In this issue

  1. Binance hit with U.K. trading ban
  2. Elon Musk puts the bark back into Shiba Inu memecoin 
  3. China’s e-CNY arriving on Platform 89

From the Editor’s Desk

Dear Reader,

Trust is hard won, but easily lost.

That maxim ought to resonate with all participants in the cryptocurrency space, no matter how big or flush with investors’ cash they may be. But so far, the signals are mixed.

By the close of business in Britain on this day, a London-based unit of Chinese-owned crypto exchange Binance will be required to make embarrassingly clear that it is not permitted to offer financial services to U.K. customers. Why? Because Binance has not registered with the regulator that polices crime and fraud in Britain’s financial services sector.

Binance is not alone. Only six crypto companies have registered with the Financial Conduct Authority, while more than 10 times that number have cancelled their applications to it. It appears that the FCA’s compliance standards may be too burdensome for these companies, as has been the case in South Korea ahead of the implementation of stricter compliance rules for exchanges in September.

In an industry where crypto exchanges numbered in the hundreds, just a handful are likely to remain, since compliance with know-your-customer and anti-money laundering rules seems just too expensive. The brazen simplicity of the profit motive counts for more.

But trust this. Here in Asia, China’s faith in blockchain — not so much in crypto — is a key policy that is becoming abundantly clear. In our special in-depth report, “Asia Powers Up: How the region, led by China, is embracing blockchain and what that means for the world” — a series produced by Forkast.News with support from the Judith Neilson Institute’s Asian Stories project — we explore the implications and what the future holds.

You can read the series not only on our site, but also in Newsweek, on Yahoo! Finance, and in the business section of the South China Morning Post. Complete with infographics and videos, our report invites you to dive deeper into how blockchain is reshaping not only policy but also power dynamics.

In our business, trust must be earned. And keeping yourself informed can preserve the one thing we value most.

Until the next time,

Angie Lau,
Founder and Editor-in-Chief

1. Bye-nance: No crypto anarchy in the UK

Binance UK
The U.K.’s Financial Conduct Authority has banned Binance Markets Ltd. from engaging with British customers.

By the numbers: Binance banned in U.K. — over 5,000% increase in Google search volume.

Binance Markets Ltd., an affiliate of Chinese-owned Binance — the world’s largest cryptocurrency exchange by trading volume — has been banned from engaging in “regulated activities” in the U.K. without the permission of the regulator that investigates and carries out enforcement related to financial crime. That means Binance Markets will not be allowed to offer them financial services to U.K. customers, advertise to them, or collect their data. 

  • Although U.K. investors have feared for the safety of funds on, and some have panned the platform on social media, Binance has told Forkast.News that users can still access services on
  • Binance has been at pains to point out that Binance Markets is a separate legal entity acquired by Binance Group in May 2020, and that Binance Markets has yet to launch in Britain.
  • Binance users in the U.K. can still access services, although the Financial Conduct Authority stipulates that all crypto businesses with operations in the country or targeting it must register by March 31, 2022, if they wish to offer services to British customers.

Forkast.Insights | What does it mean?

Regulation in the cryptocurrency space is a basic requirement, and it will be regulation that carries the industry to critical mass and maturity. As crypto becomes more integrated into mainstream finance, regulators around the world are ramping up oversight efforts and measures to protect consumers.

The FCA’s ban on Binance Markets Ltd.’s engagement with British customers is just the latest red flag to be waved at Binance Group amid a range of compliance concerns. Japan’s Financial Services Agency has also issued a warning to Binance customers that the exchange has not registered with it and that it is operating without permission. Stateside, Binance.US is also the subject of an anti-money laundering probe by the Department of Justice and the Internal Revenue Service. In March, the Commodity Futures Trading Commission began a separate investigation to determine whether U.S. residents were illegally trading cryptocurrency derivatives on the platform.

Binance often goes out of its way to claim that any local operations that are under investigation are separate entities, not meaningfully connected with its core operations. It also appears to have been deliberately vague about the location of its operational headquarters — like many crypto businesses, which seem less keen on complying with regulation than circumventing it. The apparent rootlessness of these companies belies a certain above-the-law attitude as they seek to distance themselves geographically from jurisdictions with regulatory frameworks that no longer suit their needs, although it appears to be a game they are doomed to lose as regulators coordinate and rules are adopted with an increasingly international scope.

The FCA has since January required crypto-asset businesses to register with it if they want to engage with U.K. customers. Binance withdrew its application in mid-May — and it hasn’t been the only crypto business to do so. Only six firms have fulfilled the FCA’s registration requirement, while more than 60 others have withdrawn their applications (51 pulled their applications in June alone). Although many industry players are griping about regulation, the FCA’s requirements are hardly onerous. Crypto companies are required simply to implement robust anti-money laundering and know-your-customer policies in the same way as any other business in the finance sector. 

A notion of freedom is a cornerstone of the Bitcoin project, and of the cryptocurrency sector at large, but money — digital or not —  has a direct impact on people’s lives. Cryptos have enabled activities as unsavory as child sex trafficking and terrorist financing, and even though some claim that privacy rights trump concerns over such undesirable uses of cryptocurrencies, they are unwittingly acting to maintain cryptos’ marginalization from mainstream finance and real-world use.

The original objective of the technology is to be trustless — not anonymous — not to need to know anything about an individual to know that they can be traded with and that their money exists, which is the purpose of cryptos’ underlying blockchain technology.

However, what transacting on a blockchain cannot immediately reveal is whether a certain sum of crypto has been stolen or generated from unethical activities such as terrorism, fraud, or worse. In order to use cryptos in good conscience, it’s prudent for users to deal with exchanges that vet their clients according to basic KYC and AML standards.

The truth is that at a technical level, compliance with such standards has been possible from the outset. The biggest barriers to regulatory compliance have been — and remain — the unwillingness of platforms and exchanges such as Binance simply to adopt common standards of regulatory responsibility.

Binance has frequently taken a “shoot first, and answer questions later” approach, running an operation long enough to generate a profit sufficient to render regulatory penalties a mere cost of doing business, with subsequent requests for clemency more closely resembling demands than candid — let alone contrite — admissions of wrongdoing.

2. Memecoins go to the dogs

Elon floki
A single tweet by Elon Musk has upended the memecoin market — again.

By the numbers: Floki — over 5,000%  increase in Google search volume.

Meme currency Dogecoin may have dipped since its recent surge to the main stage, but its influence in spawning a new generation of memecoins persists. The latest comes following a tweet by the world’s most cashed-up Dogecoin booster, Tesla founder Elon Musk, in which he wrote that his Shiba Inu dog — the breed of pooch that is Dogecoin’s mascot — will be named “Floki.”

  • As in the past, Musk’s mention of Dogecoin moved crypto markets, prompting the issuance of 100 billion Floki Shiba Inu tokens on the Binance Smart Chain and a trillion Floki Inu tokens on Ethereum. 
  • Some crypto holders have expressed concerns after receiving error messages after withdrawing or selling memecoins purchased through decentralized exchanges such as Uniswap and PancakeSwap.
  • As one of the most popular Dogecoin spinoffs — and a coin that some enthusiasts consider a worthy Dogecoin rival — Shiba Inu has been on a seven-day winning streak, and was up 38.4% over the past week from press time. 

Forkast.Insights | What does it mean?

The joke began in 2013 with Dogecoin, a satirical homage to Bitcoin that was designed to serve no real purpose other than generating a few laughs. However, when Dogecoin’s value surged from near-zero to an all-time-high of US$0.73 in May, the laughter behind the joke began to take on a worrying tone — had it been audible amid the chorus of meme coin investors singing its praises.

Millionaires and even billionaires were made in the Dogecoin frenzy, but many young and inexperienced traders lost their shirts when the market crashed in May.

Memecoins are assets based on jokes and cultural references rather than traditional measures of value. They’re often shamelessly plugged by celebrities and investors who seem willing to exploit their sway over young, inexperienced retail investors looking for a quick profit.

Dogecoin’s superficial success spawned joke spin-offs such as Shiba Inu, named after the breed of hunting dog upon which the Doge meme is based. And now Floki has found its way into the limelight as one of the most frothy examples of memecoin hysteria to date, following Musk’s announcement that his own Shiba Inu dog would be named Floki. The Floki coin has surged 3,500% as a result of a fickle billionaire’s tweet that means nothing and says nothing about its value or purpose. 

This may be a big joke to Musk — and, admittedly, it is hard to see evidence of anything more than an attempt at humor in his tweet — but his apparent refusal to acknowledge the power he has over the meme-crowd is an act that seems irresponsible, to put it mildly.

Memecoins have sparked much debate within the crypto industry. Although some say they are spreading awareness of crypto and making investing in the sector more accessible to a wider range of people, the truth is that memecoins are minted with such a low market capitalization that the ability for whales to manipulate them should fill retail investors with dread.

To many in the cryptocurrency industry who are working hard to develop it and see it taken seriously by institutional and professional investors, the joke of memecoins has become as tedious and off-putting as an overly-personal story an embarrassing uncle tells at every family gathering as those around him squirm uncomfortably. Yes, there is the opportunity for fast money. Yes, some people have made fortunes. But is Floki really something you will be holding onto for your grandchildren?

When getting into cryptocurrencies — which remain hugely volatile, even for projects that have clear purposes and obvious utility — investors should ask themselves what ends a coin serves, what project it supports, what it can be used for, and what problems it solves. If they can’t answer such basic questions, they would be well advised to think twice about betting on it.

In the same way, if people are so easily influenced by the meaningless musings of a multibillionaire who can afford to lose more than they could possibly make in many lifetimes, they might want to take a hard look at themselves, and perhaps save their complaints for when a regulator such as Hong Kong’s Securities and Futures Commission decides that retail investors should no longer have access to cryptocurrency exchanges. As parents have been known to say: “If you want to be treated like an adult, act like an adult.”

3. All aboard the e-CNY express

Chengdu digutal yuan 08 2
Public transportation networks in three big Chinese cities are accepting or preparing to accept ticket payment in digital yuan.

As China’s central bank marshals the masses into an embrace of the country’s state-backed digital currency, public transportation systems in the cities of Beijing, Chengdu and Suzhou are at various stages of accepting e-CNY, as the digital yuan is now known.

  • The government of Chengdu, capital of the southwestern province of Sichuan, announced on June 28 that the installation of e-CNY payment systems on all public transportation — including subways and public buses — was complete. Some 16 million Chinese who have downloaded a government-developed app named Tianfutong will be able to use it to make e-CNY payments for public transport in Chengdu.
  • A day later, authorities in Suzhou and Beijing announced that their public transportation systems would accept payment in e-CNY. In Suzhou, individuals who have an e-CNY wallet app on their mobile phones are now able to use digital yuan to pay for tickets on the city’s newly opened subway line 5, local authorities wrote on Weibo, a Twitter-like platform that is ubiquitous in China. 
  • In Beijing, all 24 subway lines and four suburban railway lines started to accept e-CNY payments today, according to People’s Daily, a communist party mouthpiece. Services are currently available only for individuals who have downloaded an e-CNY wallet app from the Industrial and Commercial Bank of China. 
  • China’s digital currency, which is not yet officially launched and is often still referred to by its original project name, DCEP (Digital Currency, Electronic Payment), has undergone 13 rounds of mass testing so far in eight of China’s largest cities

Forkast.Insights | What does it mean?

The race to adopt central bank digital currencies has been given a considerable boost by the Covid-19 pandemic, and many of the world’s central banks are engaged in research and proof-of-concept development. China leads the field, having conducted multiple tests of e-CNY and built infrastructure to encourage its use.

Beijing aims for use of the currency to reach critical mass ahead of the 2022 Winter Olympics in Beijing, and the People’s Bank of China has conducted a number of large-scale trial runs, encouraging take-up by giving away millions of dollars worth of e-CNY.

The central bank is continuing to ramp up efforts to popularize e-CNY, and China has made no secret of its plans to emerge as a leader in CBDCs following e-CNY’s rollout in major cities such as Shenzhen, Suzhou, Chengdu, Xiong’an, Shanghai and Beijing. It hopes to internationalize its currency through greater use of e-CNY.

China’s Belt and Road Initiative is another means by which Beijing is aiming to internationalize its currency. The goal appears to be to make e-CNY the preferred currency used in supply chains and on trade routes.