Visa, in collaboration with HSBC and Hang Seng Bank, has successfully completed phase 1 of its trial for the e-HKD, Hong Kong’s central bank digital currency (CBDC). The trial involved the transfer of tokenized deposits of the digital Hong Kong dollar, which achieved “near real-time” finality. Visa also highlighted that its pilot was functional 24/7, surpassing the uptime of traditional financial systems. The company plans to further explore the use of e-HKD in tokenized asset markets and programmable finance for real estate transactions. It also aims to expand retail solutions and digital cross-border payments. However, no definite timelines for the full launch of the e-HKD CBDC have been provided.
The successful trial of the e-HKD CBDC represents a significant step forward in Hong Kong’s efforts to become a Web3 hub for blockchain in the Asia-Pacific Region. Hong Kong has been striving to establish itself as a leader in blockchain technology, but its efforts were overshadowed by the collapse of the JPEX crypto exchange, which resulted in substantial losses for local investors and a decline in trust in cryptocurrency among residents.
In addition to the e-HKD CBDC trial, Hashkey, one of the first crypto exchanges to receive a regulatory license in Hong Kong, has announced its plan to introduce an exchange token called HashKey EcoPoints (HSK) in 2024. The token will be minted on Ethereum with a total supply of 1 billion, and its utility will include settling trading fees, providing early access to token subscriptions, and product upgrades on the exchange services. Hashkey also plans to buyback HSK tokens with up to 20% of profits generated from related Hashkey services. However, regulatory approval is still required for the token design plan.
In a separate development, nineteen Chinese nationals have been sentenced for their involvement in a $308 million money laundering scheme involving cryptocurrencies. The individuals laundered the funds using peer-to-peer transactions and sold the coins at unusual prices relative to spot markets for the stablecoin Tether before transferring them to exchanges for cash. The cash was then withdrawn from bank counters and transported by plane. The culprits were sentenced to prison terms ranging from six months to six years.
The rise in wire fraud involving cryptocurrencies has led to a crackdown on crypto-related activities by China’s Central Government. This enforcement action has sometimes had unintended consequences for foreign investors using Chinese-based crypto services. Despite this crackdown, there have been recent signs of a relaxation of regulations in China.
Overall, these recent developments in Hong Kong and China highlight the progress being made in the adoption of blockchain and cryptocurrencies in the region. The successful e-HKD CBDC trial, the introduction of the HSK token by Hashkey, and the crackdown on money laundering demonstrate the growing importance of these technologies and the need for effective regulation to prevent illegal activities. As Hong Kong continues to position itself as a leader in blockchain technology, it is essential to strike a balance between innovation and security to foster trust and promote the widespread adoption of these technologies.
