China and Singapore deepen crypto involvement as U.S. banks shun the industry
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(Kitco News) - China appears to be fully committed to its blockchain-by-proxy approach in Hong Kong as CPIC Investment Management (CPIC), a subsidiary of state-owned China Pacific Insurance (CPI) – the second largest property insurance company in mainland China – has announced that it will be launching a pair of crypto funds.
According to local news reports, CPIC has partnered with the Waterdrip Capital investment firm to launch the new digital asset funds as a way to provide investors with access to digital assets that are legally compliant and focus on risk control.
The firms cited Hong Kong’s declaration that it intends to become a digital asset hub as a primary reason for establishing the funds.
“As an international financial center, Hong Kong will take an open and compatible attitude towards global innovators engaged in virtual asset business,” they wrote. “At the same time, Hong Kong will also actively promote the integration of the virtual asset industry and the traditional financial industry.”
The new Pacific Waterdrip Digital Asset Fund I, which is referred to as a ‘Risk Investment Fund,’ and Pacific Waterdrip Digital Asset Fund II, a ‘POS Token Income Enhancement Fund,’ were created to provide investors with more diversified and innovative investment options.
Institutional investors, such as corporations, family offices and high-net-worth individual investors are the target clients for the funds.
Fund I will focus on seed round and private equity round investments for early blockchain projects with a focus on blockchain infrastructure, decentralized financial applications, Web3 Saas service tools, Metaverse and NFT applications.
Fund II will focus on holding tokens with a proof-of-stake (PoS) consensus mechanism that can generate a steady rate of return.
“With the implementation of more and more incentive policies related to virtual assets by the Hong Kong government, the launch of this fund is also an important strategic deployment of China Pacific Insurance Investment Management (Hong Kong) and Waterdrip Capital in this field,” the firms wrote.
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Singapore banks work with regulators on crypto customer vetting
While U.S. banks continue to shun the crypto industry, Singapore banks have started working with the government to set up uniform standards for screening potential customers from the crypto and digital asset sectors, Bloomberg reported on Thursday.
The banks, police, and the Monetary Authority of Singapore (MAS) are collaborating to improve the vetting process for virtual asset service providers who are looking to open a bank account.
The collaboration has already been underway for six months and the parties expect to have a report outlining best practices in areas such as due diligence and risk management published in the next two months, according to anonymous sources familiar with the matter.
Along with a focus on firms that provide payment, trading and transfer services, the new recommendations will also cover stablecoins, non-fungible tokens (NFTs) and transferable gaming or streaming credits.
The guidelines will serve more as recommendations than regulations, and it will ultimately be up to the banks to decide whether to accept or decline a client based on their risk appetite. According to the MAS, there are currently no rules that stop banks in Singapore from doing business with firms dealing in digital assets.
“As with any other current or prospective customer, banks are required to conduct customer due diligence measures to understand and manage the risk(s) posed by them,” the MAS said in a note to Bloomberg. “Banks make their own determination of whether to start or continue a banking relationship with a customer, balancing between commercial considerations and business risk tolerance.”
Singapore, like Hong Kong, is looking to establish itself as a cryptocurrency hub and has focused on adopting policies that encourage companies to establish their base of operations in their jurisdiction.
Examples of these efforts include the approval of operating licenses for stablecoin issuers Circle and Paxos, while DBS Bank, Singapore’s largest bank, has begun integrating decentralized finance applications into its markets and has launched a self-directed crypto trading service for accredited investors.