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Gate.io to enter Hong Kong following city’s $6.4M budget allocation to Web3

Gate’s founder called Hong Kong a “hub,” meanwhile, the city’s financial secretary said the region “must keep up” with the “huge potential” of Web3.

Cryptocurrency exchange Gate.io is gearing up to launch a presence in Hong Kong following the local government’s planned 50 million Hong Kong dollar ($6.4 million) cash injection into Web3 under the city’s 2023-24 budget.

Gate Group said on Feb. 22 that it will apply for a crypto license in Hong Kong allowing it to launch “Gate HK.” The firm’s local company, Hippo Financial Services, gained a license in August 2022 to provide virtual asset custodial services.

It comes as Hong Kong financial secretary, Paul Chan, announced the Web3-related funding and the creation of a crypto task force in a Feb. 22 budget speech.

He added Web3 has “huge potential” and the Special Administrative Region of China must keep pace with its “continuous development.”

“We must keep up with the times and seize this golden opportunity to spearhead innovation development.”

Chan outlined the funds would go toward expediting “the Web3 ecosystem development” by organizing international seminars, promoting business cooperation and arranging “workshops for young people.”

He noted a “large number” of companies are considering setting up shop in the city due to the government’s cryptocurrency laws. Gate Group’s founder, Dr. Han Lin, called Hong Kong “a global strategic market” and a “hub” due to its “industry-leading regulatory regime.”

Very excited about Hong Kong. Having obtained the TCSP License in HK, Gate Group is also preparing for a crypto license and fine tuning Gate HK, a new entity tailored to serve HK’s growing crypto market, stay tuned.

— Lin Han (@han_gate) February 21, 2023

Hong Kong shared its plans on Feb. 20 with a new licensing regime and a proposal to allow retail traders access to licensed crypto platforms.

Due to the influx of business interest, Chan said he “will establish and lead a task force” on virtual asset development made up of members from financial regulators, market participants and “relevant policy bureaux.”

The task force would “provide recommendations on the sustainable and responsible development of the sector,” according to Chan.

Hong Kong started its push to gain status as a global crypto hub in October by launching crypto-friendly policy frameworks to regulate the industry within the city.

Despite being a region of China, the city’s special status allows for its own laws and governance. Hong Kong’s crypto push would seem to be in contrast to China’s crypto ban, but it’s reported that officials in Beijing are quietly backing the region’s crypto ambitions.

Abu Dhabi-based Venom Foundation launches $1B fund for Web3 and blockchain

Venom Ventures Fund is allocating $1 billion to invest in Web3, blockchain and cryptocurrency projects and services.

Abu Dhabi-based blockchain platform Venom Foundation and investment manager Iceberg Capital announced they will allocate $1 billion of funding to Web3 and blockchain firms through a new partnership.

The Venom Ventures Fund is set to invest in protocols and Web3 decentralized applications (DApps) focused on payments, asset management, decentralized finance (DeFi) and GameFi products and services.

The fund is a partnership between layer-1 blockchain solution, Venom Foundation and Abu Dhabi Global Market (ADGM) investment management firm, Iceberg Capital. The latter will look to leverage its existing network to offer incubation programs and industry connections as well as marketing, exchange listing and technical, legal and regulatory support.

Iceberg Capital will manage the fund, investing in projects and companies through pre-seed and Series A funding rounds. The partnership aims to accelerate businesses developing blockchain, DeFi and Web3 products and services.

In response to questions from Cointelegraph, Venom Ventures chairman Peter Knez said that the Venom Foundation, its founders and regional institutional and private investors had seeded capital for the fund. The fund will support companies and projects with a global footprint and is not limited to Abu Dhabi-based firms.

The investment fund will look to attract startups and technology firms to use Venom’s scalable, proof-of-stake-based blockchain solution. Knez highlighted key services that could operate on top of its ADGM-regulated blockchain:

“Payment systems, central bank digital currencies (CBDC), stablecoins and remittance are core services that Venom can provide a solution for due to our unique blend of technology and enterprise.”

Knez also believes that the platform could power a multitude of use cases, highlighting the potential for micropayment solutions driving Web3 business models and financial inclusion:

“Venom has a vision where developing countries can participate in western countries’ labor markets.”

Abu Dhabi continues to make moves to become a cryptocurrency and blockchain hub in the Middle East. The capital of the United Arab Emirates published regulatory guidelines for the industry in September 2022 under the purview of the ADGM.

Over 1,500 Web3 businesses and organizations reportedly operate in the UAE, while Abu Dhabi continued to grant licenses to cryptocurrency exchanges throughout 2022, including Binance and Kraken.

GBTC ‘elevator to hell’ sees Bitcoin spot price approach 100% premium

Bad times for the Grayscale Bitcoin Trust get even worse this week as its discount to BTC/USD approaches 50% for the first time.

Bitcoin (BTC) investment vehicle Grayscale Bitcoin Trust (GBTC) is trading close to 50% below the BTC price on spot markets.

Data from on-chain analytics platform Coinglass confirms that on Dec. 8, GBTC shares hit a new record low of -47.2% against BTC/USD.

GBTC troubles pile up post-FTX

In the latest bout of nerves to hit the Bitcoin industry since the fall of FTX, GBTC is nearing half-price versus the price of Bitcoin.

The largest institutional Bitcoin investment vehicle, with assets worth around $10 billion, GBTC has faced numerous challenges in recent years.

The price of its shares previously traded higher than BTC/USD, resulting in what was called the “GBTC premium.” Since 2021, however, that premium has turned negative, but the resulting “discount” has done little to lure additional institutional interest.

As Cointelegraph reported, beyond a few key exceptions such as ARK Invest, GBTC is languishing. Operator Grayscale, part of Digital Currency Group (DCG), has meanwhile been attempting to convert it to an exchange-traded fund (ETF), suing U.S. regulators standing in its way.

Amid the legal battle, FTX has sparked liquidity problems elsewhere in the DCG empire, and this has led to doubts over Grayscale and GBTC. Grayscale declining to show proof of its BTC reserves last month added to the tensions, although custodian Coinbase confirmed the assets were secure.

“Grayscale is in some real trouble if they have to reveal where all the Bitcoins are that back the GBTC,” popular commented Bitfinex’ed wrote in part of a Twitter discussion on the topic this week.

This week things became even worse, as Grayscale faced a lawsuit from investor Fir Tree over what it calls “shareholder-unfriendly actions.”

*GBTC premium vs. asset holdings vs. BTC/USD chart. Source: Coinglass*

Meanwhile, overall interest in crypto ETFs has plummeted this year, separate data suggests.

Woo: Problems “partly bullish” for Bitcoin

With that, the GBTC share price ratio to its underlying Bitcoin assets, having barely recovered from previous record lows, sank even further.

Related: Why is Bitcoin price down today?

“$GBTC discount to bitcoin NAV [net asset value] is on the express elevator to hell. => sentiment = bearish,” summarized Timothy Peterson, investment manager at Cane Island Alternative Advisors.

Others lamented the slow pace of change in the U.S. as fueling the fire.

“Quite a lot of the pain this year would have been avoided if GBTC had been made into an ETF SEC keeping everyone safe!” investor and entrepreneur Alistair Milne reacted, echoing popular sentiment from recent weeks.

Willy Woo, creator of statistics resource Woobull, meanwhile argued that the impact of fading GBTC exposure was not necessarily a straight negative for BTC price strength.

“The GBTC / DCG / Genesis fears is a bearish cloud hanging over the market. But counterintuitively part of the impact has been bullish for BTC price,” he tweeted on Dec. 5.

“37.5% of people who sold GBTC bought spot BTC to take custody. Selling GBTC does not impact BTC price, buying spot does.”

An additional Twitter survey quizzed the platform’s users who notionally own GBTC over their motives to sell:

*Willy Woo Twitter survey (screenshot). Source: Willy Woo/Twitter*

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Getting funds out of FTX could take years or even decades: Lawyers

The complexities that come with digital assets, cross-border insolvency and competing jurisdictions could add years to the timeline.

While investors are eager to know when they will be able to get their funds back from the now-bankrupt crypto exchange FTX, insolvency lawyers warn it could take “decades.”

The crypto exchange, along with 130 affiliates filed for Chapter 11 bankruptcy protection in the United States on Nov. 11.

Insolvency lawyer Stephen Earel, partner at Co Cordis in Australia, said it will be an “enormous exercise” in the liquidation process to “realize” the crypto assets and then work out how to distribute the funds, with the process potentially taking years, if not “decades.”

This is due to the complexities that come with cross-border insolvency issues and competing jurisdictions, he said.

Earel said unfortunately, FTX users are in the queue with everyone else including other creditors, investors and venture capital funders, warning those that have made “crypto to crypto trades” may not see a distribution “for years.”

Simon Dixon, founder of global investment platform BnkToTheFuture, who has been an active voice in the Celsius bankruptcy proceedings, noted that anyone who holds funds on FTX will become creditors, with a creditors committee to be established to represent their interests.

He stated that the remaining assets will eventually be available to creditors depending on what remains after bankruptcy costs.

These costs could be high given the time required to recover funds, according to Binance Australia CEO, noting that this means more legal and administrative fees that eat into customers’ returns.

Meanwhile, Digital Assets Lawyer Irina Heaver, partner at Keystone Law in UAE, told Cointelegraph that there are users in the Middle East also feeling the pain from the FTX collapse, as the region was the third largest user base of FTX.

Heaver explained that as FTX already received a license and regulatory supervision from the newly formed Dubai’s Virtual Assets Authority regulator (VARA), it presents major complications for the regulators as they already have a “huge regulatory failure” on their hands.

Heaver said that only “when and if” FTX moves into Chapter 11 bankruptcy procedures, creditors’ rights will be overseen by the legal system, with courts and bankruptcy administrators involved.

Heaver advises people with substantial losses due to the FTX collapse to get legal advice and get together with “other injured parties.”

The recent FTX collapse has had significant consequences for investors across the world. It was recently revealed that the bankrupt cryptocurrency exchange may have “more than 1 million creditors.” According to a Reuters article published on Nov. 20, the bankrupt cryptocurrency exchange owes its biggest 50 creditors “nearly $3.1 billion.”

ConsenSys commits $2.4M annually to launch MetaMask Grants DAO

The employee-led DAO will take charge of issuing grants to external developers building within the MetaMask ecosystem.

Blockchain technology firm ConsenSys will spend $2.4 million annually to fund its newly launched MetaMask Grants DAO aimed at driving further development of the Web3 ecosystem.

The fund will be led by MetaMask employees who will manage the decentralized autonomous organization (DAO). The DAO will be responsible for issuing grants to developers working outside of ConsenSys that are building products and services within MetaMask’s ecosystem and the wider Web3 space.

The project will initially run for 12 months to assess its viability and success, with the DAO processing votes and proposals publicly through SnapShot on the Codefi Activate platform. ConsenSys is committing $600,000 per quarter in an effort to drive decentralization and adoption of Web3 mechanisms and business models.

MetaMask’s global product lead Taylor Monahan highlighted the focus on decentralized development as a catalyst for further growth in a statement shared with Cointelegraph:

“Not only will this accelerate growth for crypto-comfortable users, but this will also boost adoption for crypto-curious individuals with more paths to participate in.”

The DAO itself is made up of three components. The first is the employee-led DAO which consists of more than 900 full-time ConsenSys employees. These employees will be able to opt-in to be Grants DAO members, all of whom have equal voting rights.

The second part is a leadership committee, or mini-DAO, made up of seven individuals. This committee will be responsible for identifying high-potential projects, creating governance proposals and updating external content. They will also gather feedback and drive improvements to the DAO.

The final part is a secure multisignature wallet overseen by ConsenSys that will manage the token contract and treasury. It will also sign transactions for fund disbursement as well as mint and burn tokens as employees join or leave the company.

The leadership committee of MetaMask Grants DAO includes the co-founders of MetaMask, its global product lead, Snaps Studios lead, senior DAO strategist, as well as ConsenSys’ director of strategic initiatives and product management director.

The funding of the DAO will feature two types of grants. The Leadership Committee Grant will be voted on solely by its seven members, while DAO Grants will be allocated for the entire DAO to vote on.

Over 200K BTC now stored in Bitcoin ETFs and other institutional products

Bitcoin ETPs now have more BTC under control on behalf of clients than ever before.

Bitcoin (BTC) investment vehicles are seeing “gargantuan” inflows this month, which is a fresh sign that traders’ appetite for BTC exposure is mounting.

Data from monitoring firm Arcane Research published this week shows that Bitcoin exchange-traded products (ETPs) now have record high BTC under management.

“Happier days” for Bitcoin ETPs as buyers pile in

Despite BTC price action failing to draw in buyers at over 50% below all-time highs, not everyone is feeling risk-off.

According to Arcane’s data, Bitcoin ETPs have seen a flurry of interest from institutional investors both this month and last.

In total, Bitcoin ETPs, which include products such as the ProShares Bitcoin Strategy exchange-traded fund (ETF), now have 205,000 BTC under their control — a new record.

“While the May recovery was strong in ETPs, June has seen even happier days!” Arcane analyst Vetle Lunde told Twitter followers while uploading the numbers on June 2.

“The first two days of June have seen gargantuan net inflows to Purpose, 3iQ Coinshares, and BITO, pushing the global BUM to a new all-time high of 205,008 BTC.”

*Bitcoin ETF investment chart. Source: Vetle Lunde/ Twitter*

In the first few days of June alone, more than 7,000 BTC flowed to ETPs, almost as much as for the entirety of May, which, itself, saw an impressive 9,765 BTC rise.

“Massive $BTC inflows into Bitcoin ETFs in June already,” Zhu Su, cofounder of asset manager Three Arrows Capital, reacted.

Little reprieve for GBTC

The Purpose Bitcoin ETF, the first Bitcoin spot price ETF to launch anywhere in the world, meanwhile had $1.294 billion worth of assets under management as of June 3, data from on-chain monitoring resource Coinglass confirmed.

*Purpose Bitcoin ETF assets under management chart. Source: Coinglass*

Things remained somewhat less rosy for industry stalwart the Grayscale Bitcoin Trust (GBTC), however.

According to Coinglass data, GBTC continues to trade near a record discount to the Bitcoin spot price, currently 28.68% as of June 3.

Previously, Cointelegraph reported on Grayscale’s ongoing battle to convert GBTC to a Bitcoin spot ETF.

*GBTC holdings, discount vs. BTC/USD chart. Source: Coinglass*

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.