WuBlockchain Weekly: Hong Kong Announces Three New Virtual Asset Policies, Trend Research Closes…

WuBlockchain Weekly: Hong Kong Announces Three New Virtual Asset Policies, Trend Research Closes Ethereum Positions with $869 Million Loss, etc

1. SFC Is Improving Virtual Asset Regulatory Ecosystem and Announces Three New Measures link

Julia Leung, Chief Executive Officer of the Securities and Futures Commission of Hong Kong, stated at Consensus 2026 that the SFC is improving the virtual asset regulatory ecosystem and announced three new measures: first, margin financing, allowing brokers to provide financing to creditworthy clients with collateral including securities and virtual assets, limited to BTC and ETH in the initial phase; second, perpetual contracts, with a high-level regulatory framework to be introduced to allow licensed platforms to offer perpetual contracts to professional investors; third, affiliated market makers, with plans to relax rules to allow licensed platforms to provide liquidity through affiliated market-making units. Leung also noted that tokenized assets are growing rapidly, with tokenized gold assets under management reaching US$400 million, doubling in six months; 11 tokenized money market funds have been authorized so far, and Project Ensemble is piloting the settlement of money market funds with tokenized deposits.

YIP Chee Hang, Executive Director of the Intermediaries Division of the SFC, said at Consensus 2026 that Hong Kong will achieve two-way linkage in margin financing, allowing both securities collateral for investment in Bitcoin and Ethereum, and virtual asset collateral for traditional securities financing. For perpetual contracts, the SFC will issue a high-level guidance framework instead of a consultation paper, aiming to guide the market in a more pragmatic manner, with participation initially limited to professional investors. In addition, the affiliated market maker mechanism will allow platform-affiliated entities to connect to global liquidity pools, avoiding the fragmentation of Hong Kong’s ecosystem.

John Lee, Chief Executive of Hong Kong, China, reiterated at Consensus Hong Kong 2026 that Hong Kong will continue to support the growth of the local digital asset community. He noted that Hong Kong is committed to attracting global Web3 talent and enterprises through regulatory clarity and infrastructure development, such as the first batch of stablecoin licenses to be issued in March. Lee emphasized that as a financial bridge connecting the East and the West, Hong Kong will focus on the development of real-world asset tokenization, stablecoins and the digital asset ecosystem.

Joseph Chan, Deputy Secretary for Financial Services and the Treasury of Hong Kong, stated that Consensus, the Web3 conference, has been held in Hong Kong for two consecutive years, and is expected to bring direct economic benefits of over HK$300 million this year, compared with HK$280 million last year. The conference is expected to attract 12,000 to 15,000 participants, about three-quarters of whom are from outside Hong Kong, with more than 400 related events to be held during the week. Chan revealed that the Hong Kong Monetary Authority is actively processing stablecoin license applications, with the first batch of licenses expected to be issued within this quarter; legislative proposals for the regulation of over-the-counter trading and custody services are targeted to be submitted to the Legislative Council this summer.

2. Chinese Regulators Guide Some Banks to Restrict U.S. Treasury Holdings link

Chinese regulators recently issued verbal guidance to some large commercial banks, requiring them to limit new purchases of U.S. Treasury bonds and gradually reduce holdings for banks with high exposure to U.S. Treasuries to address concentration risks and market volatility risks. The guidance does not apply to China’s sovereign foreign exchange reserves, only targets commercial banks, and sets no specific requirements on the scale or timeline for adjustments. Regulators stated that the move aims to diversify market risks and is unrelated to geopolitical factors or fundamental concerns about the U.S. creditworthiness.

3. Fed Paper Recommends Setting Independent Initial Margin Weights for Crypto Derivatives link

A Federal Reserve working paper proposes classifying crypto assets as a distinct asset class for initial margin requirements in uncleared derivatives markets, arguing that traditional risk weights and models cannot accommodate crypto’s high volatility and market behavior. Authors Anna Amirdjanova, David Lynch, and Anni Zheng recommend separate risk weights for “floating” crypto assets (such as Bitcoin, BNB, Ethereum, Cardano, Dogecoin, XRP) and “pegged” crypto assets (such as stablecoins). The paper suggests using an equally weighted benchmark index of floating digital assets and pegged stablecoins as a proxy for crypto market volatility to calibrate risk weights. Initial margin requirements are critical for derivatives markets; crypto’s high volatility necessitates higher collateral buffers to prevent defaults.

4. London Stock Exchange Group Plans to Provide On-Chain Settlement Services for Institutional Investors link

The London Stock Exchange Group (LSEG) has announced the launch of an on-chain settlement system named LSEG Digital Securities Depository (DSD). This system will support institutional investors in trading and settling tokenized bonds, equities, and private market assets, connecting traditional securities markets with blockchain networks. It is designed to be multi-chain compatible and interoperable with existing settlement platforms. The first phase is scheduled for rollout in 2026, subject to regulatory approval. LSEG already operates a blockchain-based private fund platform built on Microsoft Azure.

5. Trend Research Closes Ethereum Positions, Incurring a Final Loss of $869 Million link

Jack Yi’s Trend Research closed its final Ethereum position on Sunday. At its peak, the firm held a long position in Ethereum worth $2.1 billion, making it Asia’s largest ETH long. Its on-chain accounts are now fully emptied, with a final profit and loss of -$869 million. The liquidation resulted from a leveraged strategy built on the DeFi lending protocol Aave. Trend Research initially bought ETH on centralized exchanges and deposited it as collateral on Aave. It then borrowed stablecoins against the collateral and repeatedly used the borrowed funds to purchase additional ETH, forming a recursive leveraged position that significantly increased exposure and liquidation risk. As ETH prices continued to decline, the position approached the liquidation level. To avoid forced liquidation, Trend Research chose to proactively close all positions.

Notably, the marked “BTC OG Insider Whale” address starting with 0xcA0 (represented by Garrett Jin) used the same Binance deposit address as Trend Research under Yi Lihua. According to on-chain data, the Trend Research address transferred 7.989 million USDT to an address starting with 0xcdF on February 6, which was then moved to a Binance hot wallet address starting with 0x28C. The “BTC OG Insider Whale” transferred 10,000 ETH to the address starting with 0xcdF, which was also subsequently moved to the Binance hot wallet address starting with 0x28C. The community suspects that the insider whale and Yi Lihua are backed by the same investor.

6. Bithumb Makes Erroneous Bitcoin Payments Due to Activity Reward Issuance Mistake, Totaling 620,000 BTC link

South Korea’s second-largest crypto exchange, Bithumb, mistakenly issued Bitcoin as activity rewards due to a payout error, totaling 620,000 BTC (approximately 60 trillion KRW). As of February 7, 125 BTC (around 12.3 billion KRW) remained unrecovered. Bithumb has not yet taken legal coercive measures such as provisional seizure against recipients; instead, it has contacted users one-on-one to persuade voluntary returns. According to financial authorities, about 3 billion KRW of the unrecovered funds has been withdrawn to personal accounts, while roughly 100 billion KRW has been used within Bithumb to buy back altcoins.

Bithumb acknowledged severe flaws in its internal systems. It had intended to transfer approximately 620,000 KRW (about $428) but erroneously processed 620,000 BTC, valued at roughly $40 billion. Bithumb CEO Lee Jae-won stated the issue stemmed from failures in asset matching and account isolation mechanisms, along with a 24-hour delay in transaction processing. Most BTC has been recovered, but 1,786 BTC were sold before accounts were frozen and remain unrecovered; relevant customers are legally obligated to return them.

7. Hearing for 60,000 Bitcoin Money Laundering Case to Be Held on February 16 link

The High Court of England and Wales will hold a hearing on the asset disposal proceedings of the high-profile 60,000 Bitcoin money laundering case on Chinese Lunar New Year’s Eve and New Year’s Day of the Bingwu Year of the Horse (February 16 and 17, 2026), involving more than 30 billion yuan and nearly 130,000 Chinese victims.

Currently, the asset disposal of the Qian Zhimin money laundering case has reached a deadlock, with 8,300 Chinese victims filing claims for the 60,000 Bitcoins. Multiple law firms are acting independently, leading to issues such as duplicate submissions, repeated arguments and prolonged proceedings in the view of the UK judge. Legal fees are also rising sharply and will ultimately be borne by the Chinese victims.

The market value of the 60,000 Bitcoins has dropped from a peak of approximately 54 billion yuan on October 6, 2025, to about 31 billion yuan in early February 2026.

8. Goldman Sachs Holds Crypto ETFs Worth $1.1 Billion link

Goldman Sachs has disclosed that it holds BTC worth $1.1 billion, ETH worth $1.0 billion, XRP worth $153 million and SOL worth $108 million. Goldman Sachs obtained its crypto exposure through spot crypto ETFs rather than direct token holdings. In addition, representatives from Goldman Sachs attended a White House meeting on stablecoin yields today, and its CEO David Solomon plans to speak at the World Liberty Financial Forum next week.

9. BTC Erases All Gains Since Trump’s November 2024 Election, With Liquidations Exceeding $2.7 Billion link

Wintermute released a market update stating that Bitcoin has wiped out all gains since Trump’s election in November 2024. Over the weekend, liquidations exceeded $2.7 billion, and BTC briefly dropped below $80,000 and fell to $60,000 for the first time since April 2025. Wintermute noted that this sell-off was led by U.S. capital, with the Coinbase premium remaining consistently negative and spot ETFs seeing cumulative net outflows of approximately $6.2 billion since November. IBIT, in particular, is both the largest holder and a key source of supply. Meanwhile, crypto assets have exhibited bearish negative skew relative to the broader market, with AI themes continuing to siphon capital. A sustained rebound is unlikely in the near term unless the Coinbase premium turns positive, ETF inflows resume, and basis levels stabilize.

10. Ethereum Foundation Member: Ethereum Is Shifting to Verifying zkEVM Proofs to Confirm Execution Correctness link

ladislaus.eth, a member of the Ethereum Foundation, published an article stating that Ethereum is advancing a critical yet relatively low-profile architectural shift: moving from nodes re-executing all transactions within a block to verifying execution correctness via zkEVM proofs. The relevant scheme is supported by EIP-8025 (Optional Execution Proofs), which allows validators at the consensus layer to choose to verify multi-client zk proofs instead of running the full execution layer, with no mandatory upgrades or forks required. This mechanism is expected to significantly reduce node hardware and synchronization costs, benefiting independent validators and home nodes, and laying the groundwork for future L1 execution scaling, ePBS (planned for the Glamsterdam upgrade), and native Rollups. Ethereum’s L1-zkEVM roadmap targets 2026, with the first dedicated meeting held on February 11.

Fundraising

a16z announced it led Shizuku AI’s seed funding round. link
Backpack is in talks to raise funds at a $1 billion valuation. link
Levl announced the completion of a $7 million seed funding round, led by Galaxy Ventures. link
SOLOWIN, a U.S. listed company, plans to raise $100 million to support stablecoin and asset tokenization initiatives. link
Inference Research completed a $20 million seed funding round, led by Avenir Group, the family office of Li Lin. link
Bitcoin mining firm Cango completed a $10.5 million funding round and secured an additional $65 million in investments. link

Learn more, check out crypto-fundraising.info.