July 12, 2023
By Sharan Kaur Phillora
In a recent development, China has announced its plans to expand the reach of its central bank digital currency (CBDC) while Malaysia emerges as a potential rival to Hong Kong in the cryptocurrency sector.
Here’s what we know:
President Xi Jinping addressed the 2023 Shanghai Cooperation Organization (SCO) summit and emphasized the importance of CBDCs, calling for expanding local currency settlements among SCO countries.
China has already made strides in this area, with approximately 13.61 billion digital yuan CBDCs in circulation as of January. Despite ongoing efforts, experts note that the currency has faced challenges in gaining widespread adoption.
Further progress on the digital yuan was reported on July 10, as Chinese consumers are set to have access to a SIM card linked to the CBDC. By embedding the digital yuan CBDC wallet in the SIM card itself, individuals will be able to make payments through point-of-sale machines, even when their phones are out of power. This move is expected to enhance the convenience and accessibility of the digital yuan.
Meanwhile, in Hong Kong, the cost of obtaining a crypto exchange license has risen to 100 million Hong Kong dollars ($12.77 million). The process, which began on June 1, requires significant investment in labor, materials, and technical infrastructure.
However, industry insiders have noted that the business opportunity may be short-lived or rejected even if the license is granted. As a result, crypto exchange teams have started shifting their operations to Malaysia, where they can take advantage of more favorable conditions, including lower costs and a pool of skilled IT technicians.
All crypto exchanges in Hong Kong are required to obtain regulatory licenses or cease operations by the middle of next year. Major exchanges such as Huobi, OKEx, BitgateX, HashKey Pro, and Gate.io have already applied for licenses in Hong Kong, but the emergence of Malaysia as an alternative destination presents a competitive challenge to Hong Kong’s crypto industry.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.