Hong Kong SFC Considering New Crypto Exchange Regulations

The chairman of the Hong Kong SFC Carlson Tong Ka-Shing is considering new crypto exchange regulations to tighten the protection for investors and to keep a lid on the crypto industry in the city.

The Hong Kong Securities and Futures Commission (SFC) is continually searching for new and effective ways to curb rogue crypto operators and to improve ongoing crypto exchange regulations. The SFC had already issued warnings over the past few months to exchanges to get their affairs in order and abide by SFC rules while warning investors to be careful with the choices they make.

Harsh but Fair Crypto Exchange Regulations

As more financial regulatory bodies and watchdogs start to oversee the crypto-asset industry, Tong Ka-Shing thinks it is important to safeguard investors while ensuring that the local industry remains robust and most importantly, in line with the law.

Talking to the South China Morning Post, Tong Ka-Shing outlined some of the wishes of the SFC by saying:

We do not think imposing a total ban on these platforms is necessarily the right approach, and it will not work in today’s internet world when trading can cross national boundaries. Even if we were to ban them, transactions can still be easily conducted via platforms in overseas markets.

It’s a smart move to recognize the international nature of the crypto world and that banning crypto-asset trading will not eradicate the problem, but will make it more complex for local and nationwide authorities to regulate.

"We Are Watching you!"

Attacking crypto exchange trading platforms seems like the logical place for the SFC to start. These exchanges are similar to traditional stock exchanges in many ways with centralized platforms generally operated by one group of people or a single organization. There are a handful of exchanges operating out of Hong Kong but very few are in line with current crypto exchange regulations.

Tong Ka-Shing will be handing over the reins to the SFC’s soon-to-be new chairman Tim Lui Tim-Lueng, which is expected to take place later this week. However, before leaving the post, Tong Ka-Shing warned unregulated crypto-asset exchange platforms in Hong Kong that:

We are watching you!

Although Tong Ka-Shing also pointed out that the SFC is restricted by technically only being able to regulate securities, they are keeping a keen eye on the industry. As the trading of crypto-assets and Bitcoin in Hong Kong goes through the roof, Tong Ka-Shing also mentioned that the SFC is biting at the bit to impose tighter crypto exchange regulations in the very near future.

Coinbase Commerce Now Lets Merchants Accept USD Coin (USDC)

On Monday (May 20), Coinbase announced that "Coinbase Commerce", which provides non-custodial cryptocurrency payment solutions, now allows businesses to accept fully dollar-collateralized stablecoin USDC.

History of USDC

As CryptoGlobe reported on 26 September 2018, "USDC Coin" (USDC for short) was launched on that day by Goldman-funded FinTech startup Circle Internet Financial (better known as "Circle"). This is a regulated fully-collateralized dollar-backed stablecoin that was originally announced on 16 May 2018. USDC is based on an open source fiat stablecoin framework developed and governed by the CENTRE project.

Circle said at the time that the problems with existing fiat-backed solutions (such as Tether's USDT) were that they "have lacked financial and operational transparency, have operated in unregulated jurisdictions with unknown banking and audit partners, and have been built as closed-loop ecosystems and closed proprietary technologies."

In contrast, Circle's USDC stablecoin deals with these issues by "providing detailed financial and operational transparency" and "operating within the regulated framework of US money transmission laws, reinforced by established banking partners and auditors." USDC tokens are ERC-20 compatible (meaning that they run on the Ethereum blockchain); they are minted, issued, and burnt/redeemed based on network rules defined by CENTRE. 

Coinbase's Previous Involvement With USDC

On 23 October 2018, Circle announced that Coinbase (another member of the CENTRE consortium) was making USDC available to its customers on Coinbase Consumer and Coinbase Pro, and that customers could "tokenize dollars into USDC and redeem USDC into dollars through both Circle and Coinbase."

Then, on May 14, Coinbase said via a blog post titled "Expanding USDC crypto trading globally" that:

  • It was making USDC trading available on Coinbase Consumer and Coinbase Pro in 85 countries.

  • It was doing this to help "accelerate the global adoption of crypto trading" and to provide wider access to "a stable store of value."

  • There are more than 300 million USDC tokens currently in circulation today, and that USDC is supported by 100+ ecosystem partners.

  • Stablecoins "have the potential to materially improve the lives of people in countries where inflation is eroding wealth." 

  • Coinbase serves customers in 103 jurisdictions.

Coinbase Commerce and USDC

Coinbase Commerce was launched on 14 February 2018. Coinbase described Coinbase Commerce as a new service that "enables merchants to accept multiple cryptocurrencies directly into a user-controlled wallet," and that in contrast to its previous merchant products, it was "not a hosted service, so merchants have full control of their own digital currency." Four cryptocurrencies were supported back then: Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), and Litecoin (LTC).

Coinbase Commerce can be "directly integrated into a merchant’s checkout flow or added as a payment option on an e-commerce platform." Initially, the only e-commerce platform supported was Shopify, but on 6 August 2018, support for WooCommerce was added.

Yesterday's blog post said that now Coinbase Commerce has added support for stablecoin USDC, thereby allowing "businesses to accept payments online in the same way they’re able to accept cash in-store." 

Here are a few things to note about Coinbase Commerce:

  • "Coinbase Commerce doesn’t charge any fees to process payments."
  • "Coinbase Commerce accounts are completely separate from Coinbase accounts."
  • "You can use the withdraw functionality to send cryptocurrency to an address associated with your Coinbase account."

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