1. Sui ecosystem is attacked by hackers, $223 million funds stolen.
The Sui ecological flagship project Cetus Protocol was attacked by hackers on the evening of May 22, resulting in approximately $223 million in funds being stolen. The official Cetus announcement confirmed the attack and revealed that the affected funds include portions held within Sui and those bridged to the ecosystem in ETH form. Currently, data recovery work for the Cetus protocol is underway and is expected to take several hours.
Cetus has been actively discussing the details of the recovery with the Sui Foundation and community members, while advancing in two directions: first, to resolve the issue as soon as possible through white hat negotiations; second, to collect clues and evidence to recover funds through legal channels. Cetus also proposed an agreement upgrade through PoS voting to unlock and return most of the stolen funds frozen in the attacker’s wallet.
This attack incident has once again sparked widespread concern in the industry regarding the security of blockchain. Analysts point out that although blockchain technology itself has a high level of security, issues such as coding errors in smart contracts and system vulnerabilities can still be exploited by hackers. The industry urgently needs to strengthen security audits, raise developers' security awareness, and improve regulatory policies to safeguard user funds.
2. Telegram founder Durov may face scrutiny charges.
Telegram founder Pavel Durov ( recently stated on social media that if faced with censorship pressure, Telegram would choose to exit the relevant market. Previously, Durov publicly accused the head of the French intelligence agency, Nicolas Lerner ), of asking him to ban conservative political content before the Romanian presidential election, but his request was refused.
Durov emphasized that Telegram will not censor political speech in any market, stating, "We do not block protesters in Russia, Belarus, or Iran, and we will not do so in Europe." His remarks have once again sparked heated discussions about how tech companies balance free speech and content moderation.
Analysts believe that as one of the largest crypto instant messaging applications in the world, Telegram faces a huge challenge in balancing freedom of speech with compliance with local laws. On one hand, excessive censorship could damage its image as neutral and open; on the other hand, outright violation of local laws could lead to a ban on operations. Telegram needs to seek a balance between the two, respecting the sovereignty of different countries while maintaining its own interests.
( 3. ARK Invest: Cryptocurrency ETFs will play an important role in the economy.
Cathie Wood, the CEO of ARK Invest, recently stated in an interview that cryptocurrency ETFs will play an important role in the economy. She believes that although ETFs provide easier access compared to wallets, there are some limitations regarding staking Ethereum.
Wood also mentioned that the spot Ethereum ETF does not support staking functionality, which has affected its market performance. She pointed out that Ethereum remains the preferred entry point for new users to understand the smart contract ecosystem, and may gradually shift towards chains like Solana in the future. Wood also noted that Trump's issuance of the TRUMP memecoin on the Solana network could cause some institutional investors to adopt a cautious stance.
Analysts say that the launch of cryptocurrency ETFs is beneficial in attracting more institutional funds into the crypto market, improving the liquidity and accessibility of crypto assets. However, regulatory agencies also need to formulate corresponding policies to standardize the operation of cryptocurrency ETFs and protect investors' interests. In addition, the introduction of innovative features such as staking will also drive the further development of cryptocurrency ETFs.
) 4. Solana ecosystem integrates into the real economy, Swiss watchmaker launches wallet-bound watch
The Swiss luxury watch brand Franck Muller recently announced the launch of a limited edition watch series in collaboration with the Solana blockchain, with a total of 1,111 pieces being issued. This watch can be linked to a Solana wallet via a QR code on the dial, connecting the physical watch with digital assets.
Analysts believe that this move signifies the gradual integration of blockchain technology into the real economy. By combining with traditional industries, blockchain can not only give physical goods a digital identity but also provide consumers with a brand new usage experience. In the future, more brands may follow suit by combining physical products with digital assets to offer consumers a unique ownership experience.
At the same time, this also reflects that the Solana ecosystem is accelerating its development. As a high-performance public chain, Solana has made significant progress in decentralized applications, NFTs, and other fields. By integrating with traditional industries, Solana is expected to further expand its influence and promote the large-scale application of blockchain technology.
5. We social platform Sophon has received financing to explore new on-chain social models.
The social platform Sophon has recently completed a multi-million dollar financing round. The platform aims to reconstruct user value through social oracles, integrating blockchain technology into every moment of daily life. Users' interactive behaviors on Sophon will receive rewards on-chain, forming a new model of "Connect to Earn."
The founder of Sophon stated that traditional social platforms have issues such as user data being monopolized and privacy being violated. The blockchain-based We social platform can truly achieve the decentralization of data ownership, bringing users a brand new social experience.
Analysts point out that We Social is an imaginative new track. Compared to content platforms of the Web2 era, the We Social platform can incentivize users to create and participate through a token economic model, forming a more active community. However, at the same time, We Social also faces many challenges such as user education and business models, and still needs further exploration and innovation.
2. Industry News
( 1. Bitcoin reaches a new high again, but altcoins are still lagging behind: How is this bull market different from 2021?
Bitcoin has once again broken its historical high, climbing above $112,000 this week. This milestone progress reflects investors' continued optimism in the cryptocurrency space. However, unlike the bull market of 2021, altcoins have lagged far behind Bitcoin in terms of gains. Analysts point out that this may be due to institutional investors favoring larger cryptocurrencies like Bitcoin.
Bitcoin's dominance has risen to over 62%, indicating that funds are flowing from altcoins to the king of cryptocurrencies. Trading volume data shows that institutional demand for Bitcoin continues to grow. Renowned analysts believe that this trend may persist for some time until altcoins demonstrate stronger practicality and application prospects.
However, some analysts also warn that altcoins may see a rebound in the coming weeks. Once the price of Bitcoin stabilizes, investors may turn their attention to altcoins, which carry higher risks but also greater potential returns. Overall, the current market landscape is significantly different from that of 2021, and investors need to closely monitor the dynamics to seize potential opportunities.
) 2. Solana is approaching a breakout, with $180 potentially becoming a key resistance level.
The Solana ecosystem token SOL performed strongly this week, with its price climbing to around 180 USD. Analysts believe that if it can break through this key resistance level, SOL may further advance to 210 USD or even higher levels.
The main factors driving the rise of SOL include the continuous expansion of the Solana ecosystem and the increasing activity of the developer community. Data shows that the number of new projects and DeFi protocols on Solana has significantly increased over the past few months. Additionally, the Solana Foundation recently announced a new ecosystem incentive program, which is also expected to further promote ecosystem development.
However, analysts also pointed out some potential risks. The SOL price is facing significant selling pressure around the $180 mark, making a short-term breakthrough more difficult. Moreover, if major cryptocurrencies like Bitcoin experience a pullback, SOL may also be affected to some extent.
Overall, the development prospects of the Solana ecosystem are still worth paying attention to. However, investors need to closely monitor changes in the technical aspects and the macro environment when making decisions.
3. Is XRP price expected to soar? Analysts predict a possible 1700% surge within two months.
Cryptocurrency analysts predict that XRP could see an astonishing 1700% surge in the next two months. If this prediction is accurate, XRP's price will soar from the current $0.4 to about $7, a historical high.
The analyst's optimistic expectations are mainly based on the latest developments in the XRP lawsuit. With the case expected to conclude this year, XRP may shake off regulatory clouds, leading to broader recognition and adoption. In addition, the application prospects of XRP in cross-border payments are also highly regarded.
However, some analysts are cautious about this prediction. They believe that even if XRP wins, it is unlikely that the price will see such a significant increase in the short term. After all, the cryptocurrency market is highly volatile, and any favorable factor is difficult to drive the coin price to soar on its own.
Regardless, the future trend of XRP is worth ongoing attention. Investors need to closely monitor the progress of the lawsuit and make rational decisions based on actual circumstances.
4. Ethereum faces selling pressure from large holders, but the long-term outlook is positive.
Despite the overall growth trend in the cryptocurrency market, Ethereum has encountered a large sell-off by whales in the past 48 hours. Data shows that over $570 million worth of Ethereum has been transferred out of exchange wallets by large holders.
This behavior has raised concerns in the market about the short-term trends of Ethereum. Analysts point out that large holders selling off often puts pressure on the coin's price, especially in situations of low trading volume. In fact, the price of Ethereum has seen a slight decline over the past day.
However, in the long term, the prospects for Ethereum remain positive. As the infrastructure for smart contracts and DeFi, its importance is self-evident. With the continuous development of the ecosystem, Ethereum is expected to gain more application scenarios and users. In addition, Ethereum's PoS upgrade will also improve its scalability and efficiency.
Therefore, while investors pay attention to short-term fluctuations, they also need to maintain a long-term perspective. As a key project in the cryptocurrency space, the long-term value of Ethereum is still worth looking forward to.
5. Can Dogecoin regain its upward momentum? Analysts are optimistic about its rebound potential.
The highly watched Dogecoin (DOGE) performed strongly over the past week, sparking discussions in the market about its rebound potential. Analysts point out that the compression signals in DOGE's moving averages may indicate an upcoming significant price surge.
According to historical data, when the moving average of DOGE shows compression, it is often followed by a significant price increase. If this pattern is validated again, DOGE may break through the resistance range of $0.3 to $0.35, achieving a substantial increase.
The main factors driving the rebound of DOGE include the continued increase in community activity and the potential growth in institutional demand. Earlier reports indicated that regulators are reviewing the ETF application for DOGE. Once approved, DOGE is expected to attract more institutional investment.
However, some analysts are cautious about the upside potential of DOGE. They believe that DOGE lacks practical application scenarios and its long-term value is uncertain. Therefore, investors need to weigh the risks and returns when making decisions.
3. Project Highlights
1. The Sui ecosystem has encountered a major security incident, with the Cetus protocol hacked for $223 million.
The Sui ecosystem is a brand new blockchain platform developed by Mysten Labs, aimed at providing a high-performance, scalable distributed system. Cetus is a decentralized cryptocurrency exchange protocol within the Sui ecosystem. On May 24, Cetus suffered a hacking attack, resulting in the theft of funds worth $223 million.
According to the community update released by Cetus, the affected funds are divided into two parts: one part is within Sui, and the other part is bridged to the ecosystem outside in the form of ETH. Cetus is actively discussing with the Sui Foundation and other community members to simulate different fund recovery plans. Currently, the aggregator service has resumed online, supporting exchanges through partners such as Alpha.
The incident has dealt a significant blow to the Sui ecosystem. As an emerging blockchain platform, Sui is at a critical stage of development, where security and reliability are essential. This hacker attack not only resulted in substantial financial losses but may also affect users' confidence in the Sui ecosystem. The Sui Foundation needs to take strong measures to enhance security protection and rebuild user trust.
Industry insiders have expressed concern over this incident. Some analysts believe it highlights the shortcomings of emerging public chains in terms of security, and that audits and testing need to be strengthened. Others argue that this is an inevitable part of blockchain development, and as long as the Sui team responds in a timely manner and learns from the experience, it will be beneficial for the ecosystem's maturity in the long run. Overall, this incident will test the Sui team's adaptability and crisis management capabilities, significantly impacting its future development.
2. The Solana ecosystem remains active, with new projects emerging continuously.
Solana is a high-performance blockchain platform known for its low cost and high throughput. Despite experiencing the crypto winter of 2022, the Solana ecosystem has shown strong vitality in 2023.
At the TOKEN2049 conference held in Singapore, entrepreneurs from the Solana ecosystem demonstrated unprecedented confidence. A number of emerging projects such as Cub, FlashTrade, SonicSVM, Solayer Labs, and Compute Labs made their appearances, showcasing the Solana ecosystem's ability for continuous innovation.
These new projects cover multiple areas such as decentralized finance, programmability, and privacy protection, representing the continuously expanding boundaries of the Solana ecosystem. For example, Cub, which focuses on decentralized storage and data management, is a decentralized exchange. The emergence of these projects is expected to further enrich the application scenarios of Solana.
It is worth mentioning that nearly half of the attendees at the TOKEN2049 conference were participating in Solana community activities for the first time, reflecting Solana's ongoing ability to attract fresh talent to its ecosystem. The Solana community, which has risen from its lows, has become more resilient and vibrant.
Analysts believe that the continued activity of the Solana ecosystem is expected to drive its further development in the new round of the cryptocurrency cycle. With the continuous emergence of new projects, Solana is likely to achieve breakthroughs in areas such as programmability and privacy protection, bringing more innovative applications to users. However, security remains a key issue that Solana needs to focus on.
3. The Move ecosystem has attracted attention, with Sui, Aptos, and Movement emerging as new stars.
Move is an emerging blockchain programming language developed by Meta. The ecosystem based on Move has recently attracted widespread attention, with Sui, Aptos, and Movement becoming the focal projects.
Sui is a brand new blockchain platform developed by Mysten Labs, using Move as its programming language. Despite recently experiencing a major security incident with the theft of the Cetus protocol, Sui's technical strength and development prospects are still recognized by industry insiders.
Aptos is another public chain project based on Move, founded by former employees of Meta. Aptos officially launched its mainnet in October 2022 and quickly attracted a large influx of developers and funds. Currently, the Aptos ecosystem has begun to take shape, but it is still exploring its development direction.
Movement is the only project in the Move ecosystem that has not yet issued a token, and it is attracting a lot of attention. Industry insiders are looking forward to Movement bringing more innovative applications to the Move ecosystem.
The Move ecosystem has gained attention mainly due to its relevance to the Rust language. Transitioning from Rust to Move is not difficult, which has attracted many projects and developers from the Solana ecosystem to join the Move camp. Additionally, Move is considered to have advantages in terms of security and programmability, with the potential to drive the development of blockchain technology.
However, the Move ecosystem is still in its infancy, with few token assets available for trading. Sui, Aptos, and Movement all need to accelerate ecosystem development to attract more quality projects to settle in, in order to truly unlock the potential of Move. Overall, the future of the Move ecosystem is promising, but it also faces many challenges.
4. The social dilemma we face needs to be resolved, and innovative models are key.
We social is regarded as an important application scenario of blockchain technology, but it still faces many difficulties at present. Innovative business models may provide guidance for its direction.
At the TOKEN2049 conference, many investors and entrepreneurs expressed concerns about the prospects of We Social. First-level investor Romeo bluntly stated, "It's too difficult to do We Social; this track often only has one winner." Indeed, due to the path dependence of user habits, the social field often can only accommodate one platform to rule.
In addition, most of the current We social projects have yet to find a sustainable business model. After some projects launch, founders and investors begin to cash out in large amounts, harming the interests of the community and users. Industry insiders believe that this short-sighted model of "gathering to trade on exchanges" is draining the liquidity of the entire industry.
However, there are still many entrepreneurs in the We social track who persist in innovation. They are exploring new models such as "Connect to Earn", hoping to attract users through interesting social gameplay while avoiding ecological and economic collapse. In addition, some traditional AI companies have also joined the innovation of We social, injecting new vitality into it.
Analysts say that We social needs innovative business models to attract real users and generate sustainable revenue and value on that basis. Only in this way can We social truly achieve large-scale application. Currently, We social is still exploring, but future opportunities are still worth looking forward to.
5. AI+We has become a new hotspot, innovative applications have attracted attention.
At the TOKEN2049 conference, the combination of AI and We has become a new hot topic. More and more entrepreneurs and investors are beginning to focus on innovative applications in this field.
Traditional AI companies such as Gensyn, Hyperbolic, and Schelling AI are all diving into the We entrepreneurship. They hope to combine AI technology with blockchain to develop new types of computing and generative models. For example, Title.xyz focuses on generating images and videos based on Midjourney style.
At the same time, some We native projects are also exploring the application scenarios of AI. Gigin is an AI-driven cryptocurrency trading application based on the Mira Network, which enhances the credibility of AI trading signals through a decentralized verification system.
Industry insiders believe that AI+We is likely to become the next explosive growth sector. AI technology can empower We applications, enhancing their performance and user experience; while the decentralized nature of We helps to address trust and privacy issues in AI systems.
However, AI+We is still in its early stages, and most applications are attempts of a "Meme" nature. To truly unleash the potential of this field, continuous innovation and long-term investment are still needed. Analysts call for exchanges and investors to pay more attention to long-term entrepreneurs, support quality talent, and bring better use cases and growth to the industry.
Overall, AI+We combines two major popular technologies, and its innovative application prospects are vast. As long as the current difficulties are overcome, this field will undoubtedly become an important driving force for the development of We.
4. Economic Dynamics
1. The Federal Reserve's expectation for a rate hike in June has cooled, while inflationary pressures persist.
Economic Background: The US economy showed signs of recovery in early 2023, with an annualized GDP growth rate of 1.1% in the first quarter. However, the inflation rate remains high, with the core inflation rate rising by 4.9% year-on-year in April, far exceeding the Federal Reserve's target level of 2%. The unemployment rate remains low at 3.6%, and the job market remains robust.
Important Event: The Federal Reserve paused interest rate hikes in the May meeting, maintaining the federal funds rate at 5.25%. The market expects only a 5.6% probability of a 25 basis point hike in June, reflecting concerns over economic slowdown. However, Powell reiterated the commitment to continue efforts to curb inflation, suggesting there is still room for future rate increases.
Market Reaction: U.S. stocks experienced a brief decline after the Federal Reserve meeting, as investors' concerns about the economic outlook intensified. Bond yields fell, reflecting expectations of slowing economic growth. The dollar index softened slightly, as the market anticipates a slower pace of interest rate hikes. The commodity market showed divergence, with energy and industrial metal prices rising, while agricultural product prices fell.
Expert Opinion: Jeffrey Sachs, a professor of economics at Columbia University, stated that the Federal Reserve faces a difficult choice. On one hand, inflation remains high and requires further interest rate hikes; on the other hand, economic growth is slowing, and excessive rate increases could trigger a recession. He suggests that the Federal Reserve should remain patient and closely monitor changes in economic data.
2. The pace of China's economic recovery is accelerating, and policy support continues to strengthen.
Economic Background: China's economy achieved a year-on-year growth of 5% in the first quarter of 2023, an improvement compared to the same period last year. The official manufacturing PMI in April was 49.2, slightly below the threshold, but improved compared to the previous month. Inflationary pressures are relatively mild, with the CPI rising 0.6% year-on-year in April.
Important events: The Chinese government has introduced a series of policy measures aimed at promoting economic recovery. This includes increasing infrastructure investment, supporting the development of the manufacturing industry, and expanding domestic demand. In addition, the People's Bank continues to implement a prudent monetary policy to maintain reasonable liquidity.
Market response: The A-share market continues to rise under the boost of favorable policies, with the Shanghai Composite Index having accumulated a gain of over 10% this year. The real estate market has also shown signs of recovery, with real estate investment in April increasing by 6.8% year-on-year. Manufacturing investment and consumption data also show signs of improvement.
Expert Opinion: Zhang Bin, a researcher at the Institute of World Economy and Politics of the Chinese Academy of Social Sciences, stated that the foundation for China's economic recovery is relatively solid, mainly thanks to the optimization of pandemic prevention and control policies and a series of policy combinations. He expects that as the effects of these policies continue to be released, economic growth is likely to accelerate further in the second half of the year.
3. Eurozone inflation hits a new high, increasing pressure on the European Central Bank to raise interest rates.
Economic background: The Eurozone economy grew by 0.1% in the first quarter of 2023, slowing down compared to the same period last year. The unemployment rate remained low at 6.5%, and the job market stayed stable. However, inflationary pressures continued to mount, with the inflation rate climbing to a new high of 7.5% in April.
Important event: The European Central Bank raised three key interest rates by 25 basis points in May, reiterating its intention to continue raising rates to curb inflation. ECB President Lagarde stated that the inflation outlook is "extremely uncertain," and future rate hikes will depend on data changes.
Market reaction: European stock markets fell after the ECB raised interest rates, with investors concerned that a rapid pace of rate hikes could hamper economic growth. The euro rose slightly against the dollar, reflecting optimistic expectations for the European economic outlook. Bond yields increased, reflecting expectations for future rate hikes.
Expert Opinion: David Folkerts, Chief Eurozone Economist at Deutsche Bank, believes that the European Central Bank faces a difficult task. He stated that the inflation rate remains high and requires further rate hikes; however, at the same time, economic growth is slowing down, and excessive rate hikes could trigger a recession. He suggests that the ECB should remain patient and closely monitor changes in economic data.
4. Japan's economic recovery is weak, and the central bank maintains an accommodative policy.
Economic Background: Japan's economy grew by 0.4% year-on-year in the first quarter of 2023, a slowdown compared to the same period last year. In April, the core inflation rate rose by 3.4% year-on-year, well above the Bank of Japan's target level of 2%. The unemployment rate remained low at 2.6%.
Important event: The Bank of Japan decided to maintain its current monetary easing policy during the monetary policy meeting in April, keeping the short-term interest rate target at -0.1%. Bank Governor Haruhiko Kuroda reiterated that the rise in the inflation rate is mainly due to the increase in the prices of imported goods, while domestic demand remains weak.
Market reaction: The Nikkei 225 index rose slightly after the central bank's decision, with investors welcoming the central bank's maintenance of an accommodative policy. The yen weakened slightly against the dollar, reflecting market concerns about the outlook for the Japanese economy. Bond yields rose slightly.
Expert Opinion: Japanese economist Naohisa Takeuchi stated that the Bank of Japan faces a difficult choice. On one hand, the inflation rate is rising, necessitating a tightening of monetary policy; on the other hand, the economic recovery is weak, and exiting from easing too early could hurt the economy. He suggested that the central bank should remain patient and consider exiting easing only after the inflation rate stabilizes near the 2% target.
5. Emerging market economies are diverging, with India becoming a highlight.
Economic Background: Emerging market economies showed varied performance in 2023. The Indian economy grew by 7% in the 2022-2023 fiscal year, becoming the fastest-growing major economy in the world. However, countries like Russia and Turkey were dragged down by geopolitical conflicts and high inflation.
Important events: The Indian government has introduced a series of reform measures, including tax cuts, regulatory simplification, and promoting the development of manufacturing. At the same time, the Reserve Bank of India maintains a moderately tight monetary policy stance to control inflation. Russia, on the other hand, is facing an economic recession due to the impact of Western sanctions.
Market reaction: The Indian stock market continues to rise driven by favorable economic data, with the Mumbai stock market having accumulated a gain of over 10% this year. The rupee to dollar exchange rate remains stable. The Russian stock market and ruble exchange rate have significantly declined. Emerging market bond yields are showing divergence.
Expert opinion: The President of the International Monetary Fund, Kristalina Georgieva, stated that the Indian economy has shown strong resilience, thanks to prudent macroeconomic policies and favorable structural reforms. She also pointed out that geopolitical conflicts and high inflation will continue to weigh on the growth prospects of other emerging market economies.
5. Regulation & Policy
1. The U.S. Treasury Department's think tank discusses the impact of stablecoins on financial stability.
Recently, the U.S. GENIUS stablecoin bill passed the Senate procedural vote, and the Hong Kong Legislative Council has also passed the Stablecoin Ordinance after three readings. Stablecoins have now become an important variable in the global financial system. In the U.S., the future development of stablecoins not only pertains to the prosperity of the digital asset market but could also have far-reaching impacts on the demand for government bonds, the liquidity of bank deposits, and the dominance of the U.S. dollar.
A month before the passage of the GENIUS Act, the U.S. Department of the Treasury's "think tank"—the Treasury Borrowing Advisory Committee (TBAC)—delved into the potential impacts of the expansion of stablecoins on U.S. fiscal and financial stability in a report. As an important component of the Treasury's debt financing plans, TBAC's recommendations hold certain reference value.
The report points out that the rapid growth of stablecoins may affect the demand for government bonds, bank deposits, and the international status of the US dollar. If stablecoins are widely adopted, it could reduce the demand for government bonds, thereby increasing the government's borrowing costs. At the same time, stablecoins may also attract an outflow of bank deposits, impacting banks' sources of funds. Furthermore, the use of stablecoins could weaken the dominance of the US dollar in international trade and finance.
However, the report also believes that stablecoins have a certain value proposition. As the use of cryptocurrencies in the underground economy becomes increasingly prevalent, stablecoins provide a recognized medium of exchange, and governments face significant challenges in regulation. Even if authorities increase regulatory efforts, tracking crypto transactions in the gray market will still be a daunting task.
Experts and scholars have different interpretations of this report. Professor Bob Hamilton from the University of California, Berkeley believes that the development of stablecoins may indeed affect the demand for government bonds and bank deposits, but the extent of this impact may be exaggerated. He stated that even if stablecoins are widely adopted, their scale is unlikely to surpass the existing financial system. In contrast, Professor Gary Gort from the Massachusetts Institute of Technology holds a different view, warning that stablecoins could pose a serious threat to the international status of the US dollar, and the US government should pay close attention to this.
Overall, the development of stablecoins is triggering profound changes in the global financial system. Governments and regulatory bodies around the world need to closely monitor their development trends and formulate corresponding regulatory policies to seek a balance between promoting innovation and maintaining financial stability.
2. The Hong Kong Monetary Authority Chief: Will simultaneously develop the virtual asset and stablecoin markets.
The Hong Kong Special Administrative Region government is accelerating the development of the virtual asset and stablecoin markets. In a recent speech, the Secretary for Financial Services and the Treasury, Christopher Hui, stated that Hong Kong is simultaneously developing the virtual asset market and the gold commodity market, and will create a new financial sector that includes fintech, virtual assets, stablecoins, and green finance.
Xu Zhengyu emphasized that Hong Kong will soon seek the support of the Legislative Council to establish a legal regulatory framework for stablecoins. He pointed out that there is a significant demand for stablecoins in the Hong Kong market, and therefore the next step must be to continue innovating and expanding into new markets. This reflects the determination of the Hong Kong SAR government in developing digital assets.
In fact, Hong Kong released the "Stablecoin Regulatory Framework" last December, aiming to establish a comprehensive regulatory system for stablecoins in Hong Kong. The bill passed the Legislative Council's third reading in May this year and is expected to take effect in mid-2023. According to the bill's content, issuing stablecoins requires obtaining permission from the Hong Kong Monetary Authority and complying with relevant prudential regulatory requirements.
The Chief Executive of the Hong Kong Monetary Authority, Eddie Yue, previously stated that the establishment of a regulatory framework for stablecoins would bring new development opportunities to Hong Kong. He believes that stablecoins can enhance the efficiency of cross-border payments and inject new momentum into the development of financial technology in Hong Kong.
Industry insiders have welcomed the introduction of the regulatory framework for stablecoins in Hong Kong. Chen Shou-ren, chairman of the Hong Kong FinTech Association, believes that this will create a more favorable environment for fintech companies in Hong Kong and help attract more innovative projects to settle in Hong Kong. He also urged regulators to fully listen to industry opinions when formulating specific rules to ensure the rationality and operability of regulatory measures.
However, some experts are cautious about the development prospects of stablecoins. Zheng Ting, an associate professor in the Department of Economics at The Chinese University of Hong Kong, believes that the success of stablecoins depends on their performance in practical applications. He suggests that regulatory agencies should closely monitor the operation of stablecoins and adjust regulatory policies in a timely manner based on market responses.
Overall, Hong Kong is paving the way for the development of stablecoins. The introduction of the relevant regulatory framework will bring new development opportunities to Hong Kong's digital asset market, but it also requires the government, regulatory agencies, and the industry to work together to ensure the healthy and orderly development of the stablecoin market.
3. Former SEC Official Interprets the Background of Ethereum ETF Approval
A year ago, the U.S. Securities and Exchange Commission (SEC) unexpectedly approved the listing application for a spot Ethereum ETF, which was seen as a major breakthrough in the field of cryptocurrency regulation. Recently, former SEC senior official Nate Geraci shared his insights on this matter.
Geraci is the president of the well-known ETF issuer The ETF Store. He stated on social media that the SEC's approval of the Ethereum ETF listing is likely due to the regulatory agency's failure in the lawsuit brought by Grayscale and has no other choice. He hopes to understand the full details of this decision in the future.
Geraci's views have sparked widespread discussion within the industry. Some analysts believe that the SEC's approval of the Ethereum ETF is due to Ethereum being the "second" in the cryptocurrency space, having gained a certain level of recognition from regulators. Moreover, the development of the Ethereum ecosystem also provides a relatively sufficient regulatory basis for this.
However, there are also views that the SEC's actions are more out of helplessness. The lawsuit by Grayscale against the SEC may put the regulatory agency in a passive position; if it continues to refuse, it may face greater pressure. Therefore, approving the listing of the Ethereum ETF has become a matter of expediency.
It is worth noting that despite the approval of the Ethereum ETF, the SEC remains cautious regarding applications for other cryptocurrency ETFs. As of now, the SEC has not approved any other spot cryptocurrency ETFs for listing, apart from Ethereum. This also reflects the contradictory dilemma faced by regulators on the issue of cryptocurrency regulation.
Experts believe that the SEC is under significant pressure regarding cryptocurrency regulation. On one hand, it needs to protect investors' interests and guard against risks in the cryptocurrency market; on the other hand, it also needs to leave space for innovation to avoid stifling industry development with excessive regulation. Therefore, the SEC needs to weigh the pros and cons and seek a balance when approving cryptocurrency ETFs.
Overall, the approval of the Ethereum ETF is a breakthrough, but the road to cryptocurrency regulation remains long and arduous. The SEC needs to strike a balance between maintaining market order and promoting industry innovation, formulating practical regulatory policies to create a favorable environment for the healthy development of the cryptocurrency market.
The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
5.25 AI Daily: Insights on Blockchain Security Challenges and Future from the Sui Ecosystem Hacker Attack Case
1. Headline
1. Sui ecosystem is attacked by hackers, $223 million funds stolen.
The Sui ecological flagship project Cetus Protocol was attacked by hackers on the evening of May 22, resulting in approximately $223 million in funds being stolen. The official Cetus announcement confirmed the attack and revealed that the affected funds include portions held within Sui and those bridged to the ecosystem in ETH form. Currently, data recovery work for the Cetus protocol is underway and is expected to take several hours.
Cetus has been actively discussing the details of the recovery with the Sui Foundation and community members, while advancing in two directions: first, to resolve the issue as soon as possible through white hat negotiations; second, to collect clues and evidence to recover funds through legal channels. Cetus also proposed an agreement upgrade through PoS voting to unlock and return most of the stolen funds frozen in the attacker’s wallet.
This attack incident has once again sparked widespread concern in the industry regarding the security of blockchain. Analysts point out that although blockchain technology itself has a high level of security, issues such as coding errors in smart contracts and system vulnerabilities can still be exploited by hackers. The industry urgently needs to strengthen security audits, raise developers' security awareness, and improve regulatory policies to safeguard user funds.
2. Telegram founder Durov may face scrutiny charges.
Telegram founder Pavel Durov ( recently stated on social media that if faced with censorship pressure, Telegram would choose to exit the relevant market. Previously, Durov publicly accused the head of the French intelligence agency, Nicolas Lerner ), of asking him to ban conservative political content before the Romanian presidential election, but his request was refused.
Durov emphasized that Telegram will not censor political speech in any market, stating, "We do not block protesters in Russia, Belarus, or Iran, and we will not do so in Europe." His remarks have once again sparked heated discussions about how tech companies balance free speech and content moderation.
Analysts believe that as one of the largest crypto instant messaging applications in the world, Telegram faces a huge challenge in balancing freedom of speech with compliance with local laws. On one hand, excessive censorship could damage its image as neutral and open; on the other hand, outright violation of local laws could lead to a ban on operations. Telegram needs to seek a balance between the two, respecting the sovereignty of different countries while maintaining its own interests.
( 3. ARK Invest: Cryptocurrency ETFs will play an important role in the economy.
Cathie Wood, the CEO of ARK Invest, recently stated in an interview that cryptocurrency ETFs will play an important role in the economy. She believes that although ETFs provide easier access compared to wallets, there are some limitations regarding staking Ethereum.
Wood also mentioned that the spot Ethereum ETF does not support staking functionality, which has affected its market performance. She pointed out that Ethereum remains the preferred entry point for new users to understand the smart contract ecosystem, and may gradually shift towards chains like Solana in the future. Wood also noted that Trump's issuance of the TRUMP memecoin on the Solana network could cause some institutional investors to adopt a cautious stance.
Analysts say that the launch of cryptocurrency ETFs is beneficial in attracting more institutional funds into the crypto market, improving the liquidity and accessibility of crypto assets. However, regulatory agencies also need to formulate corresponding policies to standardize the operation of cryptocurrency ETFs and protect investors' interests. In addition, the introduction of innovative features such as staking will also drive the further development of cryptocurrency ETFs.
) 4. Solana ecosystem integrates into the real economy, Swiss watchmaker launches wallet-bound watch
The Swiss luxury watch brand Franck Muller recently announced the launch of a limited edition watch series in collaboration with the Solana blockchain, with a total of 1,111 pieces being issued. This watch can be linked to a Solana wallet via a QR code on the dial, connecting the physical watch with digital assets.
Analysts believe that this move signifies the gradual integration of blockchain technology into the real economy. By combining with traditional industries, blockchain can not only give physical goods a digital identity but also provide consumers with a brand new usage experience. In the future, more brands may follow suit by combining physical products with digital assets to offer consumers a unique ownership experience.
At the same time, this also reflects that the Solana ecosystem is accelerating its development. As a high-performance public chain, Solana has made significant progress in decentralized applications, NFTs, and other fields. By integrating with traditional industries, Solana is expected to further expand its influence and promote the large-scale application of blockchain technology.
5. We social platform Sophon has received financing to explore new on-chain social models.
The social platform Sophon has recently completed a multi-million dollar financing round. The platform aims to reconstruct user value through social oracles, integrating blockchain technology into every moment of daily life. Users' interactive behaviors on Sophon will receive rewards on-chain, forming a new model of "Connect to Earn."
The founder of Sophon stated that traditional social platforms have issues such as user data being monopolized and privacy being violated. The blockchain-based We social platform can truly achieve the decentralization of data ownership, bringing users a brand new social experience.
Analysts point out that We Social is an imaginative new track. Compared to content platforms of the Web2 era, the We Social platform can incentivize users to create and participate through a token economic model, forming a more active community. However, at the same time, We Social also faces many challenges such as user education and business models, and still needs further exploration and innovation.
2. Industry News
( 1. Bitcoin reaches a new high again, but altcoins are still lagging behind: How is this bull market different from 2021?
Bitcoin has once again broken its historical high, climbing above $112,000 this week. This milestone progress reflects investors' continued optimism in the cryptocurrency space. However, unlike the bull market of 2021, altcoins have lagged far behind Bitcoin in terms of gains. Analysts point out that this may be due to institutional investors favoring larger cryptocurrencies like Bitcoin.
Bitcoin's dominance has risen to over 62%, indicating that funds are flowing from altcoins to the king of cryptocurrencies. Trading volume data shows that institutional demand for Bitcoin continues to grow. Renowned analysts believe that this trend may persist for some time until altcoins demonstrate stronger practicality and application prospects.
However, some analysts also warn that altcoins may see a rebound in the coming weeks. Once the price of Bitcoin stabilizes, investors may turn their attention to altcoins, which carry higher risks but also greater potential returns. Overall, the current market landscape is significantly different from that of 2021, and investors need to closely monitor the dynamics to seize potential opportunities.
) 2. Solana is approaching a breakout, with $180 potentially becoming a key resistance level.
The Solana ecosystem token SOL performed strongly this week, with its price climbing to around 180 USD. Analysts believe that if it can break through this key resistance level, SOL may further advance to 210 USD or even higher levels.
The main factors driving the rise of SOL include the continuous expansion of the Solana ecosystem and the increasing activity of the developer community. Data shows that the number of new projects and DeFi protocols on Solana has significantly increased over the past few months. Additionally, the Solana Foundation recently announced a new ecosystem incentive program, which is also expected to further promote ecosystem development.
However, analysts also pointed out some potential risks. The SOL price is facing significant selling pressure around the $180 mark, making a short-term breakthrough more difficult. Moreover, if major cryptocurrencies like Bitcoin experience a pullback, SOL may also be affected to some extent.
Overall, the development prospects of the Solana ecosystem are still worth paying attention to. However, investors need to closely monitor changes in the technical aspects and the macro environment when making decisions.
3. Is XRP price expected to soar? Analysts predict a possible 1700% surge within two months.
Cryptocurrency analysts predict that XRP could see an astonishing 1700% surge in the next two months. If this prediction is accurate, XRP's price will soar from the current $0.4 to about $7, a historical high.
The analyst's optimistic expectations are mainly based on the latest developments in the XRP lawsuit. With the case expected to conclude this year, XRP may shake off regulatory clouds, leading to broader recognition and adoption. In addition, the application prospects of XRP in cross-border payments are also highly regarded.
However, some analysts are cautious about this prediction. They believe that even if XRP wins, it is unlikely that the price will see such a significant increase in the short term. After all, the cryptocurrency market is highly volatile, and any favorable factor is difficult to drive the coin price to soar on its own.
Regardless, the future trend of XRP is worth ongoing attention. Investors need to closely monitor the progress of the lawsuit and make rational decisions based on actual circumstances.
4. Ethereum faces selling pressure from large holders, but the long-term outlook is positive.
Despite the overall growth trend in the cryptocurrency market, Ethereum has encountered a large sell-off by whales in the past 48 hours. Data shows that over $570 million worth of Ethereum has been transferred out of exchange wallets by large holders.
This behavior has raised concerns in the market about the short-term trends of Ethereum. Analysts point out that large holders selling off often puts pressure on the coin's price, especially in situations of low trading volume. In fact, the price of Ethereum has seen a slight decline over the past day.
However, in the long term, the prospects for Ethereum remain positive. As the infrastructure for smart contracts and DeFi, its importance is self-evident. With the continuous development of the ecosystem, Ethereum is expected to gain more application scenarios and users. In addition, Ethereum's PoS upgrade will also improve its scalability and efficiency.
Therefore, while investors pay attention to short-term fluctuations, they also need to maintain a long-term perspective. As a key project in the cryptocurrency space, the long-term value of Ethereum is still worth looking forward to.
5. Can Dogecoin regain its upward momentum? Analysts are optimistic about its rebound potential.
The highly watched Dogecoin (DOGE) performed strongly over the past week, sparking discussions in the market about its rebound potential. Analysts point out that the compression signals in DOGE's moving averages may indicate an upcoming significant price surge.
According to historical data, when the moving average of DOGE shows compression, it is often followed by a significant price increase. If this pattern is validated again, DOGE may break through the resistance range of $0.3 to $0.35, achieving a substantial increase.
The main factors driving the rebound of DOGE include the continued increase in community activity and the potential growth in institutional demand. Earlier reports indicated that regulators are reviewing the ETF application for DOGE. Once approved, DOGE is expected to attract more institutional investment.
However, some analysts are cautious about the upside potential of DOGE. They believe that DOGE lacks practical application scenarios and its long-term value is uncertain. Therefore, investors need to weigh the risks and returns when making decisions.
3. Project Highlights
1. The Sui ecosystem has encountered a major security incident, with the Cetus protocol hacked for $223 million.
The Sui ecosystem is a brand new blockchain platform developed by Mysten Labs, aimed at providing a high-performance, scalable distributed system. Cetus is a decentralized cryptocurrency exchange protocol within the Sui ecosystem. On May 24, Cetus suffered a hacking attack, resulting in the theft of funds worth $223 million.
According to the community update released by Cetus, the affected funds are divided into two parts: one part is within Sui, and the other part is bridged to the ecosystem outside in the form of ETH. Cetus is actively discussing with the Sui Foundation and other community members to simulate different fund recovery plans. Currently, the aggregator service has resumed online, supporting exchanges through partners such as Alpha.
The incident has dealt a significant blow to the Sui ecosystem. As an emerging blockchain platform, Sui is at a critical stage of development, where security and reliability are essential. This hacker attack not only resulted in substantial financial losses but may also affect users' confidence in the Sui ecosystem. The Sui Foundation needs to take strong measures to enhance security protection and rebuild user trust.
Industry insiders have expressed concern over this incident. Some analysts believe it highlights the shortcomings of emerging public chains in terms of security, and that audits and testing need to be strengthened. Others argue that this is an inevitable part of blockchain development, and as long as the Sui team responds in a timely manner and learns from the experience, it will be beneficial for the ecosystem's maturity in the long run. Overall, this incident will test the Sui team's adaptability and crisis management capabilities, significantly impacting its future development.
2. The Solana ecosystem remains active, with new projects emerging continuously.
Solana is a high-performance blockchain platform known for its low cost and high throughput. Despite experiencing the crypto winter of 2022, the Solana ecosystem has shown strong vitality in 2023.
At the TOKEN2049 conference held in Singapore, entrepreneurs from the Solana ecosystem demonstrated unprecedented confidence. A number of emerging projects such as Cub, FlashTrade, SonicSVM, Solayer Labs, and Compute Labs made their appearances, showcasing the Solana ecosystem's ability for continuous innovation.
These new projects cover multiple areas such as decentralized finance, programmability, and privacy protection, representing the continuously expanding boundaries of the Solana ecosystem. For example, Cub, which focuses on decentralized storage and data management, is a decentralized exchange. The emergence of these projects is expected to further enrich the application scenarios of Solana.
It is worth mentioning that nearly half of the attendees at the TOKEN2049 conference were participating in Solana community activities for the first time, reflecting Solana's ongoing ability to attract fresh talent to its ecosystem. The Solana community, which has risen from its lows, has become more resilient and vibrant.
Analysts believe that the continued activity of the Solana ecosystem is expected to drive its further development in the new round of the cryptocurrency cycle. With the continuous emergence of new projects, Solana is likely to achieve breakthroughs in areas such as programmability and privacy protection, bringing more innovative applications to users. However, security remains a key issue that Solana needs to focus on.
3. The Move ecosystem has attracted attention, with Sui, Aptos, and Movement emerging as new stars.
Move is an emerging blockchain programming language developed by Meta. The ecosystem based on Move has recently attracted widespread attention, with Sui, Aptos, and Movement becoming the focal projects.
Sui is a brand new blockchain platform developed by Mysten Labs, using Move as its programming language. Despite recently experiencing a major security incident with the theft of the Cetus protocol, Sui's technical strength and development prospects are still recognized by industry insiders.
Aptos is another public chain project based on Move, founded by former employees of Meta. Aptos officially launched its mainnet in October 2022 and quickly attracted a large influx of developers and funds. Currently, the Aptos ecosystem has begun to take shape, but it is still exploring its development direction.
Movement is the only project in the Move ecosystem that has not yet issued a token, and it is attracting a lot of attention. Industry insiders are looking forward to Movement bringing more innovative applications to the Move ecosystem.
The Move ecosystem has gained attention mainly due to its relevance to the Rust language. Transitioning from Rust to Move is not difficult, which has attracted many projects and developers from the Solana ecosystem to join the Move camp. Additionally, Move is considered to have advantages in terms of security and programmability, with the potential to drive the development of blockchain technology.
However, the Move ecosystem is still in its infancy, with few token assets available for trading. Sui, Aptos, and Movement all need to accelerate ecosystem development to attract more quality projects to settle in, in order to truly unlock the potential of Move. Overall, the future of the Move ecosystem is promising, but it also faces many challenges.
4. The social dilemma we face needs to be resolved, and innovative models are key.
We social is regarded as an important application scenario of blockchain technology, but it still faces many difficulties at present. Innovative business models may provide guidance for its direction.
At the TOKEN2049 conference, many investors and entrepreneurs expressed concerns about the prospects of We Social. First-level investor Romeo bluntly stated, "It's too difficult to do We Social; this track often only has one winner." Indeed, due to the path dependence of user habits, the social field often can only accommodate one platform to rule.
In addition, most of the current We social projects have yet to find a sustainable business model. After some projects launch, founders and investors begin to cash out in large amounts, harming the interests of the community and users. Industry insiders believe that this short-sighted model of "gathering to trade on exchanges" is draining the liquidity of the entire industry.
However, there are still many entrepreneurs in the We social track who persist in innovation. They are exploring new models such as "Connect to Earn", hoping to attract users through interesting social gameplay while avoiding ecological and economic collapse. In addition, some traditional AI companies have also joined the innovation of We social, injecting new vitality into it.
Analysts say that We social needs innovative business models to attract real users and generate sustainable revenue and value on that basis. Only in this way can We social truly achieve large-scale application. Currently, We social is still exploring, but future opportunities are still worth looking forward to.
5. AI+We has become a new hotspot, innovative applications have attracted attention.
At the TOKEN2049 conference, the combination of AI and We has become a new hot topic. More and more entrepreneurs and investors are beginning to focus on innovative applications in this field.
Traditional AI companies such as Gensyn, Hyperbolic, and Schelling AI are all diving into the We entrepreneurship. They hope to combine AI technology with blockchain to develop new types of computing and generative models. For example, Title.xyz focuses on generating images and videos based on Midjourney style.
At the same time, some We native projects are also exploring the application scenarios of AI. Gigin is an AI-driven cryptocurrency trading application based on the Mira Network, which enhances the credibility of AI trading signals through a decentralized verification system.
Industry insiders believe that AI+We is likely to become the next explosive growth sector. AI technology can empower We applications, enhancing their performance and user experience; while the decentralized nature of We helps to address trust and privacy issues in AI systems.
However, AI+We is still in its early stages, and most applications are attempts of a "Meme" nature. To truly unleash the potential of this field, continuous innovation and long-term investment are still needed. Analysts call for exchanges and investors to pay more attention to long-term entrepreneurs, support quality talent, and bring better use cases and growth to the industry.
Overall, AI+We combines two major popular technologies, and its innovative application prospects are vast. As long as the current difficulties are overcome, this field will undoubtedly become an important driving force for the development of We.
4. Economic Dynamics
1. The Federal Reserve's expectation for a rate hike in June has cooled, while inflationary pressures persist.
Economic Background: The US economy showed signs of recovery in early 2023, with an annualized GDP growth rate of 1.1% in the first quarter. However, the inflation rate remains high, with the core inflation rate rising by 4.9% year-on-year in April, far exceeding the Federal Reserve's target level of 2%. The unemployment rate remains low at 3.6%, and the job market remains robust.
Important Event: The Federal Reserve paused interest rate hikes in the May meeting, maintaining the federal funds rate at 5.25%. The market expects only a 5.6% probability of a 25 basis point hike in June, reflecting concerns over economic slowdown. However, Powell reiterated the commitment to continue efforts to curb inflation, suggesting there is still room for future rate increases.
Market Reaction: U.S. stocks experienced a brief decline after the Federal Reserve meeting, as investors' concerns about the economic outlook intensified. Bond yields fell, reflecting expectations of slowing economic growth. The dollar index softened slightly, as the market anticipates a slower pace of interest rate hikes. The commodity market showed divergence, with energy and industrial metal prices rising, while agricultural product prices fell.
Expert Opinion: Jeffrey Sachs, a professor of economics at Columbia University, stated that the Federal Reserve faces a difficult choice. On one hand, inflation remains high and requires further interest rate hikes; on the other hand, economic growth is slowing, and excessive rate increases could trigger a recession. He suggests that the Federal Reserve should remain patient and closely monitor changes in economic data.
2. The pace of China's economic recovery is accelerating, and policy support continues to strengthen.
Economic Background: China's economy achieved a year-on-year growth of 5% in the first quarter of 2023, an improvement compared to the same period last year. The official manufacturing PMI in April was 49.2, slightly below the threshold, but improved compared to the previous month. Inflationary pressures are relatively mild, with the CPI rising 0.6% year-on-year in April.
Important events: The Chinese government has introduced a series of policy measures aimed at promoting economic recovery. This includes increasing infrastructure investment, supporting the development of the manufacturing industry, and expanding domestic demand. In addition, the People's Bank continues to implement a prudent monetary policy to maintain reasonable liquidity.
Market response: The A-share market continues to rise under the boost of favorable policies, with the Shanghai Composite Index having accumulated a gain of over 10% this year. The real estate market has also shown signs of recovery, with real estate investment in April increasing by 6.8% year-on-year. Manufacturing investment and consumption data also show signs of improvement.
Expert Opinion: Zhang Bin, a researcher at the Institute of World Economy and Politics of the Chinese Academy of Social Sciences, stated that the foundation for China's economic recovery is relatively solid, mainly thanks to the optimization of pandemic prevention and control policies and a series of policy combinations. He expects that as the effects of these policies continue to be released, economic growth is likely to accelerate further in the second half of the year.
3. Eurozone inflation hits a new high, increasing pressure on the European Central Bank to raise interest rates.
Economic background: The Eurozone economy grew by 0.1% in the first quarter of 2023, slowing down compared to the same period last year. The unemployment rate remained low at 6.5%, and the job market stayed stable. However, inflationary pressures continued to mount, with the inflation rate climbing to a new high of 7.5% in April.
Important event: The European Central Bank raised three key interest rates by 25 basis points in May, reiterating its intention to continue raising rates to curb inflation. ECB President Lagarde stated that the inflation outlook is "extremely uncertain," and future rate hikes will depend on data changes.
Market reaction: European stock markets fell after the ECB raised interest rates, with investors concerned that a rapid pace of rate hikes could hamper economic growth. The euro rose slightly against the dollar, reflecting optimistic expectations for the European economic outlook. Bond yields increased, reflecting expectations for future rate hikes.
Expert Opinion: David Folkerts, Chief Eurozone Economist at Deutsche Bank, believes that the European Central Bank faces a difficult task. He stated that the inflation rate remains high and requires further rate hikes; however, at the same time, economic growth is slowing down, and excessive rate hikes could trigger a recession. He suggests that the ECB should remain patient and closely monitor changes in economic data.
4. Japan's economic recovery is weak, and the central bank maintains an accommodative policy.
Economic Background: Japan's economy grew by 0.4% year-on-year in the first quarter of 2023, a slowdown compared to the same period last year. In April, the core inflation rate rose by 3.4% year-on-year, well above the Bank of Japan's target level of 2%. The unemployment rate remained low at 2.6%.
Important event: The Bank of Japan decided to maintain its current monetary easing policy during the monetary policy meeting in April, keeping the short-term interest rate target at -0.1%. Bank Governor Haruhiko Kuroda reiterated that the rise in the inflation rate is mainly due to the increase in the prices of imported goods, while domestic demand remains weak.
Market reaction: The Nikkei 225 index rose slightly after the central bank's decision, with investors welcoming the central bank's maintenance of an accommodative policy. The yen weakened slightly against the dollar, reflecting market concerns about the outlook for the Japanese economy. Bond yields rose slightly.
Expert Opinion: Japanese economist Naohisa Takeuchi stated that the Bank of Japan faces a difficult choice. On one hand, the inflation rate is rising, necessitating a tightening of monetary policy; on the other hand, the economic recovery is weak, and exiting from easing too early could hurt the economy. He suggested that the central bank should remain patient and consider exiting easing only after the inflation rate stabilizes near the 2% target.
5. Emerging market economies are diverging, with India becoming a highlight.
Economic Background: Emerging market economies showed varied performance in 2023. The Indian economy grew by 7% in the 2022-2023 fiscal year, becoming the fastest-growing major economy in the world. However, countries like Russia and Turkey were dragged down by geopolitical conflicts and high inflation.
Important events: The Indian government has introduced a series of reform measures, including tax cuts, regulatory simplification, and promoting the development of manufacturing. At the same time, the Reserve Bank of India maintains a moderately tight monetary policy stance to control inflation. Russia, on the other hand, is facing an economic recession due to the impact of Western sanctions.
Market reaction: The Indian stock market continues to rise driven by favorable economic data, with the Mumbai stock market having accumulated a gain of over 10% this year. The rupee to dollar exchange rate remains stable. The Russian stock market and ruble exchange rate have significantly declined. Emerging market bond yields are showing divergence.
Expert opinion: The President of the International Monetary Fund, Kristalina Georgieva, stated that the Indian economy has shown strong resilience, thanks to prudent macroeconomic policies and favorable structural reforms. She also pointed out that geopolitical conflicts and high inflation will continue to weigh on the growth prospects of other emerging market economies.
5. Regulation & Policy
1. The U.S. Treasury Department's think tank discusses the impact of stablecoins on financial stability.
Recently, the U.S. GENIUS stablecoin bill passed the Senate procedural vote, and the Hong Kong Legislative Council has also passed the Stablecoin Ordinance after three readings. Stablecoins have now become an important variable in the global financial system. In the U.S., the future development of stablecoins not only pertains to the prosperity of the digital asset market but could also have far-reaching impacts on the demand for government bonds, the liquidity of bank deposits, and the dominance of the U.S. dollar.
A month before the passage of the GENIUS Act, the U.S. Department of the Treasury's "think tank"—the Treasury Borrowing Advisory Committee (TBAC)—delved into the potential impacts of the expansion of stablecoins on U.S. fiscal and financial stability in a report. As an important component of the Treasury's debt financing plans, TBAC's recommendations hold certain reference value.
The report points out that the rapid growth of stablecoins may affect the demand for government bonds, bank deposits, and the international status of the US dollar. If stablecoins are widely adopted, it could reduce the demand for government bonds, thereby increasing the government's borrowing costs. At the same time, stablecoins may also attract an outflow of bank deposits, impacting banks' sources of funds. Furthermore, the use of stablecoins could weaken the dominance of the US dollar in international trade and finance.
However, the report also believes that stablecoins have a certain value proposition. As the use of cryptocurrencies in the underground economy becomes increasingly prevalent, stablecoins provide a recognized medium of exchange, and governments face significant challenges in regulation. Even if authorities increase regulatory efforts, tracking crypto transactions in the gray market will still be a daunting task.
Experts and scholars have different interpretations of this report. Professor Bob Hamilton from the University of California, Berkeley believes that the development of stablecoins may indeed affect the demand for government bonds and bank deposits, but the extent of this impact may be exaggerated. He stated that even if stablecoins are widely adopted, their scale is unlikely to surpass the existing financial system. In contrast, Professor Gary Gort from the Massachusetts Institute of Technology holds a different view, warning that stablecoins could pose a serious threat to the international status of the US dollar, and the US government should pay close attention to this.
Overall, the development of stablecoins is triggering profound changes in the global financial system. Governments and regulatory bodies around the world need to closely monitor their development trends and formulate corresponding regulatory policies to seek a balance between promoting innovation and maintaining financial stability.
2. The Hong Kong Monetary Authority Chief: Will simultaneously develop the virtual asset and stablecoin markets.
The Hong Kong Special Administrative Region government is accelerating the development of the virtual asset and stablecoin markets. In a recent speech, the Secretary for Financial Services and the Treasury, Christopher Hui, stated that Hong Kong is simultaneously developing the virtual asset market and the gold commodity market, and will create a new financial sector that includes fintech, virtual assets, stablecoins, and green finance.
Xu Zhengyu emphasized that Hong Kong will soon seek the support of the Legislative Council to establish a legal regulatory framework for stablecoins. He pointed out that there is a significant demand for stablecoins in the Hong Kong market, and therefore the next step must be to continue innovating and expanding into new markets. This reflects the determination of the Hong Kong SAR government in developing digital assets.
In fact, Hong Kong released the "Stablecoin Regulatory Framework" last December, aiming to establish a comprehensive regulatory system for stablecoins in Hong Kong. The bill passed the Legislative Council's third reading in May this year and is expected to take effect in mid-2023. According to the bill's content, issuing stablecoins requires obtaining permission from the Hong Kong Monetary Authority and complying with relevant prudential regulatory requirements.
The Chief Executive of the Hong Kong Monetary Authority, Eddie Yue, previously stated that the establishment of a regulatory framework for stablecoins would bring new development opportunities to Hong Kong. He believes that stablecoins can enhance the efficiency of cross-border payments and inject new momentum into the development of financial technology in Hong Kong.
Industry insiders have welcomed the introduction of the regulatory framework for stablecoins in Hong Kong. Chen Shou-ren, chairman of the Hong Kong FinTech Association, believes that this will create a more favorable environment for fintech companies in Hong Kong and help attract more innovative projects to settle in Hong Kong. He also urged regulators to fully listen to industry opinions when formulating specific rules to ensure the rationality and operability of regulatory measures.
However, some experts are cautious about the development prospects of stablecoins. Zheng Ting, an associate professor in the Department of Economics at The Chinese University of Hong Kong, believes that the success of stablecoins depends on their performance in practical applications. He suggests that regulatory agencies should closely monitor the operation of stablecoins and adjust regulatory policies in a timely manner based on market responses.
Overall, Hong Kong is paving the way for the development of stablecoins. The introduction of the relevant regulatory framework will bring new development opportunities to Hong Kong's digital asset market, but it also requires the government, regulatory agencies, and the industry to work together to ensure the healthy and orderly development of the stablecoin market.
3. Former SEC Official Interprets the Background of Ethereum ETF Approval
A year ago, the U.S. Securities and Exchange Commission (SEC) unexpectedly approved the listing application for a spot Ethereum ETF, which was seen as a major breakthrough in the field of cryptocurrency regulation. Recently, former SEC senior official Nate Geraci shared his insights on this matter.
Geraci is the president of the well-known ETF issuer The ETF Store. He stated on social media that the SEC's approval of the Ethereum ETF listing is likely due to the regulatory agency's failure in the lawsuit brought by Grayscale and has no other choice. He hopes to understand the full details of this decision in the future.
Geraci's views have sparked widespread discussion within the industry. Some analysts believe that the SEC's approval of the Ethereum ETF is due to Ethereum being the "second" in the cryptocurrency space, having gained a certain level of recognition from regulators. Moreover, the development of the Ethereum ecosystem also provides a relatively sufficient regulatory basis for this.
However, there are also views that the SEC's actions are more out of helplessness. The lawsuit by Grayscale against the SEC may put the regulatory agency in a passive position; if it continues to refuse, it may face greater pressure. Therefore, approving the listing of the Ethereum ETF has become a matter of expediency.
It is worth noting that despite the approval of the Ethereum ETF, the SEC remains cautious regarding applications for other cryptocurrency ETFs. As of now, the SEC has not approved any other spot cryptocurrency ETFs for listing, apart from Ethereum. This also reflects the contradictory dilemma faced by regulators on the issue of cryptocurrency regulation.
Experts believe that the SEC is under significant pressure regarding cryptocurrency regulation. On one hand, it needs to protect investors' interests and guard against risks in the cryptocurrency market; on the other hand, it also needs to leave space for innovation to avoid stifling industry development with excessive regulation. Therefore, the SEC needs to weigh the pros and cons and seek a balance when approving cryptocurrency ETFs.
Overall, the approval of the Ethereum ETF is a breakthrough, but the road to cryptocurrency regulation remains long and arduous. The SEC needs to strike a balance between maintaining market order and promoting industry innovation, formulating practical regulatory policies to create a favorable environment for the healthy development of the cryptocurrency market.