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Hong Kong contractor invests HK$100m via digital token fund to invest in Japanese cryptocurrency

A major technology group and a Hong Kong-listed contractor-turned-blockchain investor plans to raise HK$100 million (US$12.7 million) via a digital token fund to finance a yen-backed cryptocurrency project, according to a recent report.

The technology group’s pivot to blockchain investment is the result of an acquisition of an investment holding company in May and its subsequent backdoor listing.

The company is controlled by a founding partner of the HK$11.4 billion (US$1.45 billion) Hangzhou fund under the company’s name, which is backed by the Hangzhou government.

The other backers of the fund include the bitcoin tycoon of China.

The technology firm’s chairman said that the company would tap qualified investors outside China to raise funds denominated in the tether, a US-dollar backed stablecoin and list it on a cryptocurrency exchange.

Stablecoin is a cryptocurrency pegged to a stable asset such as gold or hard currencies like the US dollar.

The firm’s executive director said that the company would be seeking to fund start-ups and cryptocurrency projects globally as he believes some blockchain unicorn-hopefuls were on track to disrupt the traditional financial system and break monopolies currently enjoyed by tech and internet giants.

The executive director, who is also a part-time lecturer at Zhejiang University in Hangzhou said that blockchain will become the mainstream technology in the next three to five years. The world and Hong Kong, in particular, is entering the next stage of blockchain evolution, a stage which is akin to when computer operating system was transiting from MS-DOS [disk operating system] to MS-Windows.

For the yen stablecoin project, the firm’s leadership said the founding partners of the Hangzhou fund under the firm’s name, are currently working with a mid-tier Japanese bank, whose name he refused to divulge, in creating a stablecoin.

The firm’s leadership said that it sees a demand for a yen-linked stablecoin and is hopeful of launching the token by the end of this year or early 2019 and the next anchor currencies that the tech company will explore are the Hong Kong dollar and Australian dollar.

The firm believes that cryptocurrency traders and exchanges will be potential takers of the stablecoin.

Many cryptocurrency exchanges already trade bitcoin and other cryptocurrencies such as ethereum and EOS against tether. The technology group’s yen stablecoin could provide an alternative that can be traded on these exchanges.

The executive director was also an early investor in the world’s second-largest maker of bitcoin mining rigs which is seeking to raise HK$7.84 billion (US$1 billion) and list in Hong Kong.

The executive director has invested HKD$122.4 million since 2015 through his own blockchain venture fund, and is expecting returns “to the tune of several hundred times”.

Currently, the founding partners of Hangzhou tech fund, together with some of its affiliated funds under the firm’s technology company, have invested HK$571 million globally in blockchain and cryptocurrency projects outside China.

These include investments in an open-source cryptocurrency that offers selective transparency of transactions; a blockchain start-up chain and a blockchain-based social media network.

This move is one of many of the investments and moves backed by the Hong Kong and Chinese governments aimed at boosting the adoption of, and investment in, blockchain technology across a wide range of products and services.

From fintech applications to medical technology to social media usage, the government of Hong Kong has made it abundantly clear that one of its main ways for re-vamping the city is through backing blockchain products similar to those mentioned above.

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