Crypto Update: Hong Kong's Index Reshuffle and India's Firm Stance

The crypto space is going through a few changes, including Hong Kong replacing XRP with SOL in its indexes, and India increasing control over crypto exchanges and transactions.

The Hong Kong Virtual Asset Consortium (HKVAC) has reshuffled its crypto indexes, replacing Ripple's XRP with Solana (SOL) and adding Avalanche (AVAX). Meanwhile, Hong Kong's financial regulator still plans to accept spot crypto ETFs, mirroring the U.S. SEC's recent Bitcoin ETF approvals.

Concurrently, India is tightening its grip on crypto exchanges, with Google's Play Store removing some of the most well known apps like Binance and OKX, aligning with the strict tax measures in the country on crypto transactions. In the retail sector, GameStop is scaling back its NFT marketplace due to regulatory uncertainties, despite the potential of digital assets in gaming.

Crypto Index Reshuffle in Hong Kong

The world of crypto is changing with the introduction of Bitcoin exchange-traded funds (ETFs) to the market. However, this is not the only change that the crypto industry is facing at the moment. The Hong Kong Virtual Asset Consortium (HKVAC) recently announced revisions to its cryptocurrency indexes.

Ripple’s XRP was removed from HKVAC's top five global crypto index, with Solana (SOL) taking its place. Additionally, Avalanche (AVAX) has been added to the top 10 index, replacing Tron's (TRX) token. This inclusion follows AVAX's remarkable performance surge in December of 2023, even as other cryptocurrencies experienced downturns. According to Ryan Mcmillin, the Chief Investment Officer at Merkle Tree Capital, the rising interest in AVAX may be attributed to partnerships between traditional banks like JPMorgan and Citi and the Avalanche Foundation for tokenizing real-world assets.

Despite its removal from the top 10 index, TRON has still demonstrated a robust recovery, especially after its significant loss in value during the 2018-2020 bear market cycle. In 2023, TRON was able to rally, and recorded a 100% increase in value.

HKVAC also updated its global large crypto index to include new tokens like Internet Computer’s (ICP), Near Protocol’s (NEAR), Optimism (OP), Injective (INJ), and Immutable (IMX). These developments come as Hong Kong continues to try and strengthen its position in the crypto industry.

In a big move, Hong Kong’s financial regulator announced its readiness to accept spot crypto exchange-traded funds (ETFs) by the end of 2023. This came at just the right time considering the United States Securities and Exchange Commission’s (SEC) recent approval of 11 spot Bitcoin ETF applications on Jan. 10. However, the Hong Kong Securities and Futures Commission (SFC) did emphasize that crypto transactions by these ETFs should be conducted through SFC-licensed crypto platforms or authorized financial institutions to ensure regulatory compliance and investor protection.

Crypto Crackdown in India

Meanwhile, Google's Play Store recently removed Binance and OKX crypto exchange apps. This action comes on the heels of a similar decision by Apple's App Store in India back in December of 2023. The removals follow a notice issued by the Indian Ministry of Finance’s Financial Intelligence Unit (FIU) on Dec. 28, 2023, targeting several major crypto exchanges including Binance, Huobi, Kraken, and others, for operating illegally in the country.

The FIU's notice emphasized the requirement for exchanges providing services to Indian users to register as a “reporting entity” and to comply with income tax submission protocols. In light of non-compliance, the FIU recommended that the Ministry of Electronics and Information Technology block the websites of these exchanges.

Despite the blockage on Google's Play Store, the Binance application and website continue to function for existing users in India. Binance South Asia shared a post on X acknowledging the app's unavailability in the Indian market but reassured its users that their accounts and funds are still secure.

These developments come in the context of strict tax measures imposed by the Indian government on crypto transactions. The Indian Finance Bill 2022, approved in March of 2022, introduced a 30% tax on cryptocurrency holdings and transfers, along with a 1% tax deduction at source on each crypto trade. This heavy taxation led to a huge drop in trading volumes on local crypto exchanges and pushed Indian traders towards foreign exchanges. The bill also specifies that traders cannot offset losses against profits, and mandates separate tax calculations for each trading pair.

GameStop Winds Down NFT Operations

The NFT space is also facing some changes in the new year. GameStop, a big player in the gaming retail industry, recently announced that it will be discontinuing its NFT marketplace next month, pointing towards ongoing regulatory uncertainties. This move follows a series of reductions in the company's crypto-related offerings over the past few years.

The company notified its users via its website that they have just over two weeks left to access its NFT platform. Despite the shutdown, GameStop still assured NFT holders that their assets would remain on the blockchain and could be traded on other platforms. The decision to phase out the marketplace stems from the lack of clear regulations in the crypto space, a concern that is certainly echoed across the whole crypto industry.

This move by GameStop is part of a larger trend of scaling back its cryptocurrency ventures. Back in December of 2022, the company reported a huge net loss and proceeded to lay off staff from its digital assets department, indicating a shift away from crypto-focused strategies. Additionally, in August of 2023, GameStop advised its customers to secure their "Secret PassPhrase" as it was discontinuing access to iOS and Chrome Extension wallets, further hinting at its gradual withdrawal from the crypto arena.

GameStop's CEO, Matt Furlong, stated that while the company sees long-term potential in digital assets within the gaming world, they are still a bit cautious about risking shareholder capital in this volatile and uncertain market.

On the bright side, there might still be hope. GameStop’s decision comes at a time when the U.S. Securities and Exchange Commission (SEC) is showing more and more signs of becoming more receptive to crypto regulation, as evidenced by the recent approval of 11 spot Bitcoin exchange-traded funds (ETFs).