Chinese Region Hainan to Invest 1 Billion Yuan to Foster Blockchain Development

China’s interest in the blockchain technology continues to grow and the Hainan Free Hainan Free Trade Zone (FTZ) committed to invest 1 billion Yuan to stimulate local businesses.

According to local news outlet Xinhua Net, Hainan’s dedicated economic pilot zone has pledged to foster businesses in the blockchain industry by incentivizing talent and promoting the technology’s implementation in sectors like housing, healthcare, tourism and trade.

Hainan is the first blockchain pilot zone and will be based in the Hainam Resort Software Community. According to Wang Jing, the head of the department, this is also the first pilot to be approved by the local government.

The fostering measures include a fund worth 1 billion yuan, approximately $142 million. The announcement sees Hainan fall in line with various other Chinese provinces which have confirmed financial support for blockchain in recent weeks and months.

In general, the Hainan Free Trade Zone is a pilot economic area established by President Xi Jinping in 2018. The plan set out to make the island a free trade zone by 2020 and eventually turn into a free port by 2025.

Blockchain continues to be a hot topic in China and for Chinese officials with endorsement of technology application. However, the Chinese government remains vigilant on trading activities, iterating their stance that trading needs to be monitored and sanctioned.

In a comprehensive plan to utilize blockchain technology and big data, the government aims to facilitate the development of secure and trusted data sharing and digital governance.

The Hainan zone has seen an influx of blockchain companies, including two major cryptocurrency exchanges in Huobi and OkEX. In total there are over 100 blockchain businesses that joined the Hainan Resort Software Community.

Among the latest funds to come from the local industry was a $140 million injection from OK Group, the parent company of trading platform OKCoin. Prior to that, the government of Guangzhou also said it would inject 1 billion Yuan into the industry.

FinTech Firm SoFi Receives BitLicense from NYDFS

San Francisco-based financial firm SoFi has announced that it was granted a BitLicense from the New York State Department of Financial Services (NYDFS).

According to a press release, the fintech firm confirmed that the NYDFS granted a BitLicense, which would allow its users in the state of New York to trade digital currencies through its SoFi Digital Assets subsidiary.

The BitLicense acquisition comes just a couple of months after the firm launched in September its cryptocurrency trading services within its investment platform.

SoFi launched as a student loan refinancing platform and has ever since offered a varied portfolio of fintech services including online lending, such as student loans and mortgages. In addition to that, the platform also facilitates investing in other securities such as ETFs and stocks as well as robo-investing.

Following the announcement, SoFi will be authorized to support a total of six digital assets including Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), Ethereum Classic (ETC), Litecoin (LTC) and Stellar (XLM). SoFi’s cryptocurrency offering sits alongside other investment vehicles including stocks and ETFs on its SoFi Invest application, released earlier this year.

In addition to the BitLicense, SoFi has acquired another license – a money transmitter license, which will help the firm offer crypto trading service to its clients.

“After a rigorous application process, SoFi can now provide its members in the state of New York a trusted, secure platform to trade crypto,” stated SoFi in a press release.

Whilst sharing more details about the license, CEO SoFi Anthony Noto noted that the decision to pursue a BitLicense was a result from client demand:

“Putting our members’ interests first is our top priority at SoFi. That includes both offering individuals the products they want, like cryptocurrency within SoFi Invest, as well as protecting them, through a solid regulatory framework like that created by the New York State Department of Financial Services. We’re thrilled to now be able to offer the trading of cryptocurrency, in addition to active and automated investing, as part of SoFi Invest in New York State, in addition to the full suite of SoFi products that help our members borrow, save, spend, invest, and protect their money.”

Noto further added that the approval is proof to SoFi’s ongoing commitment to earning the trust of regulators and stakeholders as the platform tries to expand their line of services and products targeted at investors.

As it is known, a BitLicense serves a major business license for cryptocurrencies with a number of terms and conditions such as rules on operating with digital currencies, its control, administration, maintenance, storing and issuing, among others.

The California-based financial firm is now one of 24 crypto-related firms that have been granted a BitLicense since 2015, including exchanges like Gemini and trading operations like Tagomi. Earlier this year, NYDFS granted a BitLicense to two subsidiaries of crypto derivatives firm Seed CX — Seed Digital Commodities Market LLC and Zero Hash LLC.

CryptoBridge Trading Platform Shuts Down After Strict KYC is Implemented

CryptoBridge, a U.S.-based decentralized cryptocurrency exchange, has announced today that it will be ceasing all operations, citing several reasons that led to their decision.

The news was announced through an official notice on the exchange’s website, stating that the decision had been made as the exchange lacks the funds to further develop and maintain operations due to market conditions and increasing regulation.

The decentralized exchange accounted for around 320,000 visitors in October, with most coming in from Russia and Bulgaria, according to web analytics firm SimilarWeb. CryptoBridge shared that its vision was to provide a gateway to decentralized cryptocurrency trading and did everything in its power to save the ship from sinking but it seems it came up short.

According to the notice, all deposits will close tomorrow – December 3rd – and withdrawals will be processed after December 15th, adding that users have to withdraw their funds in the meantime. However, the exchange mandates that a KYC (know-your-customer) process is required by the EU laws for them to process withdrawals and it advices users to start the process as early as possible as verification can take up a few days.

CryptoBridge is known for its strict KYC requirement process to complete withdrawals. Notably, two months ago CryptoBridge forced KYC on its users, who were caught by surprise as the exchange had seemingly stolen their funds and forced a hostile KYC process.

At that time, the exchange claimed to have acted under the Fifth EU Anti-Money Laundering Directive, citing that it wanted to ensure that its users were not held responsible for any illegal intentions or money laundering activities.

Subsequently, this made users frustrated with the exchange as it had enforced KYC checks without any warning and were forced to reveal their identity in order to retrieve their funds. Following this, many users questioned whether the exchange was at all decentralized seeing as it now required KYC.

CryptoBridge isn’t the only exchange that had recently shut down. Coinexchange.io, a cryptocurrency exchange that has been running since 2016 also recently shut down, citing similar reasons as CryptoBridge.

Although CryptoBridge has some unique trading pairs, in the last 24 hours the exchange saw a volume of less than $75,000. Presumably, the forced KYC requirement was the last straw which led to more users leaving the exchange and further tanking its volume.

Meanwhile, the exchange noted as well that it will closing down all its social media accounts. However, a Twitter account seeming to be impersonating CryptoBridge, tweeted: “We are only temporarily shutting down. We will be opening a new and improved exchange.”

The exchange was reached for comments regarding these speculations, however hasn’t responded yet.

Korean Crypto Exchange UPbit Lost 342,000 Ether Following Hack

South Korean cryptocurrency exchange UPbit — run by a subsidiary of Korean tech giant Kakao — has been hacked, losing 342,000 Ether (ETH), around $50 million from its hot wallet.

The news has been confirmed by Lee Seok-woo – CEO of Upbit’s operator, Dunamu – via an official statement written on November 27th. The statement explained that the exchange had detected an abnormal transaction from its hot wallet to an unrecognized wallet, which led to an outflow of 342,000 ether (ETH). The exchange did not specify whether it had been hacked.

The statement read as follows:

“At 1:06 PM on November 27, 2019, 342,000 ETH (approximately 58 billion won) were transferred from the Upbit Ethereum Hot Wallet to an unknown wallet. Unknown wallet address is 0xa09871AEadF4994Ca12f5c0b6056BBd1d343c029.”

Following the incident, the exchange apologized to users for any inconveniences caused as the CEO had laid out several measures taken as a precaution. Respectively, the exchange transferred all cryptocurrencies from its hot wallet to a cold wallet and said the loss will be covered by its own corporate assets.

Meanwhile, withdrawals and deposits have already been suspended as a precaution. Later on, Upbit said it will take at least two weeks for deposit and withdrawal services to be back to normal, with Lee Seok-woo promising to inform users as soon as they reopen.

According to Whale Alert – a Twitter service that monitors blockchain transactions – the lost ETH worth $49 million at press time, was sent from Upbit’s wallet to an unknown ethereum address starting with 0xa09871 about 04:00 UTC on Wednesday.

About 30 minutes later, Upbit announced that it had temporarily suspended withdrawals and deposits due to server maintenance. Subsequently, the massive withdrawal alerts did raise suspicions, with several people on social media calling it a hack.

Whale Alert, in fact, noted several withdrawals taking place via UPbit, involving other cryptocurrencies and tokens as well, such as Tron (TRX) and BitTorrent (BTT), amongst others. In fact, more than $100 million worth of multiple cryptocurrencies have been sent out from Upbit today.

However, the exchange stated that only ETH holdings had been affected, and all other recent large-scale transactions were related to the exchange moving assets between hot and storage facilities to prevent further losses.

UPbit’s hack marks this year’s eighth breach, and the total amount stolen from cryptocurrency exchanges to date now stands at around $1.44 billion, according to data.

Meanwhile, Upbit isn’t the only South Korean exchange to have suffered loss. Earlier this year, Bithumb – the second biggest cryptocurrency exchange in South Korea, fell victim to an inside job. According to previous reports, it lost about $13 million in March 2019. In total, the exchange had suffered three major security breaches. Last year, Coinrail was hacked for $40 million.

Thailand Financial Authority Plans to Reform Cryptocurrency Regulation

Thailand’s financial regulator – the Securities and Exchange Commission – has announced their intent to reform the royal decree on digital asset business starting from next year, aiming to facilitate the growth of digital assets whilst protecting investors from unnecessary risks.

According to a local English-language news outlet Bangkok Post reported on November 25th, Thailand is planning to make several significant changes in its existing cryptocurrency policy, in an effort to keep up with the rapid growth of the industry. The SEC will be revising whether the existing royal decree leaves investors vulnerable to risks or hinders the development of digital asset businesses.

In addition to that, the financial regulator will also be revising its poor uptake of its certification and licensing scheme by cryptocurrency businesses.

Ruenvadee Suwanmongkol, the secretary general of the SEC, confirmed the news, stating:

“The regulator must be flexible to apply the rules and regulations in line with the market environment,[…] For example, laws should not be outdated and should serve market needs, especially for new digital asset products, and be competitive with the global market. We need to explore any possible obstacles.”

The royal decree came into effect in May last year and classifies the digital asset businesses into four types of secondary business intermediaries, which are digital exchanges, brokerage companies, dealers and token portal service providers – or commonly known as initial coin offering (ICO) portals.

The existing regulatory framework covers digital tokens, digital currencies as well as any other electronic data, as indicated by the SEC. In order to be able to operate on the market, exchanges, brokers and dealers are required to apply for licenses from the Finance Ministry, whilst ICO portals are to be approved by the SEC.

“The legislation also aims to protect investors from risk of fraud and deception by dishonest persons, money laundering and exploitation of digital assets to facilitate illegal financial transactions, while ensuring regulatory clarity to facilitate legitimate uses of digital assets,” said former SEC secretary general Rapee Sucharitakul last year.

The royal decree has stringent penalties regarding unapproved digital token issuers and solicitors of illegitimate crypto investments, which includes possible fines up to 500,000 baht ($16,540), two times the value of the digital transaction or a two-year jail sentence.

Since last year, only five companies have been granted a license for digital asset exchange, and of those, just two have launched – Bitkub Online Co Ltd and Satang Pro Corporation.

Meanwhile, the country’s ICO portal SE Digital is poised to make a debut with the first investment token in the country with a target transaction size of THB 2 billion and THB 3 billion ($65.8 million and $98.7 million respectively).

SE Digital is amongst the only three ICO portal companies to have been approved by the SEC, the other two being Longroot Thailand Co Ltd. and T-BOX Thailand Co.

Although, the SEC has yet to announce further details about the imminent amendments to the royal decree, it is clear that the financial regulator is putting in effort to identify potential loopholes in the existing framework and subsequently eliminating them in order to facilitate legitimate development of the digital asset businesses.