Has the death knell sounded for cryptocurrencies?

Hello, Mercedes here from Singapore. I have returned from a month off in Australia to find much has changed in the world of Asia tech — especially the fortunes of cryptocurrencies. China has embarked on an aggressive crackdown on the industry, but it is not the only country tightening the noose (The Big Story). Don’t miss the latest Tech Tonic podcast and a great feature on the emergence of south-east Asia’s version of the “PayPal mafia”. (Mercedes’ top 10). 

Don’t miss the FT’s webinar today on the implications of data sovereignty on global trade and policies. You can register for the event here.

The Big Story

Has a death knell for cryptocurrencies been sounded? A more than 50 per cent fall in the price of bitcoin since mid-April reveals a deep sense of alarm in the cryptocurrency sector over a crackdown by China and other governments.

China’s largest bitcoin producing provinces are intensifying a campaign to shut down cryptocurrency mining operations. Sichuan, a hydropower-rich province in south-western China, has ordered the 26 largest local mines to stop operating.

Key implications: “Globally we are seeing a much more forceful crackdown on crypto by governments,” analysts at QCP Capital, a Singapore-based crypto trading company, wrote in a note.

US authorities are also taking a closer look at cryptocurrencies. Securities and Exchange Commission chair Gary Gensler called last month for “greater investor protections” in the crypto market.

Earlier this month, global regulators called for digital currencies to carry the toughest bank capital rules of any asset, with the Basel Committee on Banking Supervision warning that the growing use of crypto assets “has the potential to raise financial stability concerns”.

Upshot: All the signs are that China, which is scaling up tests of its official digital renminbi, is serious about stamping out the crypto industry on its soil. In other countries, the approach is likely to be more gradual and based on regulatory initiatives.

Mercedes’ top 10

1. In this new season of the wonderful Tech Tonic podcast, John Thornhill asks: is AI going to work for us, or might it run amok? (FT)

2. What is driving China’s crackdown on Big Tech and where is it likely to lead? Yuan Yang takes a look. (FT)

3. Coupang, the South Korean ecommerce group, is facing a consumer backlash over its handling of a deadly fire at its biggest logistics centre. (FT)

4. US semiconductor group GlobalFoundries will spend $4bn to expand its Singapore plant in an attempt to tackle the global chip shortage. (Nikkei Asia)

5. India’s Tata Group is trying to break Flipkart and Amazon’s grip on the country’s ecommerce market with a flurry of deals. (Nikkei Asia)

6. Chinese smartphone maker Realme is expanding production in India despite Covid-19 and laws aimed at curbing mainland tech investment. (Nikkei Asia)

7. Tech companies in Taiwan have been accused of locking up migrant workers as the country grapples with a coronavirus outbreak. (FT)

8. Japan has embraced the gig economy far quicker than anticipated because of Covid-19. But can food delivery apps really crack this market in the long term? (FT)

9. Microsoft-owned LinkedIn is blocking user accounts in China for containing “prohibited content”. (WSJ)

10. South-east Asia’s version of the “PayPal mafia” is emerging. Employees of Grab, Gojek and other unicorns are leaving to start their own tech companies, writes Akito Tanaka. (Nikkei Asia)

Our take

Last Thursday, Shenzhou-12, or “divine vessel” in Chinese, took three astronauts to space. The launch was televised live from the Jiuquan Satellite Launch Centre in China’s north-western Gobi desert. To me, this illustrates increasing confidence, especially compared with China’s first manned space launch, from the same location, almost 18 years ago.

In October 2003, I was in the city of Jiuquan to get a sense of this historic moment. The space centre, though it carries the same name, is over 200km away and was off-limits to foreigners. This was the closest I could get. No foreign journalists were invited to the facility for the launch, and moreover, there was no live broadcast. The successful launch of Shenzhou-5 was reported by state-owned media half an hour later.

But last week, an NBC reporter was on-site and performing interviews with engineers and staff. This was unthinkable almost 18 years ago. Back then, Beijing was afraid to go live because of fear of failure, and it felt unprepared to show off its space centre infrastructure to foreign media.

Six-and-a-half hours after lift-off last week, the three taikonauts successfully docked with the maiden space station Tiangong (“heavenly palace”). Given that the US-led multinational International Space Station is currently scheduled to be decommissioned without a successor in 2024, China will then be the only country to own and control such a facility.

— Kenji

Smart data

Which company is bigger than Uber, Coinbase and Sony and recently overtook SoftBank? That would be Sea, the south-east Asian gaming and ecommerce company listed in New York.

The group, already the most valuable public company in south-east Asia, saw its share price soar last week, giving it a market capitalisation of about $148bn. In doing so, it topped Japan’s SoftBank Group, which is valued at about $122bn.

Headquartered in Singapore, Sea focuses primarily on south-east Asia and Taiwan, but is increasingly engaging in Latin America. Nevertheless, Sea is still heavily lossmaking: net losses widened to $1.62bn in 2020 despite its revenue and gross profits doubling over the same period.

Spotlight

When Kotaro Sawada took over running Japan’s Zozo in 2019 from colourful founder Yusaku Maezawa, some critics thought the company would lose its edge.

Maezawa was marketing svengali. The billionaire entrepreneur was known for celebrity romances, skipping college to play in a punk rock band and the Zozosuit, a skintight black bodysuit covered in white dots.

But Sawada is replacing flamboyance with unflashy attention to detail. “I’m not a charismatic manager,” Sawada says. The approach appears to be paying off. In the fiscal year ended March 2021, the value of merchandise transactions increased 22 per cent from the previous year, reaching a record of ¥419.4bn ($3.8bn).

Art of the deal

SenseTime, the Chinese artificial intelligence start-up, is mulling another run at a public listing that could raise up to $2bn. The Alibaba-backed company is planning to sell shares first in Hong Kong and is working with advisers to finalise a listing application, according to a Nikkei scoop.

SenseTime was one of the leading Chinese AI groups to be hit by a US blacklisting in 2019, which derailed its previous IPO timeline. Despite being added to the US entity list, SenseTime has raised capital from global investors and won overseas contracts in countries including Japan and Thailand. In January, Chinese media reported that SenseTime agreed on fundraising terms that valued the company at $12bn.