There aren’t yet a huge number of regulated venues for security tokens, but Singapore based AsiaNext is one of them. This month it listed its first tokenized security, a USD money market fund (MMF), and launched a novel digital collateral solution.

AsiaNext was founded as a joint venture between Switzerland’s SIX and Japan’s SBI Holdings. Both companies have a pedigree with digital securities secondary markets in SDX and ODX respectively. However, AsiaNext first launched with crypto derivatives at the start of this year. They don’t require a license in Singapore.

That’s the first of three trading offerings, which is highly relevant because the collateral solution allows collateral from one area to be used in others.

The company holds a Singapore capital markets license and another as a recognized market operator (RMO), which allows it to operate a digital exchange. The MMF is the first digital securities listing. It is working with asset managers to list other funds, including Valour a multinational crypto ETP issuer with $900 million in assets under management.

AsiaNext is also planning a third trading venue for spot crypto trading and has applied for a Major Payments Institution license.

A novel digital collateral solution

In the meantime, it has launched the AsiaNext Orchestration Layer (AXOL) which integrates the three trading venues. Given derivatives trading usually works on margin, the collateral that institutions can post could be fiat currency, stablecoins, crypto or digital securities. Those could all come from one of the three trading venues, enabling capital efficiency. AXOL uses workflows to streamline the collateral management and members can also earn yield on their assets.

Our launch of the AsiaNext Orchestration Layer is a bold step into the future of institutional crypto trading,” said Neil Thomas, Chief Commercial Officer at AsiaNext. “By combining the power of blockchain technology with tried and tested finance principles, we are giving our members the edge they need to thrive in an increasingly complex trading environment”

Meanwhile, earlier this year AsiaNext collaborated with Malaysian digital assets platform, KLDX, which focuses on private equity and debt. Through the collaboration they plan to offer a wider range of investments and improve liquidity.

One of AsiaNext’s affiliates, SBI Digital Markets, is also working with new EU exchange 21X to list products in Europe.

Link

China has imprisoned two men for using the Tether stablecoin (USDT) to circumvent foreign exchange controls. They received five year sentences after processing RMB 30 million ($4.1m) in transactions.

One of the traders met a Nigerian online who complained about the foreign exchange costs of converting naira to renminbi. So Lin, the Chinese trader, came up with a plan for the Nigerian, ‘Prince’, to buy Tether on a local crypto exchange and transfer it to Lin. He then sold the Tether to domestic currency dealers, deposited the renminbi into a local bank and transferred it to an account belonging to Prince. After making 300 yuan on the first transaction, Lin went into business with a friend, Yan.

Within months their bank accounts were restricted because of large fund inflows of RMB 21 million ($2.9 m) so they co-opted a third person Xie to provide a bank card to receive funds. They continued at a slower pace until their arrest in June 2022. The authorities collected evidence including WeChat chat records, bank transactions and records from overseas crypto trading platforms, which resulted in the three pleading guilty. Lin and Yan were imprisoned for five years, with Xie receiving a 1.5 year suspended sentence.

Stepping back, the timing of this coincides with the Nigerian government taking action against Binance Nigeria and other cryptocurrency exchanges. The prosecution of the Chinese traders started on February 26 and presumably involved some interaction with Nigerian authorities. Nigeria started taking steps against crypto exchanges in the first week of March. The timing could be a coincidence because Nigeria blamed the crypto exchanges for the plunging value of the Naria from late January to early March this year.

Making an example of the offenders?

Meanwhile, the Chinese state appears to be using the case as a lesson to others, because multiple news outlets, including Sina, described why it is an offense. A major issue for China is that it circumvents foreign currency controls. Specifically, they want to control Chinese money flowing out, which wasn’t the case here. The authorities also want to keep tabs on inward investment and manage the exchange rate. Secondly, they’re concerned that circumvention leads to inaccurate economic data. What’s not mentioned is that legitimate cross border trading without FX tracking would make tax evasion easier. Plus, there are the usual worries about money laundering by criminals.

In 2022, the International Monetary Fund (IMF) published a paper exploring the cryptocurrency challenges to capital controls.

Link