KuCoin Ventures, the investment arm of the KuCoin cryptocurrency exchange, has invested $10 million in CNHC, a Chinese yuan-pegged stablecoin issuer and blockchain-based payment service provider. This funding round included industry investors such as IDG Capital and Circle Ventures, the investment arm of USD Coin (USDC) issuer, Circle.
This marks the first time that KuCoin Ventures has invested in a stablecoin-related project, according to KuCoin’s Chief Investment Officer and KuCoin Ventures Lead, Justin Chou. He stated that KuCoin is interested in building a stronger infrastructure for the financial system, and the world is likely to see more real-world asset-backed stablecoins in the near future. However, stablecoin designers must find a balance between overcollateralization and efficiency to ensure stability in the financial market.
KuCoin Ventures’ investment in CNHC reflects its strategy of supporting Web3 infrastructure in the Asia-Pacific region. The investment firm also invested $10 million in China’s blockchain project Conflux in early 2022. Chou believes that Hong Kong has a real opportunity to become the new crypto center of the world with new regulations and policies for digital assets.
CNHC’s co-founder, Joy Cham, stated that the platform launched its offshore yuan-pegged stablecoin CNHC about two years ago, which is more akin to a house settlement tool due to its limited exposure. Currently, the CNHC stablecoin is only listed on one centralized exchange, TruBit Pro Exchange, but Cham stated that it will be listed on more centralized and decentralized exchanges in the near future. Additionally, CNHC currently supports settlement services in other major stablecoins, including Tether (USDT) and USD Coin (USDC).
KuCoin CEO Johnny Lyu stated that the exchange has had no impact due to the recent banking crisis involving Silicon Valley Bank and Silvergate as it has no exposure to those banks. However, the whole market is exposed to varying degrees of USDT and USDC. Lyu believes that the removal of crypto from traditional banking could have long-lasting implications on the industry, but it may also be an opportunity for crypto to reach mass adoption.
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In March 2021, New York State Attorney General Letitia James filed a complaint against KuCoin, alleging that it violated securities law by offering to sell and purchase cryptocurrencies that are commodities and securities without registration.
