Welcome to State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government. I’m your host, Nikhilesh De. Thousands of people poured into Hong Kong to talk crypto during Consensus Hong Kong this past week. Policymakers and regulatory folks were no exception. |
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Welcome to Amberdata’s End-of-Year Report for 2024—a period marked by notable growth and maturation across the crypto asset spectrum. Over the past twelve months, Bitcoin, Ethereum, and a variety of stablecoins each underwent significant shifts in ownership patterns, on-chain activity, and overall market structure. Institutional engagement deepened as whales selectively re-accumulated, while mid-tier holders helped stabilize price discovery. At the same time, retail adoption surged, with newcomers arriving in waves to boost address counts and spur network participation.
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Hong Kong Securities and Futures Commission CEO Julia Leung (CoinDesk/Personae Digital) |
The conversation around digital assets seemed to be more hopeful, even from a regulatory view.
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Industry participants expect regulators to be friendlier toward crypto and indeed, some of the conversations on stage focused on new roadmaps and products — and this is despite the memecoin frenzy we've seen in recent weeks.
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Hong Kong's Securities and Futures Commission — a primary market regulator — published a "new roadmap to develop Hong Kong as a global virtual asset hub" earlier this week during Consensus Hong Kong as part of its ongoing efforts to oversee the sector.
Julia Leung, SFC's chief executive officer, said on stage that the regulator would focus on three main pillars: innovation, security and growth. Custody, over-the-counter dealing and stablecoins are all part of SFC's efforts, she said, which will soon expand to product offerings and services, including derivatives and margin lending.
Other areas of interest include addressing custody issues with different types of wallets and insurance requirements, she said.
"These are the things that we will review on the compliance side and how to actually maximize the operational process," she said.
The roadmap published online calls for ensuring Hong Kong's existing regulatory framework continues to address "new priorities" as the crypto market changes.
Elsewhere, Standard Chartered Bank, Hong Kong Telecom and Animoca Brands unveiled a joint venture aiming to issue a licensed stablecoin pegged to the Hong Kong dollar in the near future.
Mary Huen, the CEO of Standard Chartered Hong Kong and Greater China & North Asia, said on stage that digital assets will become a "key component" of its future financial infrastructure.
The bank had already built tools for tokenization and custody, she said.
"Standard Chartered Bank, together with our partners, has been actively participating in building the ecosystem for Hong Kong to become the global digital hub," she said. These projects include the e-Hong Kong dollar, the mBridge cross-border payment hub, the Ensemble wholesale central bank digital currency project "and, of course, the Hong Kong MA stablecoin issuer sandbox."
The Hong Kong Legislative Council is still reading the legislation that would authorize the licensing of stablecoins, The first reading is completed, Animoca's Evan Auyang said during a panel discussion, marking progress for this effort.
These discussions were received positively by the businesses and other individuals attending Consensus, based on the conversations I had with people on and off the stage. The U.S. being friendlier toward crypto is another facet of that positive sentiment, but the fact that other jurisdictions are making efforts seems to be promising.
Interestingly, while recent memecoins were criticized (namely, the Javier Milei-linked LIBRA), no one seemed to take issue with the concept of memecoins broadly — although the recent craze does seem to bear striking similarities to past cycles like NFTs, yield farming and the 2017 ICO boom. |
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Stories you may have missed |
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| Libra Token’s Co-Creator Claimed He Paid Argentinian President Milei’s Sister: Hayden Davis, CEO of Kelsier Ventures, bragged about being able to "control" Argentina's President Javier Milei because he paid Milei's sister, according to text messages obtained by CoinDesk's Danny Nelson. It's more bad news for Milei, who's been under fire for tweeting an address to the LIBRA token (no relation, so far as I know, to the stablecoin project unveiled in 2019), which pumped briefly and then crashed heavily. Milei is now facing impeachment threats and fraud allegations. Ye, Self-Proclaimed 'Nazi' Who Said 'Coins Prey on Fans,' Plans YZY Token: Kanye West, who now goes by Ye, is planning to launch a "Yeezy" token where he maintains a 70% allocation, just weeks after saying he wouldn't be doing so. "Coins prey on the fans," he said. Ye has also tweeted that he was a Nazi and sold shirts with swastikas on them (at least until Shopify shut his online store down). SEC Poised to Drop Coinbase Lawsuit, Marking Big Moment for U.S. Crypto: The U.S. Securities and Exchange Commission agreed in principle to withdraw its lawsuit against Coinbase, marking a massive victory for the crypto industry in the U.S. (assuming, that is, that the three commissioners currently at the regulator vote to approve the withdrawal, which seems likely). As a reminder, the SEC sued Coinbase alleging it was operating as an unregistered entity despite listing certain tokens that met the Howey Test. Coinbase — like other crypto exchanges and broader industry participants — disagreed with the SEC's assessment of whether these cryptocurrencies met the definition of a security. India's Directorate of Enforcement Seizes $190M in BitConnect Fraud Case: The Indian government seized roughly $190 million in crypto, an amount of cash and a car in its ongoing Bitconnect investigation, the Directorate of Enforcement said. Private Jets, Political Cash Among $1B in Sam Bankman-Fried's Forfeited Assets: Court: The U.S. Attorney's Office for the Southern District of New York and the federal judge overseeing FTX founder Sam Bankman-Fried's criminal case signed off on a final forfeiture order detailing the assets turned over or seized from Bankman-Fried and his codefendants over the past few years. U.S. Stablecoin Adoption Is Being Hindered by a Lack of Regulation, S&P Says: Stablecoin regulations in the U.S. will let institutional firms become more comfortable with using the dollar-pegged tokens, S&P Global Ratings said in a report. South Korea to Start Lifting Ban on Corporations Trading Crypto: South Korea's Financial Services Commission announced that professional investors and listed companies will be able to buy and sell crypto, and non-profit organizations can sell virtual assets they're holding, overturning a previous ban on both types of activity. AI Fake May Have Scammed Firms for Millions in FTX Claims: Report: A person or group of people appear to have stolen at least $5.6 billion by pretending to be someone looking to sell their FTX liquidation claims, according to an investigation from Inca Digital. The perpetrator(s) appear to have used artificial intelligence to create a deepfake avatar for video calls, tricking representatives from at least two companies. SEC Backs Off Crypto Dealer Fight, Continues Resetting Industry Approach: The U.S. Securities and Exchange Commission withdrew its appeal of a court ruling against its expanded definition of a dealer, which would have included a wide array of digital asset operations. Bybit Loses $1.5B in Hack but Can Cover Loss, CEO Confirms: Bybit lost $1.5 billion in crypto to a hack, a dollar value that far exceeds previous hacks. |
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| Some folks came to Hong Kong for a crypto conference. |
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| (Reuters) The Nigerian government is suing Binance for $81.5 billion, alleging it failed to pay $2 billion in back taxes and harmed the local economy. This is on top of four charges of tax evasion the company previously faced. The suit comes just months after Binance executive Tigran Gambaryan was returned to the U.S. following a months-long detention by the Nigerian government. (NPR) The Department of Government Efficiency (the renamed U.S. Digital Service) published a tracker saying it cut $55 billion from federal expenditures, but an NPR review of published contracts and receipts suggests that some of the contracts DOGE claimed to have ended haven't and other contracts won't save any money if canceled. The total estimated savings is closer to $2 billion, NPR said. (Reuters) There also seems to be some disagreement between the White House and U.S. President Donald Trump as to who's actually running DOGE. Trump says it's Elon Musk, while the White House said in court that Musk was not an employee of DOGE and had no authority over it.(NBC News) Elsewhere in U.S. government cost-cutting, the Department of Agriculture said it did not mean to fire employees responding to the ongoing bird flu outbreak and was trying to rescind those firings. (The New York Times) The Times' David Yaffe-Bellany dug into the Heartland Tri-State Bank's bizarre loss of tens of millions of dollars to an investment scam. |
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If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at [email protected] or find me on Bluesky @nikhileshde.bsky.social. You can also join the group conversation on Telegram. See y’all next week! |
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