💸The End of Money in Brazil,🪙ICOs to Revive Hong Kong,🌍DeFi to Resolve African FX Challenges

December 01, 2023

Your 5 minute emerging markets web3 weekly update

In This Issue

Latin America and the Caribbean
🔸From Cash to Cashless: Brazil's Progress Towards 'The End of Money'
🔸Stake Together vs. LIDO DAO: A Battle for Liquid Staking Supremacy

Asia
🔸Hong Kong Securities Association Floats ICO Mechanism as Part of Economic Revitalization Plan
🔸IOTA Launches $100 Million Foundation in Abu Dhabi to Boost DLT Growth in the Middle East

Africa
🔸African DeFi: Resolving FX Challenges and Unlocking Liquidity
🔸South African Crypto Regulation Steps Up as Firms Rush for Licenses

Eastern Europe
🔸Turkish Crypto Exchange Tomya Faces Investigation Amid High-Profile Fraud Scandal, Owner and 25 Others Detained in Turkey
🔸Crypto Market Trends: Russian P2P Transactions Soar and Stablecoins Gain Popularity

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Latin America and the Caribbean

Image Credit: Dall-E 3

A recent study by Visa reveals that 58% of small Brazilian companies are preparing to operate without physical cash in the next two years. Moreover, 92% of entrepreneurs in the country aim to transition to full digital operations, including the use of digital payment methods like PIX and cryptocurrencies, highlighting the ease and efficiency of virtual payment methods. The growth of internet use and technology in Brazil, along with the convenience, security, and cost-effectiveness of digital payments, is driving the transition away from physical currency, with paper money expected to become obsolete in the near future.

A group of Brazilian developers and entrepreneurs have launched Stake Together, a staking platform aiming to compete with Ethereum's largest liquid staking platform, LIDO DAO. Stake Together invested in three audits from renowned institutions and adopted Distributed Validation Technology (DVT) to enhance security, availability, and scalability. Unlike other protocols, Stake Together offers a diversified fee distribution structure with 9% yield fees allocated to various stakeholders, including Public Goods Projects and Operators, promoting decentralization and community participation in contrast to Lido's dominance in the staking market.

Asia

Image Credit: Dall-E 3

The Hong Kong Securities and Futures Professional Association has suggested the possibility of launching an initial coin offering (ICO) mechanism as part of measures to revitalize the city's economy. The proposal, included in a list of recommendations, lacks details regarding the nature and scope of the ICO mechanism, leaving it unclear whether it involves a comprehensive framework or an authorized platform. This suggestion comes alongside other measures, including legal recognition of Islamic finance and the formulation of "Islamic finance guidelines with Hong Kong characteristics."

IOTA has launched the IOTA Ecosystem DLT Foundation with a $100 million investment to accelerate distributed ledger technology growth in the Middle East. Approved by regulators at the Abu Dhabi Global Market (ADGM), this foundation aims to make the UAE a prominent blockchain industry hub. It will focus on converting real-world assets into digital ones, using IOTA tokens to fund investments over the next four years, marking a significant long-term commitment to IOTA's development. The approval by ADGM positions this foundation as the first blockchain-focused organization with regulatory approval in the region, aligning with recent regulatory advancements in Abu Dhabi that aim to establish the UAE as a leader in the blockchain industry.

Africa

Image Credit: Dall-E 3

Canza Finance, a neobank specializing in decentralized cross-border payments for Africans, is addressing the challenge of limited access to forex liquidity and currency swaps in Africa. Its CEO, Pascal Ntsama IV, believes that decentralized finance (DeFi) can address these challenges and enable slippage-free swaps at central bank rates. Canza Finance's DeFi service, Baki, aims to create a hub for businesses to participate in intra-African and FX trades at a reduced cost, allowing traders to swap currencies without loss. With proper regulatory support, DeFi in Africa can be expected to experience significant growth. Baki is designed to work within the existing regulatory climate, and Ntsama believes that positive shifts in regulation could lead to greater industrial and institutional adoption for the platform, which allows users and liquidity providers to earn yields from currency swaps in the system through its fee-sharing model.

The South African Financial Sector Conduct Authority (FSCA) has received 128 applications for crypto asset service provider licenses as of November 30, marking the last day for crypto service providers in the country to apply for the license. In June, South Africa became the first African country to require crypto exchanges to be licensed to protect investors. FSCA plans to take enforcement action, including fines or the closure of non-compliant firms, against crypto exchanges that continue to operate without a license after the deadline. These applications will be evaluated based on criteria including market services, operational policies, and procedures, KYC compliance, data protection, and cyber risk management. South Africa has been actively working on regulating crypto and blockchain technology, including adopting taxation standards to go after individuals and businesses that fail to report earnings and pay taxes on digital assets by 2027, as part of its efforts to harness blockchain for national development.

Eastern Europe

Image Credit: Dall-E 3

The Turkish crypto exchange Tomya is under investigation as its owner, Yavuz Usta, and 25 others were detained in connection with a high-profile fraud scandal. Tomya is known for sponsoring the former Premier League football team Hull City. The investigation follows a complaint by an investor who claimed to have been defrauded of $211,500 by someone introduced to him by a Tomya employee. Although there are no specific allegations against Tomya, its affiliation with Hull City, owned by prominent media personality Acun Ilıcalı, has garnered attention. Further details on the investigation are emerging and comes at a time when Turkey is preparing to introduce crypto legislation.

In the second and third quarters of 2023, Bitcoin investments by Russian users declined along with decreased activity on centralized crypto exchanges, as reported in the Bank of Russia's financial stability report. The report highlighted that P2P transactions remain the primary channel for Russians to acquire digital assets, with a 53.9% increase in the average monthly volume compared to the same period in 2022. The Central Bank recorded a 27.8% decrease in Russian visits to major cryptocurrency trading platforms in the third quarter, while the total volume of Bitcoin inflows and outflows on these exchanges dropped by 22.4% in the second and third quarters. Despite the decrease in activity, the crypto market's attractiveness for Russians is growing due to an interest in stablecoins as an alternative means of storing funds under sanctions, according to the report.

Thanks for reading and have a great week ahead!

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Written by Jon Lira. Connect with him on LinkedIn.

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