Macau might fill China cryptocurrency gap

Over 3,000 participants attended the 2018 Finwise Summit in Macau last weekend, making it the most popular blockchain meeting in the world. The sheer scale of the event, coupled with regulatory sentiment in other East Asian jurisdictions, prompted at least one external media outlet to comment on how Macau is becoming a “cryptocurrency hub”.

According to Hong Kong’s EJ Insight, more than half of the attendees were from mainland Chinese IT companies, startups, and investment firms.

This comes against a backdrop of tighter regulation on cryptocurrencies in Hong Kong and a ban on domestic cryptocurrency exchanges in China in September  last year.

China’s blanket ban on initial coin offerings (ICO) caused the price of most cryptocurrencies – including Bitcoin – to drop substantially, as well as several blockchain platforms. The situation was not alleviated when Hong Kong also moved to ban ICOs.

ICOs are seen as a way to help startup firms raise funds through selling digital tokens.

According to EJ Insight, Hong Kong’s Securities and Futures Commission informed that companies planning ICOs need to register with the regulator and abide by certain rules.

With more stringent regulations elsewhere, cryptocurrency operators are relocating to jurisdictions like Macau, which has a history of sheltering shady businesses.

Despite a crackdown on money laundering amid Beijing’s capital outflow concerns, Macau remains some distance from a watertight regulatory environment, as evidenced by recent European Union threats to include it on a tax ‘blacklist’.

Just days after the China ban, Macau’s most notorious former gang boss, “Broken Tooth” (Wan Kuok Koi) was spotted at a signing ceremony for an ICO in Hong Kong, a sign of local interest in the disruptive industry

The event was hosted by Macau Dragon Group and its Thailand-based partner, Wi Holding Company. The organization is reportedly developing plans to build a Macau-based floating casino using a cryptocurrency for gaming chips. It remains unclear whether the Macau Gaming Inspection and Coordination Bureau will permit the casino to set up shop in the MSAR or its territorial waters.

While the local government is seeking to diversify the economy away from a reliance on gaming revenues, the cryptocurrency business might not be what they had in mind.

The Monetary Authority of Macao might also have a problem with foreign cryptocurrencies looking to the MSAR as a future home. Although there are no rules restricting ICO activities in the private sector, financial institutions in Macau are forbidden from getting involved with, or offering services related to, cryptocurrencies.

The concern for Macau regulators – as elsewhere in the world – is that the cryptocurrency market is developing at a rapid and unpredictable pace, and its inherent volatility might pose a threat to the overall economy.

The Times reached out to the Monetary Authority of Macao and the Office of the Secretary for Economy and Finance, but neither responded immediately to our request.

Bitcoin sinks below USD10,000

BITCOIN TUMBLED below USD10,000, bringing its loss to almost 50 percent from a record set only a month ago, as increased scrutiny from regulators around the world weighs on the digital-coin craze. The largest cryptocurrency dropped 7 percent to $9,968 as of 9:05 a.m. in New York, its first foray below $10,000 since Dec. 1, according to consolidated pricing data collated by Bloomberg. It has fallen from a record $19,511 reached Dec. 18, and seen more than $140 billion shaved off its market value. The selloff this week brings more trauma to a digital-coin market that has lost more than $300 billion in value just since Jan. 13. After a dizzying rally pushed Bitcoin higher by 1,400 percent last year, the latest plunge cast doubt on the viability of cryptocurrencies and the blockchain technology that underpins it.