KuCoin Ventures, the investment arm of cryptocurrency exchange KuCoin, has invested $10 million in CNHC, a Chinese yuan-pegged stablecoin issuer and blockchain-based payment service provider. The funding round also included KuCoin’s investor IDG Capital and Circle Ventures, the investment arm of USDC issuer Circle. This marks the first stablecoin-related investment by KuCoin Ventures, which aims to support Web3 infrastructure in the Asia-Pacific region.
Stablecoin Backing Infrastructure
KuCoin Ventures Chief Investment Officer Justin Chou said that the investment in CNHC reflects the company’s strategy of backing infrastructure for the financial system. He added that the world is likely to see more real-world asset-backed stablecoins in the near future. To ensure the stability of the financial market, stablecoin designers need to find a balance between overcollateralization and efficiency, and prove their resiliency.
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CNHC Stablecoin
CNHC co-founder Joy Cham said that CNHC, which was launched about two years ago, is more akin to a house settlement tool, referring to CNHC’s limited exposure. The stablecoin is listed on one centralized exchange, TruBit Pro, but Cham said that it will be listed in more centralized and decentralized exchanges in the near future. CNHC currently supports settlement services in other major stablecoins, including USDT and USDC.
KuCoin’s Investment Strategy
According to the announcement, KuCoin Ventures also invested $10 million in China’s blockchain project, Conflux, in early 2022. Chou noted that Hong Kong has a well-established traditional finance ecosystem and a real opportunity at becoming the new crypto center of the world with new regulations and policies for digital assets.
KuCoin CEO Johnny Lyu said that KuCoin has had no impact due to the recent banking crisis involving Silicon Valley Bank, Silvergate, or Signature Bank, as it has no exposure to those institutions. He added that removing crypto from traditional banking could cause long-lasting implications on the industry. Bitcoin was born after ‘Lehman Brothers’ yet still grew to mass adoption with about 420 million global users. The recent shutdowns of financial institutions may be the opportunity for crypto to reach mass adoption.
