Will deposit tokens unseat stablecoin issuers?

In Token Issue this week, we look at the rise of non-US denominated stablecoins in Australia and why they may threaten USDC’s dominance. [Read from your browser]( Token Issue Welcome to Token Issue! Delivered every Friday, this free newsletter breaks down the biggest stories in Asia’s crypto scene and beyond. View past issues [here]( or [sign up here]( to receive future newsletters. Written by Scott Shuey Crypto journalist Hi {NAME} With the crypto winter hopefully dying down, many platforms are looking toward the future. On the horizon is the US Securities and Exchange Commission, which has called open season on any and all crypto platforms connected to the US. Since most stablecoins are backed by - or at least tied to (in the case of algorithmic stablecoins) - the US dollar, many financial institutions are looking for alternatives. The solution may lie down under, writes Shihan Fang. While Australia may not be the most crypto-friendly country at the moment, its stance on stablecoins appear to be an exception. In this week's Deep Dive, she breaks down what banks and crypto-native firms are doing in the sector and explores a cousin of the stablecoin: deposit tokens. -- Scott  ---------------------------------------------------------------  🤿 THE DEEP DIVE  [Australia stablecoins show promise as a16z-backed Archblock eyes market]( If you want to talk about stablecoins, you have to talk about US dollars. The top 10 stablecoins are all pegged to the greenback. But that is about to change, thanks to the Australian government, which is working to create a regulatory framework for the crypto sector. While no one expects the Aussies to embrace Bitcoin anytime soon, the regulations look promising for stablecoins backed by the Australian dollar. In a two-part story, Shihan Fang explores what’s going on down under. First, she talks to Charlie Chen, the Sydney-based managing director for TrueCoin, which is developing an Australian dollar-backed stablecoin called TrueAUD (TAUD). In [part two]( Shihan looks at whether tokenized funds issued by regulated banks in Australia could be a threat to crypto-native stablecoin issuers. The bottom line is likely to be regulation, says Ryan McCall, co-founder and CEO of Zerocap. "Most people trust banks because they're regulated. If something goes wrong the government or the Reserve Bank is going to step in," he says.  --------------------------------------------------------------- 👀 ALL EYES ON... *What everyone’s talking about.* 1️⃣ [Hong Kong's crypto aspiration raise questions about China's willingness to open up]( Hong Kong was ground zero for crypto speculation this week after the [announcement]( the Securities and Futures Commission (SFC) said it is considering a plan to allow retail investors to invest in crypto starting in June. The big question is whether this signals a change in policy by the People's Republic of China. It doesn't, but mainland China does seem to have given the [green light to Hong Kong]( to set itself up as a crypto hub. There has been an onslaught of analysts over the past couple of days trying to determine exactly which crypto assets will be legal in Hong Kong. In short, the proposed regulation allows trading in major coins but bans derivative trading. The proposal also said exchanges "should not deposit, transfer, lend, pledge, complement or otherwise deal with or create any encumbrance over client virtual assets." Following the initial announcement, Hong Kong’s [government said]( that in the 2023-2024 budget, it will allocate US$50 million to accelerate the Web3 ecosystem development. The news is expected to spark a gold rush of sorts. Huobi, which had already been targeting an expansion into the city, said it is [applying for a license]( to operate an exchange in the city. 2️⃣ [Do Kwon charged by SEC, implicated in the transfer of over 10,000 bitcoin to Swiss bank]( Do Kwon was already one of the most wanted men in the world for his involvement in the collapse of Terraform Labs in May 2022. This week, the US Securities and Exchange Commission joined the chase when they [charged]( Kwon and Terraform Labs with securities fraud. According to court documents, Terraform and Kwon "offered and sold crypto asset securities in unregistered transactions and perpetrated a fraudulent scheme that led to the loss of at least US$40 billion of market value," which "devastated U.S. retail and institutional investors." But we (allegedly) already knew that. What we didn't know was that Kwon allegedly transferred over [10,000 bitcoin]( worth an estimated US$216 million, from Terraform Labs and Luna Foundation Guard accounts, cashing it out from an unnamed Swiss bank. Kwon's whereabouts are currently unknown, although he is suspected of being in Europe. South Korea has issued a warrant for his arrest.  --------------------------------------------------------------- ⭐ TO THE STARS Impactful developments and projects in Web3. 1️⃣ [A16z investment sparks run into SolidLizard]( SolidLizard, a decentralized (DEX) platform on Arbitrum, has gained US$60 million in [total value locked]( over the past 22 days, including US$8.7 million from VC firm a16z. The pools on the exchange promise annual percentage rates of 23.8% for USDC-USDT and between 58-145% on wETH-USDC . SolidLizard Swap is a [ve(3,3)]( permissionless liquidity market that offers low fees on stable and volatile swaps. [2️⃣]( [C]( launches its own blockchain]( Major crypto exchange Coinbase is diversifying into DeFi with the launch of Base, a Layer 2 blockchain built on Ethereum. It uses the open source OP Stack, which is the same technology found in Optimism, another Layer 2 project. Base offers gasless transactions and EVM equivalence, meaning existing Ethereum projects can easily port their software over to its platform. --------------------------------------------------------------- MORE TO CHEW ON Stuff that’s good to know. 1️⃣ [Napster purchases Mint Sings]( Napster, the company famous for bringing music with questionable origins into the mainstream, has now entered the Web3 music scene. Napster announced earlier this month that it had acquired Mint Songs, an NFT marketplace that helps music artists build Web3 communities. Napster did not announce the terms of the deal. 2️⃣ [Coinbase revenue up, but user numbers down]( Coinbase announced this week that its fourth-quarter revenue and profits beat estimates, but its user numbers continued to fall. Its full-year revenue came in at US$3.1 billion, down 57% percent. The company reported a net loss of US$2.6 billion for 2021. 3️⃣ [Polygon cuts 20% of staff]( Sandeep Nailwal, a co-founder of Polygon, announced that the platform has laid off 20% of its staff. "Earlier this year, we consolidated multiple business units under Polygon Labs. As part of this process, we're sharing the difficult news that we've reduced our team by 20%, impacting multiple teams and about 100 positions," he posted. 4️⃣ [FTX Japan to allow withdrawals via local exchange]( FTX Japan, the Japanese subsidiary of fallen crypto exchange FTX, resumed withdrawals of customer holdings on Tuesday. The Liquid Japan web platform is handling withdrawals. The Japanese entity operated independently of its parent company. 5️⃣ [Circle plans to boost staff by 25%]( Circle, which manages the [USDC stablecoin]( said this week that it is planning on boosting its headcount by up to 25% in 2023, according to the Wall Street Journal. The news comes in stark contrast to the rest of the state in the crypto industry, which has seen numerous job cuts through the crypto winter. According to CFO Jeremy Fox-Geen, Circle is looking to add up to 225 staff. The company said it had 900 employees in 2022.  --------------------------------------------------------------- That’s all for this issue - we hope you liked it. WAGMI! P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. 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