🪙 Digital Yuan tax issuance?
🧧 Hong Kong $100M crypto fund
💴 Stablecoin Yen?
🪙 Digital Yuan tax issuance?
China’s adoption of Central Bank Digital Currency (CBDC) has been gaining momentum, particularly with the digital yuan paving the way for new breakthroughs in cross-border commerce and import taxation.
In Guangdong, China, the local tax body has reportedly begun issuing digital yuan import tax refunds. According to Securities Times, a power and electrical parts supplier named Huizhou Tianbao Chuangneng Technology was due a $1,035 refund after the tax body miscalculated an import tax bill. The refund was issued in the form of a digital yuan payment to the company’s corporate wallet. The report also revealed that Guangzhou, Zhaoqing, and other parts of the digital CNY pilot zone have launched digital yuan payment and tax refund services for domestic value-added tax, corporate income tax, and other taxes. These developments allow local treasury departments to handle digital yuan tax refunds in a faster and more efficient manner.
Now if this isn't a sign that things are moving fast, this is also the first time this have EVER happened. China's yuan has actually now replaced the US dollar as the most traded currency in Russia!
Times of encouragement, or control? 🤔
In another development, a man became the first Chinese citizen to pay parcel tax on a trade import from Macau using digital yuan, which is awesome but at the same time it means CBDC adoption may gain more traction is this is successful and many people are not so keen for this movement to continue.
In terms of parcel tax, it is a composite levy on imports, including customs tax, import VAT, and consumption taxation. The man who had been shopping while on holiday in Macau, paid a fee of around $52 using digital yuan, eliminating the time he would have spent waiting in line to pay the tax. Not only is this extremely convenient, but it is also saving costs too, so overall, a benefit to many citizens of China.
These developments highlight the increasing usage of digital yuan in cross-border commerce and import taxation, with extensive tests being carried out in Macau and Hong Kong. The CBDC payment system is expected to improve transaction speed and expedite the passenger customs clearance process. With more overseas digital yuan usage cases on the rise, the digital yuan is undoubtedly breaking new ground in the world of finance and commerce.
The question remains though, are CBDCs a benefit or a burden? 🚨
🧧 Hong Kong $100M crypto fund
Hong Kong is accelerating its efforts to become a global crypto hub with a more friendly regulatory stance, and a new fund is set to raise $100 million to invest in crypto companies in the city.
The ProDigital Future Fund has already secured $30 million in commitments from major Asian investment firms, including Sunwah Kingsway Capital Holdings and Golin International Group.
The fund is led by a general partner at the Asian private equity firm SAIF Partners, and longtime tech investor Curt Shi. ProDigital Future will invest in early-stage and developing startups, particularly tech companies with ties to China transitioning into Web3.
The new fund comes as Hong Kong officials plan to host a meeting between crypto companies and bankers in an attempt to ease financing for the sector, which suggests the city is determined to tackle various difficulties that crypto companies face when trying to set up corporate banking accounts.
The surge comes as the city has recently adopted a more crypto-friendly stance in a bid to reclaim its position as a global crypto hub and attract more crypto companies, specifically those facing a difficult time operating from mainland China.
On the other hand, regulators in the US, specifically the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), have launched an aggressive crackdown on the crypto industry.
All crypto adoption is a positive for the industry, but what is not so positive especially for the US is that they are potentially pushing away MAJOR business and opportunities as a result.
Shi noted that while the fundraising process has been “relatively smooth,” investors are cautious about putting their money into crypto projects. He added that not only Hong Kong investors but also some family offices from China, Australia, and Singapore have also participated.
Hong Kong's Secretary for Financial Services and the Treasury, Christian Hui, said that more than 80 companies working in the digital asset space had shown interest in establishing a presence in the city since October 2022.
The surge in interest comes as a number of Chinese state-owned banks in Hong Kong, including the Bank of Communications, Bank of China, and Shanghai Pudong Development Bank, have either started offering banking services to local crypto firms or have made inquiries.
This indicates that Hong Kong is determined to tackle various difficulties that crypto companies face when trying to set up corporate banking accounts.
💴 Stablecoin Yen?
Mitsubishi UFJ Financial Group, Japan's largest bank, has announced that it will be partnering with domestic blockchain players to launch a stablecoin interoperability pilot.
The project aims to create a system that enables seamless transfers and exchanges between various stablecoins to be launched in Japan. The pilot will make use of Datachain-developed interconnection solutions that allow different blockchains to link. The goal is to boost efficiency and reduce fees for inter-bank, inter-company, and interpersonal remittances when using stablecoins.
Hear this out, why is Mitsubishi UFJ interested in stablecoins?
Last year, Japanese lawmakers voted in favor of stablecoin regulation clauses that have now been inserted into the revised Payment Services Act, which will come into effect later this year. These clauses classify certain stablecoins as electronic methods of payment, granting them a legal status. This development will allow banks to launch their own fiat-pegged coins on blockchain networks, which is super bullish for crypto adoption in Japan.
However, different banks are already working on a diverse range of blockchain protocols, raising interoperability-related questions. The central Bank of Japan is also working on a prototype digital yen, which may also make use of blockchain technology. Key Japanese business players are expanding into the non-fungible token (NFT) and digital securities spaces, causing possible interoperability problems.
Mitsubishi UFJ Trust and Banking is taking a proactive approach by exploring interoperability solutions for overseas CBDCs and improving the efficiency of cross-border remittances. The bank claims that its solution will connect different blockchains in a safe and practical way, creating a financial infrastructure that can be used on a global scale. Last year, the bank announced its intention to launch a digital assets wallet.
Added to this, involvement with DMI finance as seen below is hugely positive, especially with their HEAVY impact and financial additions to many Web3 start ups/enterprises already.
Evidently with hyper adoption seemingly occurring due to increased popularity, it is important for financial institutions to work together to ensure interoperability and seamless integration of different blockchain networks. The Mitsubishi UFJ stablecoin interoperability pilot is a step in the right direction towards creating a more efficient and interconnected financial ecosystem for all involved, plus the added benefits of the worldwide impact this has is HUGE!
Who knows, someday we could all be using stablecoins for our daily transactions 👀