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Visa completes e-HKD CBDC trial with HSBC and Hang Seng 

Hong Kong is one step closer to a central bank digital currency (CBDC) with the release of its successful e-HKD phase 1 results in collaboration with Visa, HSBC, and Hang Seng Bank.

According to the November 1 announcement, Visa said that it achieved “near real-time” finality with transfers involving tokenized deposits of the digital Hong Kong dollar (e-HKD).

“Tokenized deposits were burned on the sending bank’s ledger, minted on the receiving bank’s ledger, and simultaneously settled interbank via the simulated wholesale CBDC layer,” the payments firm wrote.

“This would provide for settlement in an atomic manner with better streamlining of any operational dependencies imposed by financial institutions and other intermediaries, thus improving liquidity management.”

The payment processor also stated that its e-HKD test pilot was functional 24/7, surpassing the uptime of traditional financial systems, which typically don’t function after hours or on weekends. In addition, the firm wrote that “tokenized deposits can be fully transacted while remaining encrypted, without revealing information about identity, balances, or transaction amounts to non-bank users.”

For its next steps, Visa plans to explore the use of e-HKD in tokenized asset markets and programmable finance to automate real estate transactions. “In this pilot’s Property Payments use case, the payment from a buyer transferring the remaining balance tokens to the property developer may be automated upon reaching the completion date of the contract, minimising lag time in closure of the process,” the company said. Other areas of research interest include expansion of retail solutions and digital cross-border payments.

Despite the promising results, no definite timelines have been given for the full launch of the e-HKD CBDC, or even that such a launch will occur. In its October 30report, the Hong Kong Monetary Authority warned there are still issues to resolve:

“For instance, an rCBDC issued as a programmable money may be more susceptible to cybersecurity risks, as it may present more mediums for external threats to inject malicious code.”

With the silent nod from Beijing’s Central Government, Hong Kong has been striving to become a Web3 hub for blockchain in the Asia-Pacific Region. However, such efforts had been overshadowed by the collapse of the JPEX crypto exchange, resulting in losses exceeding $150 million for Hong Kong investors. Since the incident unfolded, trust in cryptocurrency among local residents has fallen drastically

The new e-HKD pilot results as announced by Visa.
The new e-HKD pilot results as announced by Visa.

Hashkey’s regulated exchange token 

Hashkey, one of the first crypto exchanges to receive a regulatory license in Hong Kong, will introduce an exchange token in 2024. 

According to therecentwhitepaper, the “HashKey EcoPoints” (HSK) token will be minted on Ethereum with a total supply of 1 billion. Out of this amount, 65% is reserved for users, 30% for Hashkey staff, and 5% for its ecosystem treasury.

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The token will be distributed as incentivizes to ecosystem users and distributors and will not be “sold via private or public sales for fund raising purposes.” As for utility, the company states that the token could be used to settle trading fees, along with early access to future token subscriptions and product upgrades on its exchange services.

The exchange also pledges to buyback HSK tokens with up to 20% of profits generated from related Hashkey services. “HashKey implements an offsetting issuance mechanism (burning) to protect HSK holders from the dilutionary impact of rewards-based increases in HSK circulating supply,” the firm wrote. However, regulatory approval is still required for the token design plan:

“The contents of this whitepaper have not been reviewed by any regulatory authority in Singapore or Hong Kong. You are advised to exercise caution in relation to the information in this whitepaper and any transaction that you intend to carry out involving HSK.” 

In August, Hashkey, alongside crypto exchange OSL, received one of the first regulatory licenses for retail crypto trading in Hong Kong. Its trading volume initially stagnated but has sincegainedtraction. Only select coins and tokens, such as Bitcoin, Ethereum, Tether, and Avalanche, are approved to be listed on the exchange.

Hashkey's plan for token utility.
Hashkey’s plan for HSK token utility.

$308M syndicate manipulated crypto markets to launder money: Police 

Nineteen Chinese nationals have been sentenced for their role in a $308 million money laundering scheme involving cryptocurrencies between November 2020 and April 2021. 

According to an October 31 report by the Chongqing Tongliang District People’s Court, Mr. Jiang and Mr. Deng, the principal conductors of the money laundering syndicate, together laundered a total of $308 million worth of Bitcoin and Tether for proceeds of crime related to online gambling and wire fraud.

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Police say that to avoid platform monitoring and know-your-customer requirements, the accused individuals orchestrated a sophisticated scheme of using peer-to-peer transactions, where coins were sold at “unusual prices relative to spot markets” for stablecoin Tether and then transferred to exchanges for cash.

“By fabricating pretexts such as withdrawing project funds and migrant workers’ wages, they organized gang members to withdraw cash from bank counters in Chongqing, Sichuan, Shanghai and other provinces and cities. The amount of cash withdrawals ranged from hundreds of thousands to several million yuan each time. After withdrawing the cash, the cash is packaged in trolley cases, backpacks, etc., and transported by plane.”

The 19 individuals, including Mr. Jiang and Mr. Deng, were sentenced to six months to six years in prison. “In recent years, the phenomenon of criminals committing illegal and criminal activities through telecommunications networks has become increasingly rampant, posing a huge threat to the legitimate rights and interests of the general public,” the presiding judge wrote. 

Due to such a rise in wire fraud involving cryptocurrencies, China’s Central Government has cracked down harshly on crypto-related activities in the country, although there have been some signs of relaxation as of late. Nevertheless, such enforcement actions have sometimes resulted in collateral damage for foreign investors using Chinese-based crypto services without criminal intent. 

The culprits as they appeared for sentencing in Chongqing Tongliang District People's Court.
The culprits as they appeared for sentencing in Chongqing Tongliang District People’s Court.

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, Nasdaq.com and Seeking Alpha.

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Collapsed crypto firm Ziglu faces $2.7M deficit amid special administration

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Collapsed crypto firm Ziglu faces .7M deficit amid special administration

Collapsed crypto firm Ziglu faces .7M deficit amid special administration

Thousands of savers face potential losses after a $2.7 million shortfall was discovered at Ziglu, a British crypto fintech that entered special administration.

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Heidi Alexander says ‘fairness’ will be government’s ‘guiding principle’ when it comes to taxes at next budget

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Heidi Alexander says 'fairness' will be government's 'guiding principle' when it comes to taxes at next budget

Another hint that tax rises are coming in this autumn’s budget has been given by a senior minister.

Speaking to Sunday Morning with Trevor Phillips, Transport Secretary Heidi Alexander was asked if Sir Keir Starmer and the rest of the cabinet had discussed hiking taxes in the wake of the government’s failed welfare reforms, which were shot down by their own MPs.

Trevor Phillips asked specifically if tax rises were discussed among the cabinet last week – including on an away day on Friday.

Politics Hub: Catch up on the latest

Tax increases were not discussed “directly”, Ms Alexander said, but ministers were “cognisant” of the challenges facing them.

Asked what this means, Ms Alexander added: “I think your viewers would be surprised if we didn’t recognise that at the budget, the chancellor will need to look at the OBR forecast that is given to her and will make decisions in line with the fiscal rules that she has set out.

“We made a commitment in our manifesto not to be putting up taxes on people on modest incomes, working people. We have stuck to that.”

Ms Alexander said she wouldn’t comment directly on taxes and the budget at this point, adding: “So, the chancellor will set her budget. I’m not going to sit in a TV studio today and speculate on what the contents of that budget might be.

“When it comes to taxation, fairness is going to be our guiding principle.”

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Afterwards, shadow home secretary Chris Philp told Phillips: “That sounds to me like a barely disguised reference to tax rises coming in the autumn.”

He then went on to repeat the Conservative attack lines that Labour are “crashing the economy”.

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Chris Philp also criticsed the government’s migration deal with France

Mr Philp then attacked the prime minister as “weak” for being unable to get his welfare reforms through the Commons.

Discussions about potential tax rises have come to the fore after the government had to gut its welfare reforms.

Sir Keir had wanted to change Personal Independence Payments (PIP), but a large Labour rebellion forced him to axe the changes.

With the savings from these proposed changes – around £5bn – already worked into the government’s sums, they will now need to find the money somewhere else.

The general belief is that this will take the form of tax rises, rather than spending cuts, with more money needed for military spending commitments, as well as other areas of priority for the government, such as the NHS.

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‘Shameful’ that black boys in London more likely to die than white boys, says Met Police chief

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Justice system 'frustrating', Met Police chief says - as he admits London's 'shameful' racism challenge

It is “shameful” that black boys growing up in London are “far more likely” to die than white boys, Metropolitan Police chief Sir Mark Rowley has told Sky News.

In a wide-ranging interview with Sunday Morning with Trevor Phillips, the commissioner said that relations with minority communities are “difficult for us”, while also speaking about the state of the justice system and the size of the police force.

Sir Mark, who came out of retirement to become head of the UK’s largest police force in 2022, said: “We can’t pretend otherwise that we’ve got a history between policing and black communities where policing has got a lot wrong.

“And we get a lot more right today, but we do still make mistakes. That’s not in doubt. I’m being as relentless in that as it can be.”

He said the “vast majority” of the force are “good people”.

However, he added: “But that legacy, combined with the tragedy that some of this crime falls most heavily in black communities, that creates a real problem because the legacy creates concern.”

Sir Mark, who also leads the UK’s counter-terrorism policing, said black boys growing up in London “are far more likely to be dead by the time they’re 18” than white boys.

“That’s, I think, shameful for the city,” he admitted.

“The challenge for us is, as we reach in to tackle those issues, that confrontation that comes from that reaching in, whether it’s stop and search on the streets or the sort of operations you seek.

“The danger is that’s landing in an environment with less trust.

“And that makes it even harder. But the people who win out of that [are] all of the criminals.”

Met Police Commissioner Sir Mark Rowley said racism is still an issue in the force
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Met Police Commissioner Sir Mark Rowley

The commissioner added: “I’m so determined to find a way to get past this because if policing in black communities can find a way to confront these issues, together we can give black boys growing up in London equal life chances to white boys, which is not what we’re seeing at the moment.

“And it’s not simply about policing, is it?”

Sir Mark said: “I think black boys are several times more likely to be excluded from school, for example, than white boys.

“And there are multiple issues layered on top of each other that feed into disproportionality.”

‘We’re stretched, but there’s hope and determination’

Sir Mark said the Met is a “stretched service” but people who call 999 can expect an officer to attend.

“If you are in the middle of the crisis and something awful is happening and you dial 999, officers will get there really quickly,” Sir Mark said.

“I don’t pretend we’re not a stretched service.

“We are smaller than I think we ought to be, but I don’t want to give a sort of message of a lack of hope or a lack of determination.”

“I’ve seen the mayor and the home secretary fighting hard for police resourcing,” he added.

“It’s not what I’d want it to be, but it’s better than it might be without their efforts.”

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How police tracked and chased suspected phone thief

‘Close to broken’ justice system ‘frustrating’ and ‘stressed’

Sir Mark said the criminal justice system was “close to broken” and can be “frustrating” for others.

“The thing that is frustrating is that the system – and no system can be perfect – but when the system hasn’t managed to turn that person’s life around and get them on the straight and narrow, and it just becomes a revolving door,” he said.

“When that happens, of course that’s frustrating for officers.

“So the more successful prisons and probation can be in terms of getting people onto a law-abiding life from the path they’re on, the better.

“But that is a real challenge. I mean, we’re talking just after Sir Brian Leveson put his report out about the close-to-broken criminal justice system.

“And it’s absolutely vital that those repairs and reforms that he’s talking about happen really quickly, because the system is now so stressed.”

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Leveson explains plans to fix justice system

Challenge to reform the Met

The Met chief’s comments come two years after an official report found the force is institutionally racist, misogynistic and homophobic.

Baroness Casey was commissioned in 2021 to look into the Met Police after serving police officer Wayne Couzens abducted, raped and murdered Sarah Everard.

She pinned the primary blame for the Met’s culture on its past leadership and found stop and search and the use of force against black people was excessive.

At the time, Sir Mark, who had been commissioner for six months when the report was published, said he would not use the labels of institutionally racist, institutionally misogynistic and institutionally homophobic, which Baroness Casey insisted the Met deserved.

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However, London Mayor Sadiq Khan, who helped hire Sir Mark – and could fire him – made it clear the commissioner agreed with Baroness Casey’s verdict.

A few months after the report, Sir Mark launched a two-year £366m plan to overhaul the Met, including increased emphasis on neighbourhood policing to rebuild public trust and plans to recruit 500 more community support officers and an extra 565 people to work with teams investigating domestic violence, sexual offences and child sexual abuse and exploitation.

Watch the full interview on Sunday Morning with Trevor Phillips from 8.30am on Sunday.

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