Today in crypto, Chinese regulators are reportedly preparing to restrict mainland state-owned enterprises and banks from pursuing stablecoin and crypto initiatives in Hong Kong, Goldman Sachs’ CEO says the US Federal Reserve likely won’t cu…
Today in crypto, Chinese regulators are reportedly preparing to restrict mainland state-owned enterprises and banks from pursuing stablecoin and crypto initiatives in Hong Kong, Goldman Sachs’ CEO says the US Federal Reserve likely won’t cut interest rates by 50 basis points, and the Polygon Foundation restored consensus and finality functions after a software bug knocked some nodes out of sync.
Chinese firms may face limits on stablecoin activity in Hong Kong: Report
Chinese internet giants, state-owned enterprises and financial institutions operating in Hong Kong may face restrictions on stablecoin and crypto activities.
According to a Thursday report by local news outlet Caixin, mainland Chinese firms operating in Hong Kong may be forced to withdraw from cryptocurrency-related activities. The Hong Kong branches of several state-owned enterprises and Chinese banks are also expected not to participate in the race to obtain a Hong Kong stablecoin license.
The news follows reports that HSBC and the Industrial and Commercial Bank of China (ICBC), the world’s largest bank by total assets, plan to apply for stablecoin licenses in Hong Kong. Hong Kong’s new stablecoin regulatory framework came into effect on Aug. 1 with a six-month transition period. Regulators said 77 institutions had expressed interest in applying.
According to Caixin, recent policy shifts mean that Chinese banks and other institutions applying for a Hong Kong stablecoin license will likely withdraw from the race. An anonymous senior financial industry insider reportedly told the outlet that those players may postpone their applications for stablecoin licenses.
The report follows another Caixin article suggesting the Hong Kong Monetary Authority (HKMA) may ease capital requirements for banks handling crypto.
According to a Thursday Caixin report, the HKMA is reportedly considering easing capital rules for banks holding crypto by lowering bank capital requirements.
Goldman Sachs CEO doubts Fed will cut 50 basis points
Goldman Sachs CEO David Solomon said on Wednesday that it’s unlikely the Federal Reserve will cut interest rates by 50 basis points next week, just days after Standard Chartered Bank said it anticipated a bigger cut due to August’s weaker-than-expected jobs report.
“Whether or not we have a 50 basis cut, I don’t think that’s probably on the cards,” he told CNBC. “I’m pretty confident we’ll have a 25 basis rate cut.”
His take aligns with the broader market consensus, as CME FedWatch shows 92.2% anticipate a smaller cut, while 7.8% expect a 0.5% rate cut at the Fed’s Sept. 17 meeting.
Solomon said he “could see one or two other cuts, depending on how economic conditions play out from here.”
This month’s Fed rate cut meeting is significant not just for the broader market but also for crypto, as lower interest rates make riskier assets such as crypto more attractive to investors.
Polygon fixes RPC node bug, consensus returns to normal
The Polygon Foundation, the organization that oversees development of the layer-2 scaling network in the Ethereum ecosystem, said on Wednesday that consensus and finality functions have been restored, following a software bug that caused some nodes to fall out of sync with the blockchain.
Polygon successfully executed a hard fork following the software bug that disrupted some remote procedure call (RPC) nodes, which are used to relay information between applications and the blockchain layer, the Polygon team said in Wednesday’s update.
The bug was caused by a “faulty” proposal from a validator, which pushed some of the Bor nodes, used for transaction ordering and block production, onto divergent network forks, according to Polygon co-founder Sandeep Nailwal. Nailwal said:
“We rolled out fixes on both Heimdall v0.3.1 — a new version with a hard fork to delete the identified milestone — and Bor 2.2.11 beta2, purging the milestone from the database. With these fixes now live, nodes are not stuck, checkpoints and milestones are finalizing normally.”
Software bugs continue to cause blockchain outages. As cryptographic protocols become more complex by hosting smart contract functionality, file storage and crosschain interoperability, bugs may become more frequent, disrupting the onchain user experience.
