By supporting a Chinese yuan-pegged stablecoin issuer, the investment division of a prominent cryptocurrency exchange, Kucoin is moving to assist future stablecoin efforts. KuCoin Ventures has led a $10 million investment in stablecoin issuer and blockchain-based payment service provider CNHC.

Announcing to their announcement, KuCoin Ventures said that the funding round included some prominent industry investors, including Kucoin’s investor IDG Capital and Circle Ventures, the investment arm of the USD Coin 

USDC

Kucoin Chief Investment Officer and Kucoin Ventures Lead Justin Chou revealed that the new investment in CNHC is the first time KuCoin Ventures has invested in a stablecoin-related project.

“KuCoin is always interested in building a stronger infrastructure for the financial system,” Chou said, adding that the world is likely to see more real-world asset-backed stablecoins in the near future. 

He added, “To ensure the stability of the financial market, stablecoin designers need to find a balance between over-collateralization and efficiency. We are happy to see more algorithm-based stablecoins but they need to prove their resiliency.“

The investment​​ into CNHC reflects Kucoin Ventures’ strategy of backing Web3 infrastructure in the Asia-Pacific region, Chou said. 

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.

CNHC Co-founder Joy Cham also stated that the platform launched its offshore yuan-pegged stablecoin, CNHC, about two years ago. He described the stablecoin as more akin to a house settlement tool, referring to CNHC’s limited exposure. According to data from CoinMarketCap, the CNHC stablecoin is only listed on one centralized exchange, TruBit Pro.

“It will be listed in more centralized and decentralized exchanges in the near future,” Cham added.

The Executive also mentioned that Tether and USDC are two additional significant stablecoins that are now supported by CNHC’s settlement services. Cham also said that the recent banking issue affecting Silicon Valley Bank and Silvergate had had some effect on the company.

“Some of the banks are our partners that help us to settle USD, but there’s other banking partners so service is still ongoing,” Cham said.

On the other hand, according to  Kucoin CEO Johnny Lyu Kucoin has had no impact due to those issues, as it has no exposure to Silicon Valley Bank, Silvergate, or Signature Bank.

“However, the whole market is exposed at varying degrees to USDC and USDT,” Lyu said, adding that removing crypto from traditional banking could cause long-lasting implications for the industry. 

The CEO further noted, “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.”

The news comes as KuCoin is being sued in the US for allegedly breaking the law by providing cryptocurrency trading services in New York. KuCoin was accused of breaking securities laws by offering to buy and trade cryptocurrencies that are commodities and securities without being registered, according to a complaint made on March 9 by Letitia James, the attorney general of New York state.