Hong Kong Launches Phase 2 of CBDC Testing
The Central Bank of Hong Kong is set to accept proposals regarding innovative use cases for the Hong Kong dollar. The last date of submission is set on 17th May, 2024 as per a Cointelegraph article.
The Monetary Authority of Hong Kong (HKMA) initiated the second phase of the electronic Hong Kong dollar (e-HKD). This is a pilot that invites industry participants to share new utilities for the CBDC.
Uses and Features of e-HKD
HKMA announced the beginning of the second phase of e-HKD pilot to explore new uses and features of e-HKD. During the first phase of the CBDC pilot, the government worked on the same key areas.
The second phase is an extension of the first stage where e-HKD is set to add value. Participants are to expand upon the functionality of the CBDC in various areas.
Some of these aspects include programmability, atomic settlement, and tokenization. Additionally, HKMA noted that it will make an attempt to look into various use cases which are not covered in the previous phase.
As a gesture of goodwill, the Central Bank of Hong Kong has encouraged market participants to send their proposals till 17th May. HKMA has estimated that the second phase of the e-HKD program is going to last until mid-2025.
e-HKD Program
The Central Bank of Hong Kong noted that until the second quarter of 2025, the participants will have sufficient time to test and evaluate new use cases. The regulatory agency has also issued guidelines for the investors who are participating in the pilot.
As per the HKMA, the applicant will be assessed on the basis of element of innovation, uniqueness, and impact on customer experience, market testing, compliance with current regulations, and ability to increase e-HKD utility in Hong Kong.
The CBDC project was introduced in 2021 as part of the Fintech 2025 plan. On 8th June 2021, the Central Bank published CBDC plans. It notices that e-HKD was part of the government’s efforts to promote digital finance adoption in the special administration region by 2025.
The central bank further noted that it conducted research on CBDCs since 2017. Cointelegraph reported that the pilot focused on tokenization of deposits via blockchain minting and recording on-chain data in a balance sheet.
In this manner, the analysts and researchers working for the government understood the potential applications of the CBDCs. The HKMA noticed that it has accelerated efforts to boost Hong Kong’s readiness to issue CBDCs at wholesale and retail scale.
Electronic payments giant VISA has remained one of the active participants in the e-HKD pilot. Visa completed the digital Hong Kong dollar testing alongside local banking firms such as Hang Seng and HSBC on 1st November.
Hong Kong’s SFC Issues Notification Against MEXC Exchange
The SFC recently added MEXC exchange to a warning list on 15th May 2024. MEXC has been promoting its services to Hong Kong-based investors. At the same time, the regulator noted that MEXC had not applied for a virtual asset trading platform (VATP) license.
As per the Anti-money laundering and Counter-terrorist financing ordinance, businesses operating in Hong Kong cannot offer virtual asset services without a license.
The regulatory agency advised investors to refrain from trading digital assets on unregulated exchanges. The public notification retained that investors are exposed to the risk of losing their entire investment on the trading platform if it ceases operations. The regulatory agency has added various unregulated exchange platforms to the same list.
MEXC is the 11th largest exchange in terms of trading volume across the globe. CoinMarketCap recorded an intraday trading volume of $2.19 billion. The average weekly trading volume of the exchange is noticed around 3 million with 1,942 cryptocurrencies actively traded.
SFC blocked a few fake websites that impersonated major local exchanges. On 9th February, SFC blocked eight domains for impersonating MEXC exchange.
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