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Did Asia's Richest Man Just Get It Wrong?

Mukesh Ambani's foray into blockchain and CBDCs, South Korea sets crypto exchange minimum reserves, PEPE gets support from fans, and DCG reaches an agreement with Genesis

,   and  Blockhead
3 min read
August 29, 2023

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The crypto industry is no stranger to wild predictions. Just this year, so-called crypto mogul Balaji Srinivasan bet that Bitcoin would hit $1 million within 90 days in March. We don't need to tell you how that bet turned out.

But one bet that's caught our attention has been placed by Mukesh Ambani, AKA Asia's richest man. Ambani, who serves as the chairman of Reliance Industries Ltd, has a net worth of $94.3 billion and places 13th on the Forbes rich list.

On Monday, Ambani revealed his firm is venturing into blockchain and CBDCs under its new financial services entity, Jio Financial Services (JFS). Its partnership with BlackRock fuelled the announcement.

"JFS products will not just compete with current industry benchmarks but also explore pathbreaking features such as blockchain-based platforms and CBDC," Ambani said. "They will adhere to the highest standards of security, regulatory norms and ensure protection of customer transaction data at all times."

Reliance has been a key player in India's digital growth and adoption. Its other entity Reliance Retail, the country's largest retail chain, has been accepting India's digital rupee since February 2023.

Against a slew of ridiculous crypto pricing predictions, Ambani's CBDC bet is a refreshing one in its focus on blockchain tech rather than price targets. However, recent findings have revealed that CBDC awareness is weaker than expected.

According to a CFA Institute report, only 13% of professional investors said they had a strong understanding of CBDCs.

Only 13% of Professional Investors Understand CBDCs: Global Survey
There is very little understanding of how a central bank-issued digital currency would function, according to the most expansive poll of the global investing sector on central bank digital currencies (CBDCs).
BlockheadAshrith Rao

If investors aren't clued in, it's a troubling sign for the current state of the industry. Additionally, stablecoins are currently rarely used for payments outside of the crypto ecosystem, suggesting the adoption of CBDCs for mainstream transactions is still limited.

However, the (legit) rich didn't get rich overnight, and Ambani's vision for blockchain and CBDCs is certainly a long term play. A BIS survey revealed that 93% of the 86 central banks asked were engaged in work related to CBDCs, and that by 2030, there could be 15 retail CBDCs and 9 wholesale CBDCs in public circulation.

The wider use of stablecoins also has great potential further down the line. Central banks are already more advanced in the development of retail CBDCs than wholesale CBDCs.

Ambani's got it right on this one.

Elsewhere:

  • South Korean Minimum: From September, South Korean cryptocurrency exchanges will be required to hold reserves of at least 3 billion won (US$2.3 million) as per guidelines by the Korea Federation of Banks. Exchanges must set aside the funds or the equivalent of 30% of their daily average deposits so they can “fulfill their liability for damages to users” in the event of default. The move comes as the country increases regulatory standards to strengthen consumer protection in the crypto industry. Local crypto exchanges Upbit and Bithumb are already aligning to comply with these new guidelines.
  • Doubling Down on PepeCoin: Nothing's going to stand in the way of PepeCoin fans. Despite a recent 16 trillion PEPE token wipeout attributed to rogue team members, fans are continuing to prop up support for the memecoin. So-called "pro-Bitcoin influencer" Jason Williams boldly stated on Twitter, "Pepe is fine and always will be. I’m a Pepe maxi." The project's remaining tokens ($8.7 million) are supposedly in "safe hands with “clear roads ahead,” the project claims.
  • DCG Deal: Digital Currency Group (DCG) has reached a preliminary agreement with Genesis creditors regarding its bankruptcy. The plan could see recoveries ranging from 70% to 90% in USD for unsecured creditors and 65% to 90% in digital assets. Genesis declared bankruptcy in early 2023 following the collapse of FTX. DCG plans to repay liabilities of around $630 million and $1.1 billion under different terms. Genesis owes over $3.5 billion to creditors, including Gemini, Cumberland, Mirana, MoonAlpha Finance, and VanEck’s New Finance Income Fund.
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