know your customer

Aussie crypto exchange hints interest in Hong Kong base

The CEO of Independent Reserve says Hong Kong’s “friendly” licensing regime makes it a worthy destination to set up shop, but there are other factors to consider.

Australia-based crypto exchange Independent Reserve is looking at opportunities to set up shop in Hong Kong as the city continues efforts to become a cryptocurrency hub.

Set to take effect in June, the Hong Kong Securities and Futures Commission (SFC) released a proposed licensing regime for cryptocurrency exchanges on Feb. 20 in line with its ambitions to become Asia’s next crypto hub.

Independent Reserve co-founder and CEO Adrian Przelozny told Cointelegraph the “friendly” licensing regime makes Hong Kong a worthy destination to set up a new base, something his firm is now strongly considering.

“Right now, it is looking very interesting […] The recent announcement by the regulators in Hong Kong does make Hong Kong look like a friendly jurisdiction.”

“We see Hong Kong as a good opportunity for Independent Reserve, and we’re always looking at new areas in Asia where we can expand our business,” he added.

The potential move would follow the likes of its peers Huobi and OKX.

*CEO Adrian Przelozny pictured in center with chief operating officer Lasanka Perera (left) and chief technology officer Roman Stefanidi (right). Source:* *Independent Reserve*

Under the new licensing regime, Hong Kong-based crypto companies must comply with various measures relating to the safe custody of assets, such as Anti-Money Laundering, Know Your Customer, counter-financing of terrorism countermeasures, and conflict of interest disclosures and audits.

Przelozny said his team is visiting Hong Kong next week to meet with banks, regulators, lawyers and compliance experts to determine if the location suits the company.

Commenting on the region’s political relationship with China, Przelozny believes China is testing how a more relaxed cryptocurrency regime looks in Hong Kong.

If successful, he believes China may follow suit:

“The Chinese government is using Hong Kong as a testnet to experiment with a looser cryptocurrency regime to see what impact that has on the business landscape there. If they see it as a positive thing, then I think there’s a chance they’ll roll it out through China and loosen their existing restrictions.”

Similar remarks were made by Tron CEO Justin Sun in a December 2022 interview on Bloomberg.

He believes that China is using Hong Kong as an “experiment base” to make a final decision on its policy stance.

However, Przelozny is cautious that it may only represent a “transitory experiment” that could be reversed in the future.

If Independent Reserve is satisfied with the regulatory landscape, Przelozny said the last checkbox to tick would be how expensive it is to open up shop there and what it thinks the return on investment will be for doing so.

Independent Reserve operates as a licensed virtual-asset service provider in Singapore.

It also recently launched Bitcoin.com.au after purchasing the domain name for $2 million (3 million Australian dollars).

Longstanding Australian crypto exchange Independent Reserve has bought https://t.co/caP4K5Kwnn.https://t.co/ococz49Hwe pic.twitter.com/lRHaPi5vhe

— Independent Reserve (@indepreserve) March 23, 2023

Over 80 cryptocurrency firms across mainland China and elsewhere have expressed interest in establishing a presence in Hong Kong of late, according to a March 20 statement by Christian Hui, the Secretary for Financial Services and the Treasury.

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips

Equifax, known for huge data breach, is building a Web3 KYC solution

Equifax, which suffered a huge data breach in 2017, has partnered with privacy-centric blockchain company Oasis Labs for a decentralized ID offering for Web3 companies.

Credit reporting company Equifax, known for suffering from one of the largest customer data breaches to date, has partnered with blockchain company Oasis Labs to build a Know Your Customer (KYC) solution.

Equifax and Oasis said on Oct. 26 that the latter would be building a decentralized identity management and KYC solution for the industry on Oasis’ platform, which will leverage application programming interfaces (APIs) from Equifax to help with checks and user identification.

The announcement made no mention of the exact technology which will underpin this offering and Cointelegraph’s request for comment was not immediately responded to by either company.

Both firms believe there hasn’t been a KYC solution tailored to Web3 with “strong privacy protection” and their proposed offering is set to address this gap by issuing anonymized KYC credentials to individuals’ wallets.

This credential will be continuously updated according to the announcement and Oasis pledges its “privacy-preserving capabilities” will ensure data is processed in confidence while maintaining a trail on the company’s blockchain.

Web3 firms offering similar solutions based around decentralized identity are Dock and Quadrata with each offering a product built around decentralized identity.

The partnership could have some Web3 natives concerned, considering the significant data breach Equifax suffered in 2017. Around 163 million worldwide private records were compromised, with 148 million being U.S. citizens making it the 13th largest data breach in United States history, according to cybersecurity company UpGuard.

Attackers targeted a third-party web portal with a known vulnerability that was patched, but Equifax had failed to update to the latest version. The hackers gained access to the firms’ servers for around two and a half months, all the while siphoning millions of records containing sensitive information.

It was reported that Equifax spent $1.4 billion on legal fees and strengthening its security posture following the incident. The U.S. Federal Trade Commission and Consumer Financial Protection Bureau issued a $700 million fine in July 2019, which the firm settled.