TLDR

• Flare CEO Hugo Philion said the FAssets v1.3 upgrade makes FXRP minting simpler for XRP users.
• The new mint-to-tag model lets users mint FXRP through a single XRP Ledger transaction.
• Philion said the process uses native XRP Ledger features and does not require direct exchange integrations.
• He said Flare designed the system with minting caps, escrow protections, and emergency custody measures.
• Philion said the XRP Ledger can serve as the issuance and settlement layer while Flare provides the compute layer.

Flare CEO Hugo Philion said the network is upgrading its FAssets system to make XRP more usable in DeFi. He said FAssets v1.3 lets users mint FXRP through a simpler “mint-to-tag” process on the XRP Ledger. Philion also said Flare is building confidential compute tools for privacy-focused, institutional blockchain applications.

Flare, XRP and the FAssets v1.3 Upgrade

Philion discussed the update in an interview with XRP-focused YouTuber Crypto Sensei. He said the goal is to simplify how users convert XRP into FXRP.

Under FAssets v1.2, users had to reserve collateral and work with agents. Philion said v1.3 reduces that flow to a single XRP transaction.

He said users can send XRP to a designated address with structured memo data. That process uses native XRP Ledger features, including destination tags.

Philion said the design removes the need for direct exchange approvals or integrations. He said any exchange supporting XRP destination tags could support the process in theory.

He also said Flare built the system to limit bridge-related risks. According to Philion, the protocol uses minting caps, overcollateralized redemptions, escrow protections, and emergency custody arrangements.

Philion said Flare’s Core Vault can route funds to a regulated custodian tied to Ripple. He said that option would apply during severe protocol failures or attacks.

The interview framed the XRP Ledger as the issuance and settlement layer. Philion said Flare serves as the programmable compute layer for DeFi applications.

Flare Expands XRP DeFi and Confidential Compute Plans

Philion said Flare is also working with exchanges including Uphold on one-click XRP products. He listed staking, lending, borrowing, and loan origination among those services.

He said lending markets remain one of the largest missing pieces in XRP’s ecosystem. He pointed to Firelight and Morpho as examples of protocols built around XRP liquidity.

Philion described confidential compute as the most ambitious part of Flare’s roadmap. He said Flare 2.0 combines blockchain settlement with trusted execution environments.

Under that model, applications could process transactions privately and still prove execution on-chain. Philion said that setup could support institutional-grade DeFi use cases.

He said tokenized real-world assets issued on the XRP Ledger could move into Flare’s private environments. There, institutions could trade, borrow, or access compliant decentralized exchanges.

Philion said the structure creates a partnership model between the two networks. In his description, XRP Ledger handles issuance and final settlement, while Flare provides compute and utility.

After the interview, XRP community figure Eri reacted on social media. She said the model could help “Ripple win business” in sectors requiring confidential computing.

AmericanFortress researchers introduced a patent-pending post-quantum signature scheme that could secure the global crypto ecosystem against future quantum attacks without requiring mass fund migrations.

According to the company, the breakthrough means even Satoshi Nakamoto’s huge 1.1 million bitcoin stash, alongside nearly 5 million BTC in dormant accounts, can be saved, with a combined value of about $400 billion.

In an interview with CoinDesk, Michal Pospieszalski, CEO of AmericanFortress, explained that inactive and dormant wallets do not have to remain vulnerable to unscrupulous hackers, who could sweep up the loot and dump it onto the market with incalculable consequences.

However, Pospieszalski said a major point of confusion is the older bitcoin. Because Satoshi-era wallets are “Pre-BIP32” addresses with no seed phrase derivation and therefore cannot automatically be upgraded like the newer created wallets. Instead, the AmericanFortress’ protocol would execute a defensive freeze via a backward-compatible soft fork.

“Our quantum-resistant protocol would automatically freeze and protect those funds until governance decides what to do with them after Q-day,” Pospieszalski said, noting the community would eventually have to vote to move, burn, or redistribute the frozen assets.

“But this means even Satoshi wallets can be protected with a minor BIP, which we are working on,” Pospieszalski said. “This means integrity for Bitcoin going forward—and that’s just BTC. It applies to all other major chains as well, like Ethereum, Solana, and Tron.”

The announcement follows an $8 million seed funding raise co-led by SAVA Digital Asset Fund, Moon Pursuit Capital and 0G Labs. Along with the funding round, the firm released a cryptographic paper that identifies the specific network performance bottlenecks that have plagued other post-quantum trials.

This week, a standard quantum-security test on BNB Chain worked but significantly slowed transaction throughput by 40%.

Unlike traditional approaches that require entirely new blockchains or exhaustive address rotations, AmericanFortress’s approach uses zero-knowledge (ZK) proofs to prove master seed ownership at the point of spend. The strategy deploys three distinct solutions: Pre-BIP32 raw key protection, standard BIP32 quantum protection, and a high-speed “QBIP32” derivation scheme. Because it integrates natively with existing curves, it causes no performance degradation.

“It’s just a node and wallet software update in that order,” Pospieszalski noted.

The threat to crypto is highly concentrated, the AmericanFortress CEO said, adding that while quantum computers cannot crack master seed phrases, they can reverse-engineer individual private keys from wallet addresses whose public keys have been exposed onchain.

Research indicates that over $600 billion in crypto assets are in this precise vulnerable state, including 100% of Solana addresses, said Pospieszalski, describing this as “common knowledge.”

For active users, migrating to a quantum-proof level takes a mere 50 milliseconds via a simple wallet prompt, he explained, adding that for dormant seed-derived wallets, protection can be executed programmatically at the base layer.

Pospieszalski said the cost of this quantum-proofing is extremely low, equivalent to the price of a single rollup transaction, rather than paying for every historical transaction individually.

Pospieszalski revealed that AmericanFortress is actively licensing the SDK out to Layer 1 and Layer 2 blockchains in exchange for marketing positioning, although he said the firm is open to exclusive acquisitions.

The cryptographic methods for bitcoin are expected to be ready for discussion within the next few weeks, ahead of an official presentation on June 2 in Paris, AmericanFortress said.

Ultimately, Pospieszalski sees this as a turning point for the longevity of digital assets. “Sudden quantum proofing of BTC is now possible,” he said.

TLDR

• Mark Cuban said he sold most of his Bitcoin after losing confidence in its hedge role.
• He stated Bitcoin failed to rise during geopolitical tension and a weaker dollar.
• Cuban compared Bitcoin’s performance to gold, which increased during the same period.
• He described the outcome as disappointing for his original investment thesis.
• Cuban had previously held about 60% of his crypto portfolio in Bitcoin.

Mark Cuban said he sold most of his Bitcoin after losing confidence in its role as a hedge. The billionaire investor cited recent market behavior during geopolitical tension as the main reason. Cuban said Bitcoin failed to act as a reliable alternative to weakening fiat currencies.

Mark Cuban, Bitcoin Hedge Narrative Comes Under Scrutiny

Cuban shared his views during an episode of the “Portfolio Players” podcast. He said Bitcoin did not perform as expected during the Iran conflict.

He stated, “When all this hit the fan with the Iran war, Bitcoin was always the best alternative.” However, he added that the asset failed to respond as he had believed.

Cuban said gold prices increased during the same period. He pointed out that Bitcoin dropped instead of rising alongside a weaker dollar.

He also said, “Every time the dollar dropped, Bitcoin should’ve gone up, and it just didn’t.” He described this outcome as disappointing for his investment thesis.

Cuban had long supported Bitcoin as a store of value. He previously compared it to gold due to its fixed supply. In a 2021 interview, Cuban said his crypto portfolio held 60% Bitcoin. He also said he had “never sold it” at the time.

Crypto Portfolio Shift as Bitcoin Underperforms Expectations

Cuban’s latest comments show a change in his stance on Bitcoin. He said he now feels less confident about its role as a hedge asset.

He clarified that he remains less disappointed in Ethereum. However, he criticized other crypto assets more broadly.

Cuban said, “I’m more disappointed in Bitcoin, not as disappointed in Ethereum and the rest.” He referred to some other tokens as “garbage.”

His earlier views praised blockchain technology and decentralized finance. He also supported Ethereum for enabling smart contracts and NFTs. Bitcoin supporters often describe the asset as “digital gold.” They argue it can protect wealth during inflation or currency weakness. However, Bitcoin has often traded like a high-risk asset. Its price has moved with broader market sentiment and risk appetite.

Recent market data shows gold rising during geopolitical tension. At the same time, Bitcoin struggled to maintain upward momentum. Cuban’s remarks add to the ongoing debate about Bitcoin’s market role. The discussion continues as crypto markets react to global economic events.

More than half of XRP Ledger nodes are still running outdated software, with just six days to go before a scheduled amendment activation.

XRP Ledger co-creator David Schwartz spent the weekend talking about a hard fork and downplaying, in his view, the probability of any contentious split in XRP’s consensus due to their slow upgrades.

The ledger’s so-called “fixCleanup3_1_3” amendment cleans up a series of issues affecting NFTs, permissioned domains, vaults, and a new lending protocol. It’s supposed to activate on May 27 but ideally should hold more than 80% support from trusted validating nodes for two weeks. 

The release notes, published by the XRP Ledger Foundation, tell every server operator to upgrade to 3.1.3 immediately. Any node still running older code at activation risks becoming amendment-blocked.

Amendment-blocked nodes may not validate ledgers (ledgers are the XRP Ledger’s version of blocks), process transactions, or participate in consensus.

Schwartz on the difference between a fork and a fix

Concern about a chain split in the XRP community spilled into a long thread on May 18. A critic asked Schwartz how a contested 50/50 validator split would even achieve resolution. 

First, Schwartz downplayed changes to voting power, saying, “anyone can create dozens of nodes just to game the voting scheme,” and rejecting any rudimentary governance proposals akin to one vote per node.

Indeed, annual costs for running a hosted XRP validating node can be as low as a few thousand dollars — a trivial expense for a motivated attack on the $83 billion blockchain.

Schwartz then walked through his view of the consensus math.

“The validator split doesn’t matter,” he said. “All that’s necessary is that each side have enough validators to create a functional unique node list (UNL) containing validators who agree to produce a ledger stream according to their preferred rules.”

UNL strips away the convention of one vote per node. Instead, XRP Ledger node operators modify their UNL on their node’s software to prefer certain validating nodes, although almost every user adopts two particular UNLs that the Ripple-backed XRP Foundation maintains, dUNL and XRPLF.

Anyway, pressed on what a plausible fork would actually require, Schwartz estimated, “Realistically, you need to find at least a half dozen people willing to run validators to have a plausible fork.”

The reassurance lands oddly. He downplayed fears of a chain split because forking XRPL only takes half a dozen people willing to spend a few thousands dollars.

The clock is ticking

On May 17, XRPL Foundation contributor Hussein Zangana, known in the XRP community as “Vet,” posted that only “40% of the network is updated.”

His dashboard showed less than 40% of 846 XRP Ledger nodes on the new version.

By May 18, RippleX head of engineering J. Ayo Akinyele put the figure at roughly 44% and by May 19, CoinGape reported about 46%.

With less than a week to upgrade, almost half of the network is in the wrong place.

Importantly, however, all 35 seats on the XRP foundation’s super-powerful dUNL have voted in favor of fixCleanup3_1_3.

CoinGape reported 100% support among these 35 validating nodes that actually count toward practical consensus, because again, almost all XRP users adopt the XRP Foundation’s dUNL as their UNL by default.

The slow movers seem to be nodes operated by exchanges, market makers, NFT marketplaces, DEX front-ends, and other operators running their own servers. They risk becoming amendment-blocked on May 27, until they upgrade.

Tokenized money market funds still make up only around 5% of the stablecoin universe despite their ability to generate yield, Wall Street bank JPMorgan said in a Wednesday report.

The bank said crypto market participants continue to favor stablecoins because they have become the ecosystem’s default cash instrument for trading, collateral management, settlement, cross-border payments and liquidity management across centralized exchanges (CEX) and decentralized finance (DeFi) protocols.

According to the report, money market funds face a “structural regulatory disadvantage” because they are classified as securities, subjecting them to registration, disclosure, reporting and transfer restrictions that limit their ability to circulate freely within the crypto ecosystem.

“We doubt that tokenized money market funds would grow beyond 10%-15% or so of the stablecoin universe, unless there is a regulatory change that reduces the structural disadvantage arising from tokenized money market funds classified as securities,” wrote analysts led by Nikolaos Panigirtzoglou.

As a result, the bank’s analysts said demand for tokenized money market funds is largely confined to crypto-native investors seeking yield on idle cash and institutional investors looking to combine blockchain-based settlement and programmability with traditional investor protections.

Advocates of tokenized money market funds say the products combine the safety and yield of traditional cash-management vehicles with the speed and flexibility of blockchain networks.

By putting fund shares onchain, tokenized funds can enable near-instant settlement, 24/7 transfers, automated compliance and more efficient collateral management. Proponents also argue that tokenization can reduce operational costs, improve transparency and allow assets to move more seamlessly across trading, treasury and payments systems

Tokenized money market funds promise faster settlement and broader access, but they still face risks tied to liquidity, counterparty exposure, regulatory uncertainty and the underlying stability of the traditional assets backing the tokens.

These tokenized funds are likely to continue growing faster than stablecoins because of their interest-bearing nature, the analysts said, but it is unlikely they will expand beyond 10%-15% of the stablecoin market absent meaningful regulatory changes.

Regulators have offered only limited support so far. The bank pointed to a streamlined Securities and Exchange Commission (SEC) process introduced earlier this year to simplify the issuance and redemption of onchain money market funds. The report also highlighted emerging partnerships between traditional finance firms and crypto-native companies that allow institutions to use tokenized money market funds as off-exchange trading collateral while still earning yield.

Still, these developments are “marginal” and unlikely to overcome the broader regulatory disadvantages that prevent tokenized money market funds from matching the seamless utility of stablecoins across crypto markets, the report added.

Read more: Mike Cagney’s second act: Turning blockchain into Wall Street’s new plumbing

CoinDesk Indices presents its daily market update, highlighting the performance of leaders and laggards in the CoinDesk 20 Index.

The CoinDesk 20 is currently trading at 2062.9, down 0.5% (-9.64) since 4 p.m. ET on Wednesday.

Five of the 20 assets are trading higher.

Leaders: NEAR (+4.1%) and TAO (+1.6%).

Laggards: ICP (-1.6%) and HBAR (-1.3%).

The CoinDesk 20 is a broad-based index traded on multiple platforms in several regions globally.

Liquidators overseeing Terraform Labs’ bankruptcy have unredacted the Jane Street Group lawsuit that accuses the firm of using a secret Telegram chat to profit from Terra’s $40 billion collapse.

Appointed administrator, Todd Snyder, filed the lawsuit last February in a Manhattan court. 

It accuses Jane Street, its co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang of using insider information to front-run transactions and profit from Terraform Labs’ fallout. 

Allegedly key to this was a Telegram group chat called “Bryce’s secret” set up by Pratt. The suit claims he used the group to relay information from various Terraform employees back to Jane Street.  

At the time of filing, Jane Street claimed the suit was full of “baseless, opportunistic claims.” 

Read more: Do Kwon sentenced to 15 years for Terra/Luna fraud

It said, “This desperate suit is a transparent attempt to extract money when it’s well-established that the losses suffered by Terra (UST) and Luna (LUNA) holders were the result of a multibillion-dollar fraud perpetrated by the management of Terraform Labs.”

The lawsuit was mostly redacted but now, many of these redactions have been removed. Protos has compared the documents to reveal what’s new. 

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The unredacted claims in Terraform Labs lawsuit

The first set of unredacted lines introduces the group chat “Bryce’s secret,” and notes that it was a secret message chain named after a former Terraform intern and then-current Jane Street systems developer. 

It claims that the insider information allowed Jane Street to unwind hundreds of millions of dollars in potential exposure, “and then to short sell Terraform tokens to reap even more illicit profits.”

Unredacted lines claim Jane Street “made a killing.” The suit then claims that Jane Street, knowing it had used insider information, went on to delete all traces of the crypto wallet linking it to these trades.  

Jane Street was allegedly ‘hungry for defi info’

We’re also now able to see the claim that Jane Street was “very hungry for…defi info,” and that it sold the entirety of its UST holdings. It then allegedly “took short positions in UST and Luna to profit from the crash it helped catalyze.”

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Previously-redacted details about Pratt, Granieri, and Huang are then revealed. These note Granieri’s role in authorizing the alleged suspicious UST trades, and claim that he discussed the rescue of the Terraform ecosystem while learning material non-public information.

Pratt was allegedly involved in “acquiring and confirming information from Terraform and providing it to others at Jane Street.”

The suit also claims that Huang discussed decommissioning Jane Street’s wallet, was primarily responsible for executing relevant trades during UST’s 2022 depeg, and frequently received Pratt’s insider information. 

Later unredacted lines claim that Pratt was encouraged by others at the firm to leverage his connections at Terraform. 

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Lawsuit says Pratt was allegedly ‘adding colour’  

The newly-unredacted suit also claims that Jane Street staff discussed investing in Terraform and Luna Foundation Guard (LFG), and mulled over LFG’s $1 billion capital raise through an over-the-counter sale of LUNA. 

Employees — who remain redacted — asked how this was achieved, and if the deal had “a four-year lock and 24 participants, with an average price of $51/luna?”

The suit claims Huang was skeptical of the $51 price, and added Pratt to the discussion to “add some colour.” The suit also alleges that Pratt said, “Pricing around $51 sounds right according to my sources.” 

It adds that Pratt heard the raise was supposed to be $2 billion originally, and that the deal was supposed to be at a 40% discount before LUNA fell and various investors backed out. 

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Bryce’s secret is allegedly born

From here, unredacted lines claim that “Bryce’s secret” was made on February 22 with Pratt, Terraform Labs’ head of business development, and another unnamed Terraform employee. 

In one discussion, the employee and Pratt allegedly discussed a potential investor in Terraform Labs with the firm’s head of business development.

The suit details that the two were initially coy about the investor, but eventually the unnamed employee revealed to the head of business development that it was “Jane Streeeeeeeet.”

This allegedly piqued the Terraform business head’s interest. The suit notes they asked Pratt “what are you guys looking to do, besides otc,” and “can u market make ust?”

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Pratt then replies, “everything. Probably ya. If jump can legally do smtg we probs can too,” according to the suit. 

The lawsuit claims these discussions were “the beginning of near-constant communications between Jane Street and Terraform between February and May 2022 that revealed material non-public information.”

In another instance, the lawsuit notes that, as Jane Street and Terraform negotiated a LUNA purchase deal, Pratt was tasked with drafting a “terra explainer” for Jane Street that would summarise its operations. 

If Pratt was ever unsure about details, he would allegedly “ask [his] friends,” aka former Terraform Labs employees. 

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The suit also notes Pratt’s alleged insider knowledge was relied upon in March 2022 discussions about staking on Anchor. When the discussion shifts to shorting LUNA, Huang allegedly halts the discussion so Pratt can share his input, where he then appears to obtain more non-public information.

In March again, the lawsuit claims Pratt told Huang that crypto firm Celsius wanted to invest between $1-2 billion into LFG, but “Terra is probably going to say no.”

Pratt goes on to say that he doesn’t really know what Celsius does, and that “terra is super confused too.” 

Pratt allegedly sought insider info at wedding

The lawsuit notes that on April 1, Pratt told Huang and a redacted individual that  “if we can still get in on [Luna Foundation Guard]… it’s looking better and better.” 

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He added, “I am hopefully going to a wedding later this month which basically every Terra exec will be at, including obviously Do. Maybe I can talk to them there and see if we can do something :).”

Pratt also allegedly helped Jane Street understand non-public numbers surrounding the UST/LUNA mint-burn. 

Read more: The high-profile LUNA investors — from prime ministers to beauty queens

This allegedly involved Pratt leveraging his relationship with Terraform Labs’ head of research to confirm outdated sources. 

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Huang allegedly told Pratt, “I’m like kind of mad this isn’t just in their docs,” to which Pratt allegedly responded, “On the other hand shouldn’t you be slightly pleased that you have an informational advantage :’).”

Pratt also apparently shared with Huang in that same chat that, based on the info provided by the research head, “Jump makes an absolute killing off of MEV in Terra and that MEV in general should be very high priority for us.”

Lawsuit says Jane Street explored hirings to learn more about Terra

The lawsuit says Terraform’s head of research “was both providing and seeking information” and by March 2022, wanted Jane Street to hire him. One Jane Street employee allegedly wanted to hire him to learn more about Terraform Labs’ inner workings. 

Further unredacted lines note that Pratt tried to quash concerns that the firm’s wallet, positioned as the sixth largest, was a “red flag.”

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The suit alleges he said, “estimates I’ve heard from trusted sources put [hedge fund] Alameda’s Anchor deposits somewhere north of $1B.”

He then supposedly added, “Despite us being the 6th largest wallet, I think it’s very unlikely that we’re the 6th largest depositor.”

Jane Street allegedly made suspiciously timely UST sales

The next batch of unredacted lines detail Jane Street’s purchases of UST. 

According to the suit, Jane Street bought 10,000 UST on February 11, then one month later, another 10 million UST on Binance. 

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Afterwards, between April 1 and April 11, Jane Street is noted to have bought over 190 million UST on Binance. Altogether, the lawsuit says it owned ~$200 million worth of UST.

The suit then claims that it staked its UST with Anchor and began to earn 20% interest. 

From here, unredacted sections detail the run-up to Terraform’s UST depeg and Jane Street’s unstaking and selling of UST. The suit reveals how Jane Street carried out a test sale of $8 million worth of UST to test the peg’s stability in late April.  

It then held onto the rest of its UST until May 7, the day Terraform withdrew 150 million UST from the Curve3 liquidity pool without public disclosure.

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Jane Street exited its entire $192 million UST position that day.

Read more: How Jump Trading allegedly manipulated UST into collapse

The unredacted suit claims, “Jane Street leveraged its material nonpublic information about Terraform’s ecosystem to sell its UST at the most opportune moment.” 

“By selling all of its UST in one day, all effectively at its peg value of $1, Jane Street avoided the catastrophic losses that other investors, including the individual victims, suffered when UST collapsed to virtually $0 just days later.”

Lawsuit says Jane Street traders were nervous 

The unredacted sections then go on to explain how Jane Street began to short UST and LUNA based on non-public information. 

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Pratt allegedly learnt through Terraform’s head of research that Jump Trading would help Terraform Labs restore its UST peg, which was, by May 9, trading below $0.80.

He allegedly learned this by asking, “Y jump not doing their shit.”

On May 9, Jane Street co-founder, Granieri, allegedly forwarded on non-public information to fellow Jane Street traders that he learned from Jump Trading’s founder Bill DiSomma and CIO Dave Olsen.

This included efforts from Jump Trading to help Terraform Labs, and Jump’s request to Jane Street to also help bail Terraform Labs out and restore its peg. 

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Read more: How did so many Jane Street traders wind up at FTX?

He supposedly learned that Jump Trading would only invest $100-200 million to help Terraform Labs, and alleged that it would need at least $2 billion, or $5 billion to be saved. 

According to the lawsuit, Granieri said Jane Street would think about Jump’s request. Across that same day, and the next, the lawsuit claims Jane Street began shorting UST and LUNA for millions. 

Also alleged in the suit is that some Jane Street traders were concerned about trading on insider information. It added that one supposedly said he “understood that [material non-public information] didn’t really exist in crypto.”

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According to one unredacted line, “Jane Street unwound its short positions, pocketing over $19 million of profits on the UST short positions and over $115 million of profits on the Luna short positions.”

It had also allegedly placed another cheap option bet on LUNA that, if the UST depeg was ever restored, it would make Jane Street up to $180 billion by Huang’s estimates. 

The suit then details that Terraform Labs’ head of research was eventually offered a role after the collapse of UST. It notes that he joined, but Jane Street staff  were “unclear… whether he was also still working at Terraform at the time.”

Jane Street allegedly wanted to keep its ‘killer’ trades quiet 

Redacted sections also show that Jane Street was praised by a group of skilled on-chain analytics experts in the weeks that followed for the “killing” it made on its trades. 

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Rather than revel in the praise, the lawsuit claims that Huang “expressed anxiety at having been caught.” He allegedly guessed that the firm’s admirers were “friends with exchanges and someone leaked them our wallets at some point.”

One unredacted section details how news of a wallet involved in the depeg began to spook Huang, and that he discussed “affirmatively stripping information that would connect them to this wallet.”

This was despite Jane Street’s name not being publicly linked yet. 

Read more: Researcher ties Jane Street to notorious ‘Wallet A’ that helped depeg UST

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The unredacted document goes on to claim, “While it never publicly touted its involvement in the scheme, Jane Street has also never denied that it reaped massive profits from the collapse of UST due to its sales based on insider information.”

Other previously-redacted sections of the document recount specific details around unjust enrichment, market manipulation, insider trading, and other securities violations.  

Got a tip? Send us an email securely via Protos Leaks. For more informed news and investigations, follow us on X, Bluesky, and Google News, or subscribe to our YouTube channel.

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Hong Kong’s first officially approved HKD-backed stablecoin, HKDAP, has completed a live transfer test on Ethereum involving three licensed firms.

The transfer of Hong Kong’s HKD-backed stablecoin on Ethereum (ETH) demonstrates the regulator’s willingness to adopt innovative DeFi tooling.

According to a May 21 report, Anchorpoint Financial, one of the China’s first entities to secure a stablecoin issuer license from the Hong Kong Monetary Authority (HKMA), has successfuly tested the stablecoin alongside OSL Group and PantherTrade, a licensed trading platform backed by Futu Holdings.

What does the HKDAP Ethereum test show?

The test confirms that HKDAP can be issued, transferred, and settled on a public blockchain without technical failure. This is not a sandbox simulation but a mainnet transaction, meaning the infrastructure is production-grade. That distinction matters because previous stablecoin pilots in Asia often remained confined to permissioned environments.

A spokesperson involved in the test said, “The successful mainnet transfer validates both the technical architecture and compliance framework for HKDAP ahead of issuance.” The quote underscores that regulatory approval and blockchain execution are being developed in parallel rather than sequentially.

Why is Hong Kong pushing a regulated stablecoin?

Hong Kong’s approach contrasts sharply with the fragmented regulatory posture seen in the U.S. and parts of Europe. By licensing issuers like Anchorpoint Financial and requiring full backing of reserves, the HKMA is attempting to create a compliant alternative to offshore dollar-pegged stablecoins.

The HKDAP model is explicitly pegged 1:1 to the Hong Kong dollar, positioning it as a regional settlement layer rather than a global reserve asset like Bitcoin (BTC) or a programmable ecosystem token like Ethereum. However, deploying it on Ethereum allows immediate interoperability with DeFi protocols, wallets, and exchanges.

OSL Group’s involvement is also notable. As one of Hong Kong’s few licensed digital asset platforms, OSL provides a regulated on-ramp for institutional users. PantherTrade, backed by Futu Holdings, adds another layer of distribution, potentially linking traditional brokerage clients with on-chain assets.

According to analysts, the timing is also strategic. With phased issuance expected by the end of Q2 2026, HKDAP could become one of the first fully regulated fiat-backed stablecoins in Asia operating on a public blockchain. That would place it in direct competition with existing dollar-pegged assets while offering regulatory clarity that many global stablecoins lack.

“Anchorpoint will issue the HKDAP (i.e. HKD At Par), a regulated Hong Kong dollar‑backed stablecoin, leveraging a business‑to‑business‑to‑consumer (B2B2C) model,” the joint venture said, adding that rollout will begin in the second quarter of 2026 and proceed in phases.

For context, stablecoins currently account for over $150 billion in circulating supply globally, with the majority denominated in U.S. dollars. Hong Kong’s move signals an attempt to localize that liquidity under its own monetary and regulatory system.