Bitcoin rally leads to Hong Kong crypto stocks bull run, Huawei to enter Cyberport, South Korean crypto exchange rules, and more.

by Zhiyuan Sun 5 min February 15, 2024

Asia Express

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Our weekly roundup of news from East Asia curates the industry’s most important developments.

Hong Kong crypto stocks up 40% amid Bitcoin bull run 

Hong Kong crypto stocks have surged as part of the broader market recovery. Two notable entities, licensed crypto exchange OSL and crypto custodian Sinohope Technology, have seen weekly gains of 46% and 36%, respectively.

The performance is all the more noteworthy given the Hong Kong and Chinese stock markets are in an ongoing bear market. The city-state’s Hang Seng Index has fallen 24% over the past year and currently trading at 2009-lows.OSL and Sinohope’s market caps currently stand at $650 million and $140 million, respectively.

The two firms are currently focused on expanding partnerships with entities in traditional finance. On Feb. 7, Swiss multinational bank UBS’ Hong Kong subsidiary tokenized an options call warrant on Xiaomi Corporation stock together with OSL.

Sinohope’s share price recovery comes after revenue and profits fell last year due in part to having $18.1 million worth of digital assets stuck on the failed crypto exchange FTX, which are unavailable for capital deployment. The firm remains a creditor in FTX’s ongoing bankruptcy proceedings.

Huobi and Sinohope co-founder Leon Li (Right).
Huobi and Sinohope co-founder Leon Li meets with Vladamir Putin adviser Sergey Glazyev (PRNewsfoto/Huobi)

Huawei signs Web3 memorandum with Hong Kong government

Chinese telecom conglomerate Huawei has signed a memorandum of cooperation with Hong Kong’s Cyberport initiative, a digital hub set up by the city’s government to transform the nation into a digital technology hub by attracting talent and promoting innovation.

Cyberport and Huawei Cloud will work together to provide Web3 and AI infrastructure to prominent Hong Kong tech startups for the next three years.

“We are excited to jointly explore various possibilities of industrial cloud innovation and related technologies, and deepening AI and the development of the Web3 field, and injecting new impetus into Hong Kong’s innovation and technology ecosystem,” said Cyberport chairman Ximing Chen. 

Jilin Shi, president of global marketing and sales services at Huawei Cloud, explained that the company would “continue to support the development of startups and cultivate regional unicorn companies” specializing in Web3 and AI. “In the past 18 months, Huawei Cloud Cloud has helped 30+ startup companies obtain Series A financing, with a cumulative amount exceeding US$100 million,” Shi stated.

Since its launch in 2022, Cyberport has attracted over 2,000 Web3 and AI firms to set up subsidiaries or relocate to Hong Kong.

Senior company representatives at the unveiling of Hong Kong's second phase of CBDC tests (HKMA)
Senior company representatives at the unveiling of Hong Kong’s second phase of CBDC tests (HKMA)

OKX Ventures invested $50 million in startups in 2023 

Cryptocurrency exchange OKX, also based in Hong Kong, disclosed that its venture capital subsidiary invested over $50 million in blockchain startups last year, with 50% of its capital going into infrastructure and decentralized finance companies.

It tipped funds into Polyhedra, Celestia, Kakarot, MegaRollup, Altlayer, Bitsmiley, Bewater, Babylon, Cetus, Ethena, Flashbots, HUG, Moonbox, Mocaverse, Matr1x, Orbiter, RepubliK, Rage Trade, Sei, Taiko, TRLab and ZKM.

“[Infrastructure and DeFi] provides a secure, efficient, and reliable operating environment for crypto assets and blockchain technology, and its robustness directly influences the overall development and sustainability of the entire industry.”

For the next year, OKX Venture is looking forward to a “favorable macroeconomic climate and the ongoing innovation cycle within the crypto industry sets the stage for a potential bull market.” It cites expected rate cuts in the U.S., Ethereum’s Dencun upgrade, the upcoming Bitcoin halving, and the proliferation of Bitcoin ETFs as catalysts and said it will continue expanding its portfolio with a focus on layer 1 ecosystems this year.

Upbit reigns supreme in South Korea 

South Korean crypto exchange Upbit looks like maintaining its monopoly in the East Asian country for the time being. 

According to a Feb. 15 report, Bithumb, Korea’s second-largest crypto exchange by volume, was unable to secure a partnership with banks to offer real-name verified accounts for its clients. Under South Korean law, crypto users must create a bank account with the same bank as their crypto exchange in order to deposit and withdraw from crypto to fiat.

Currently, Upbit controls over 70% to 90% of all exchange volume in South Korea. Meanwhile, Bithumb has offered a commission-free strategy to entice users, although experts claim that the feature is unsustainable. The exchange is currently pursuing an initial public offering on KOSDAQ to raise more capital for expansion efforts. 

South Korean authorities to expel unauthorized crypto exchanges 

Crypto exchanges that do not comply with regulations or default on their debt obligations will be barred from operating in South Korea. According to a Feb. 12 report by local news agency Yonhap, the country’s Financial Intelligence Unit (FIU) will conduct routine inspections, starting with the country’s four registered crypto exchanges and gradually expanding to unauthorized exchanges operating in the country, with the possibility of their expulsion.

Exchanges must comply with regulations around containing money laundering risks, won market operation capabilities, and protecting users’ assets for their permits to be renewed.

The FIU also plans to create a Financial Action Task Force that, among other tasks, will have the power to freeze suspected illicit transactions originating from or between crypto exchange events at the pre-investigation stage. From 2022 to 2023, South Korean crypto exchanges reported a 49% increase in the number of illicit transactions.

Philippines to create CBDC

The Philippines is interested in creating a central bank digital currency (CBDC) but does not want anything to do with blockchain. 

Speaking to journalists on Feb. 12, Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said that the central bank wishes to create a wholesale CBDC with the aid of the country’s financial institutions, not a retail CBDC or one involving the use of blockchain or ledger technology. “Other central banks have tried blockchain, but it didn’t go well,” Remolona explained.

The central banker added he did not favor a retail CBDC — that would “rival cryptocurrencies” — as it would dilute control from financial institutions and cause disintermediation, which would translate to a decline in revenue for banks that facilitate such transactions. A Philippine peso CBDC trial is ongoing and expected to launch within the next two years. 

BPI Governor Eli Remolona.
BPI Governor Eli Remolona.


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Zhiyuan Sun

Zhiyuan Sun is a journalist at Cointelegraph focusing on technology-related news. He has several years of experience writing for major financial media outlets such as The Motley Fool, and Seeking Alpha.