blockchain banking

China’s Central Bank Gets One Step Closer to Launching Its Digital Currency

The People’s Bank of China (PBoC) announced last week that the top-level design of its digital currency is finally complete. The digital currency’s next step is to “follow the principles of stability, security, and control,” said Mu Changchun, head of the digital currency research institute at the PBoC.

Digital Asset Alert: HK SFC Issues New Regulations

The Hong Kong Securities and Futures Commission (SFC) issued a position paper Nov. 6th defining a new regulatory framework for virtual asset trading platforms. In it, they outlined the parameters under which VSTs would be eligible to apply for a license from the SFC. Virtual asset trading platforms are platforms that offering trading of security tokens.

A virtual asset is a digital representation of value. Also known as a cryptocurrency, a crypto-asset or a digital token, the estimated total market value of virtual assets is now between $200-300 billion. As of November 2019, there are over 3,000 digital tokens and 200 virtual asset trading platforms.

Now the SFC adopted a new set of regulatory standards for virtual asset trading platforms similar to those applicable to licensed securities brokers and automated trading venues. The standards were passed in order to address key regulatory concerns surrounding the tokenization of digital assets. Of primary concern to regulators are the safe protection of assets, KYC requirements, anti-money laundering, and terrorism counter-financing.

Photo – Rikki Chan

According to the position paper released this month, the SFC will only grant licenses to platforms that are capable of meeting the standards outlined by their committee. While enthusiasm for ICOs waned throughout 2019, other forms of virtual asset fundraising hold continued buzz. Securities such as STOs are typically structured to provide the same features as traditional securities, but also involve digital proof of asset ownership using blockchain technology.

“Regulators need to be open to the benefits of innovation, but they should also be ready to tackle the risks to investors which some financial technologies give rise to,” said Mr. Ashley Alder, the SFC’s Chief Executive Officer.

As part of the newly announced regulations, the SFC also made it clear that virtual assets traded on licensed platforms will not require compliance with the same set of financial regulations as traditional security offerings.

Additionally, the SFC issued a warning to investors regarding the high risks associated with purchasing virtual asset futures contracts, citing their unregulated nature and security vulnerabilities. While this warning served largely as a side note to the excitement surrounding the announcement, investors and digital asset owners alike likely still have a long way to go before these concerns can be fully addressed and their digital assets safeguarded.

To learn more on HUB Security solutions for digital assets and key management or submit details below.

Request a Demo





The Rise of Blockchain Banking

As the financial industry begins its long-awaited move to adaptive blockchain technology, many banks are becoming increasingly open to the use of crypto-based solutions for digitizing assets. It’s no secret the future of banking is digital for many financial institutions looking to modernize their product offerings. It even appears likely we’re headed toward an era of national digital currencies backed by central banks. Hats off to Mike Orcutt.

But HSBC’s decision to be the first financial institution to move $20 billion worth of assets to a blockchain platform is possibly enormously rewarding––– or risky. While the future of blockchain-based platforms such as HSBC’s Digital Vault looks promising, security experts voice growing concerns over the management of such large amounts of digital assets.

While the rise in usage of blockchain technology has made financial asset management more transparent and accessible, the crypto world has seen its fair share of threats over the past decade. From Binance to Bitpoint to Quadriga’s wild story, the industry’s shift in reliance on the blockchain has its own perils.

Blockchains are particularly attractive to hackers since once they gain access to the private keys it’s game over and fraudulent transactions are very difficult to reverse(if at all). While blockchains have unique security features, they also have their unique vulnerabilities. As banks expand their digital solution, they will continue to face continuous ongoing threats to their blockchain infrastructure. As long as vulnerabilities as these exist, banks must learn to embrace innovative solutions that can keep their most sensitive assets secure.

Today we know that marketing tactics which branded blockchain technology as unhackable were simply misleading ––– and wrong. In total, since the beginning of 2017, hackers have stolen nearly $2 billion worth of cryptocurrency, mostly from exchanges, and that’s just what’s revealed publicly. Contrary to popular belief, these attackers aren’t just lone opportunists either, they’re sophisticated cybercrime organizations. According to Chainalysis, just two of these groups, both of which are still active today, have stolen a combined $1 billion from exchanges.

Whether the future of banking relies on the blockchain or paper-tracking is still up for debate. But if history teaches us anything, it’s that we’re still not out of the woods when it comes to protecting our most sensitive piece of data. Even if we’re HSBC.

To learn more and schedule a live demo with Hub Security, Click here.

Request a Demo





Scroll to top

JOIN OUR NEWSLETTER

Keep up with cyber security news!