The funding arm of main cryptocurrency alternate KuCoin is shifting to assist new stablecoin initiatives by backing a Chinese yuan-pegged stablecoin issuer.
KuCoin Ventures has led a $10 million funding into stablecoin issuer and blockchain-based fee service supplier often called CNHC.
Announcing the information on March 16, KuCoin Ventures stated that the funding spherical included some outstanding business buyers, together with KuCoin’s investor IDG Capital and Circle Ventures, the funding arm of the USD Coin (USDC) issuer, Circle.
KuCoin chief funding officer and KuCoin Ventures lead Justin Chou instructed Cointelegraph that the brand new funding in CNHC is the primary time for KuCoin Ventures to spend money on a stablecoin-related mission.
“KuCoin is always interested in building a stronger infrastructure for the financial system,” Chou stated, including that the world is prone to see extra actual world asset-backed stablecoins within the close to future. He added:
“To guarantee stability of the monetary market, stablecoin designers must discover a steadiness between overcollateralization and effectivity. We are completely satisfied to see extra algorithm-based stablecoins however they should show their resiliency.”
The investment into CNHC reflects KuCoin Ventures’ strategy of backing the Web3 infrastructure in the Asia-Pacific region, Chou said. According to the announcement, KuCoin Ventures also invested $10 million in China’s blockchain project Conflux in early 2022. Chou noted that Hong Kong has a well-established traditional finance ecosystem and has a “real opportunity at becoming the new crypto center of the world” with new regulations and policy for digital assets.
CNHC co-founder Joy Cham told Cointelegraph that the platform launched its offshore yuan-pegged stablecoin CNHC about two years ago. He described the stablecoin as a “more akin to a house settlement tool” referring to CNHC’s limited exposure. According to data from CoinMarketCap, the CNHC stablecoin is only listed on one centralized exchange, TruBit Pro Exchange.
“It will be listed in more centralized and decentralized exchanges in the near future,” Cham added.
The exec also noted that CNHC currently supports settlement service in other major stablecoins, including Tether (USDT) and USD Coin (USDC). Cham also noted that the firm has had some impact due to the recent banking crisis involving Silicon Valley Bank and Silvergate. “Some of the banks are our partners that help us to settle USD, but there’s other banking partners so service is still ongoing,” Cham said.
Related: Do Kwon had the right idea, banks are risk to fiat-backed stablecoins — CZ
On the other hand, KuCoin has had no impact due to those issues as it has no exposure to SVB, Silvergate or Signature Bank, KuCoin CEO Johnny Lyu told Cointelegraph.
“However, the whole market is exposed at varying degrees to USDC and USDT,” Lyu said, adding that removal of crypto from traditional banking could cause “long-lasting implications on the industry.” The CEO stated:
“Bitcoin was born after ‘Lehman Brothers’ but nonetheless grew to mass adoption with about 420 million world customers. The latest shutdowns of monetary establishments would be the alternative for crypto to succeed in mass adoption.”
The information comes amid KuCoin dealing with a lawsuit within the United States resulting from alleged violations of providing crypto buying and selling companies in New York. In a criticism filed on March 9, New York state Attorney General Letitia James argued that KuCoin violated securities legislation resulting from providing to promote and buy cryptocurrencies which might be “commodities and securities” with out registration.