivery partners, and the individuals receiving the benefit have access up to the moment information regarding the funds or supplies donated.

Some charities and NGOs are getting it right, however. Along with IBM, both the UN and the World Food Programme (WFP) are now proactively using blockchain to record transactions.

The Chinese government has announced that it also intends to integrate blockchain into a range of social services programs.

 

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Trader Triggers Emergency Mode at Exchange With 4.16 Million BTC Futures Position

The world’s second largest exchange Hong Kong-based OKEx, went into emergency mode in late July when a trader took up a 4.16 million Bitcoin futures position listed on the exchange.

The position, worth $416 million, triggered the exchange’s failsafe risk management system forcing futures traders to give up about 18 percent of their profits.

OKEx’s “socialized clawback mechanism,” was called on, which takes a percentage of profit from other short position traders to cover any financial shortfall. This procedure happens when an exchange’s insurance fund is not enough to cover margin call losses.

The client refused to liquidate part of his long position order when approached by the exchange forcing OKEx to freeze his account to prevent further problems.

This incident was seen by the industry as an example of how further regulation is still needed in order to offer a heightened level of protection to exchanges; such as in conventional stock exchanges where brokerages act as a buffer for ensuring clients have sufficient margin deposits and risk management in place on margin calls. Normally exchanges allow their clients to leverage their positions by as much as 20 times.

Soon after the incident, the subsequent drop in the Bitcoin price forced the exchange to liquidate the clients’ account as the required maintenance margin ratio wasn’t sufficient. The shortfall was 1,200 Bitcoin then valued at $9 million, forcing OKEx to add 2,500 of exchange funds into the insurance fund to limit the clawback.

OKEx released a statement explaining that a very large trade occurred which couldn’t be supported:

“An enormous long position in BTC0928 futures contract was force-liquidated at 20:17:14 July 31, 2018 (Hong Kong Time, UTC+8). Due to the sheer size of the order, our risk management system may be triggered to activate the societal loss risk management mechanism.”

Questions have been asked as to how the company’s risk management system allowed such a large trade in the first place, only triggering the system after the trade had been made.

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Asia is Buoyant, New Crypto Exchanges Set for Hong Kong, Korea, and Indonesia

While 160 crypto exchanges wait to enter the Japanese market, elsewhere, the market is turning more buoyant, as Hong Kong, Korea, and Indonesia are poised to become home to new exchanges. Bitone Trade HK, Huobi – Indonesia, and South Korean Probit have all announced that they are opening exchanges.

Hong Kong is particularly buoyant in the blockchain industry at the moment and is feeling the pinch in the sector with a lack of qualified professionals to fill positions. A “talent list” has been issued by The Government of the Hong Kong Special Administrative Region in which it states that it needs “quality people from around the world in a more effective and focused manner to support Hong Kong’s development as a high value-added and diversified economy”. Among the 11 professions on the new list are those with DLT skills.

The latest exchange, Bitone Trade HK will support 30 cryptocurrencies with plans to eventually list more than 100 coins. The company commented:

“Our platform is launched in Hong Kong which is Asia’s international financial center and we provide customers with stable and secure services. Mainly for the Asian market, our goal is to achieve a monthly transaction volume of US$5 billion”

Indonesia may not be one of the markets that spring to mind when the word cryptocurrency drops into a conversation, but the industry is beginning to express itself in South East Asia and forging its own way. The world’s fourth most populous nation has just launched its first formal blockchain association — Asosiasi Blockchain Indonesia (ABI), boosting hopes that the Southeast Asian country may yet embrace blockchain technology.

Huobi Indonesia built on the Huobi Cloud platform will list 123 coins on its new exchange. Currently, the platform lists three base cryptocurrencies: USDT, BTC, and ETH.

South Korea and Japan are considered the crypto powerhouses in the region and never run out of crypto news. Its latest exchange, soon to be launched Probit will list 157 currencies and plans to support eight languages on the platform. The bonus for users is the platform’s heightened levels of security, ensuring that more than 95% of digital assets are stored in a cold wallet supported by hardware keys and software double authentication. The company assures its clients that their “goal is to provide a virtual currency trading platform with the highest level of security.”

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Bithumb Airdrop Causing $247 Million in Wash Trading Daily

Bithumb is conducting season 1 of its ‘Super Airdrop Festival‘, where it refunds traders 120% of trading fees. It has set aside a limit of KRW 1 billion per day for the refunds, which comes out to KRW 167 million (USD 149,000) of rewards each day. Clever traders have seized this opportunity to make profits by conducting wash trading.

Wash trading is when a user sets up two accounts, placing a sell order on one, which is bought immediately by the other. This generates fake trading volume on crypto exchanges and is commonly used to inflate trading volume stats to push crypto exchanges up the CoinMarketCap rankings. Due to the Bithumb airdrop, users now have an incentive to wash trade, since they can make easy profits.

Doing the math, Bithumb charges 0.3% fees, yielding a rebate of 0.36%. Therefore KRW 278 billion (USD 247.6 million) of wash trading can produce the KRW 1 billion limit for trading refunds. And this is exactly what’s been happening – at the time the airdrop reward resets every day, there has been a KRW 252 billion spike in Bitcoin trading on average for a moment, representing one person or many people jumping on the opportunity to make easy money via wash trading.

Bithumb has experienced tremendous problems since it was hacked in June 2018, resulting in the loss of USD 31 million of crypto and the shutdown of the exchange. It has just become fully operational again and has opened registration for new users. Simultaneously, it launched the trading fee refund airdrop.

These events give Bithumb the appearance of having strong liquidity, which attracts traders. It has shot up to #5 in the world on CoinMarketCap with over USD 450 million of trading volume. That means Bithumb’s true trading volume is over USD 200 million per day, much higher than it was before the hack.

In fact, the USD 200 million of real volume generates USD 600,000 of profits per day from trading fees, which is more than enough to pay for the airdrop with a nice profit on top. Perhaps Bithumb will continue doing the airdrop long term, since it is attracting real volume to the exchange and is, therefore, a profitable strategy.

 

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Uzbekistan Legalizes Cryptocurrency, Sets Regulations

The President of Uzbekistan, Shavkat Mirziyoyev, has declared that cryptocurrency is legal, and has announced some initial regulations for trading and mining crypto. A new set of laws specifically for crypto are going to be developed by the government, which has decided not to use existing securities laws for crypto. One positive thing right off the bat is it appears Uzbekistan will not be taxing crypto revenue.

Uzbekistan is a nation in Central Asia with roughly 33 million people, about 10% the population of the United States. A review of Bitcoin legality by country on Wikipedia reveals that Uzbekistan had no laws whatsoever regarding cryptocurrency, meaning up until now, anything involving crypto was allowed.

Therefore, even though the legalization of crypto in Uzbekistan sounds positive, it actually means this is the beginning of regulations that will make some crypto activity illegal. Kyrgyzstan is the only neighboring country which has legalized crypto activity. This lack of regulation in the region probably indicates that crypto activity has been low in the region and is just now increasing to the point that laws are needed.

The Presidential decree specifically legalizes crypto exchanges. Apparently, crypto exchanges have already been operating in the country, but now they must obtain a license. The National Agency for Project Management will issue crypto exchange licenses and monitor crypto exchanges for criminal and terrorist activity. Crypto exchanges will be required to have a reserve of 30,000 “minimum wages” to get a license but it is unclear how much money this is. A monthly minimum wage in Uzbekistan as of 2017 was USD 185 and if this is the right number, then exchanges need over USD 5 million of reserves to operate. Additionally, crypto exchanges will have to host their site on servers in Uzbekistan and must keep all transaction and know your customer (KYC) data in storage for five years.

The decree briefly mentions crypto mining and states that crypto farms over 100 KW will have to purchase designated real-estate from Uzbekistan’s state energy companies.

Although these new laws may open up Uzbekistan crypto users to legal violations, backing up and looking at the broader picture, it is positive that the country has decided to regulate cryptocurrencies instead of outright banning them.

 

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