Chinese investors flock to the ‘wild west in crypto’

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Decentralised finance is taking off in China after Beijing banned investing in cryptocurrency.

China’s campaign against cryptocurrencies led to the authorities shutting down bitcoin mining operations in May. That has coincided with the rise of decentralised finance or DeFi, which allows users to trade with each other without any intermediary, such as a bank or broker, and makes it harder to block.

While the most severe enforcement against cryptocurrencies came in September, China first banned crypto exchanges in 2017 and Chinese users have been gradually moving towards DeFi. According to Chainalysis, a research firm, China’s share of global bitcoin transactions peaked in November 2019 at 15 per cent, and had fallen to 5 per cent in June 2021.

In the 12 months to June, mainland China was associated with $256bn of cryptocurrency activity — the highest in Asia — and 49 per cent of the total was traded through DeFi platforms. Uniswap, one of the leading DeFi exchanges, is now the second biggest exchange in East Asia by transaction volume, said Chainalysis.

While the latest restrictions are deterring new blood from entering the crypto markets, experts say that some existing cryptocurrency holders are turning to DeFi in order to continue to trade. DeFi protocols do not have the same “know your customer” obligations as the more tightly regulated conventional exchanges.

Chainanlysis found that countries with historically large institutional investors armed with large crypto wallets — including the US, China, Vietnam and the UK — played an outsized role in DeFi. Large crypto asset owners are drawn to DeFi because it allows them to earn revenue from their coins. Users lend their crypto to DeFi protocols to provide liquidity pools for peer-to-peer lending to occur. In return, investors receive part of the transaction fee or token rewards.

But industry insiders warn that tighter regulation on DeFi is likely to come in the US, which could introduce KYC obligations that make it harder for Chinese users to register new accounts.

Read the full story here.

The Internet of (Five) Things


1. Cleaning gaming’s ‘frat boy’ culture

Activision Blizzard, the $60bn gaming giant behind Call of Duty and Candy Crush, has fired 20 employees in an attempt to clean up its culture following allegations of widespread gender-based discrimination and harassment. In a letter sent to staff on Tuesday, the company said it has also reprimanded 20 individuals and will expand its ethics and compliance team, which is tasked with creating a “more accountable workplace”. In August, hundreds of Activision Blizzard workers walked out in protest after management dismissed a California state lawsuit describing a “pervasive ‘frat boy’ workplace culture” as “irresponsible” and “inaccurate”.

2. Facebook opts for a third-party coin for its digital currency wallet
Facebook has launched a long-awaited pilot of its digital currency wallet Novi in the US and Guatemala, but has chosen to use the Paxos Dollar stablecoin after its own cryptocurrency Diem failed to get backing from regulators. Users will be able to download the app on iPhones or Android, register with a government-issued ID and transfer money between wallets for free. Coinbase, the US cryptocurrency exchange, is providing custody services for Novi.

3. The Squid Game for subs
The breakout success of Squid Game helped Netflix to double its new subscribers from a year earlier, exceeding forecasts and signalling a stronger finish to the year as it releases a flood of new movies and television shows. The hit South Korean drama, released in September, has been the video streaming service’s biggest-ever series launch, reaching more than 142m viewers globally. Netflix projected it would add 8.5m subscribers in the fourth quarter of this year, above the 8.33m expected by Wall Street, and reach 18.4m new viewers for the year. Most new subscriber growth came outside the US, with the Asia-Pacific region contributing 2.2m in paid net new subscribers.

4. Jack Ma’s Spain vacation
Alibaba’s founder Jack Ma is holidaying in Spain, marking the Chinese internet tycoon’s first confirmed trip outside China since he ran afoul of the country’s financial regulators late last year. Ma has made only a handful of low-key appearances in China since the initial public offering of Ant Group, his online finance platform, was blocked by President Xi Jinping in November, shortly after the tycoon publicly criticised Chinese financial regulators in a speech.

5. WeWork goes public
WeWork will finally make its debut on the stock market after a $9bn merger was approved by shareholders of a blank-cheque company, bringing to an end the property group’s tumultuous two-year journey to go public. The shareholders of BowX Acquisition, a listed special purpose acquisition company, or Spac, on Tuesday voted in favour of its transaction with WeWork, enabling the shared office space provider to trade on the New York Stock Exchange from Thursday under the ticker WE. WeWork becomes a public company with a much humbler profile than when it made its first attempt in 2019, and its $9bn valuation is a fraction of the $47bn at which SoftBank valued the company in an investment months before its failed initial public offering.

Tech tools

The Pixel 6 and 6 Pro smartphones are unveiled
The Pixel 6 and 6 Pro smartphones have received positive reviews © Bloomberg

Google Pixel 6 and Pixel 6 Pro smartphones launched yesterday has been met with positive reviews. The handsets will run on Google’s custom Tensor chip, moving away from Qualcomm’s SoS (system-on-chip) found in most Android handsets. Tensor enables new phone features such as speech recognition and translation, powered by artificial intelligence and machine learning.

The Guardian writes the phone “aims to beat competitors on camera and performance while undercutting them on price.” Reviewers liked the range of matt-coloured finishes and high-end cameras. The company says its cameras improve on existing photography technology in capturing diverse skin tones, correcting for the bias towards lighter skin. Inbuilt AI tools also allow users to erase unwanted objects from photos and correct out-of-focus faces. The phones have wireless charging and an in-screen fingerprint reader, features typically only seen in higher-priced handsets.

The Pixel 6 will retail for £599/$599, which is at least £170 cheaper than the newly released iPhone 13 and Samsung Galaxy S21 Ultra, while the Pixel Pro will sell for £849/$899.

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