{"text":[[{"start":7.89,"text":"This article only represents the author's own views."}],[{"start":12.02,"text":"For companies looking to make a quick, large investment with big profit potential, the appeal of cryptocurrencies can be irresistible these days. That club gained a new member last week with the entry of China Renaissance Holdings Ltd. (1911.HK), the investment bank that became embroiled in controversy more than two years ago with the detention of its founder and chief rainmaker on suspicion of bribery."}],[{"start":40.81,"text":"Last Thursday, the company said its board approved a plan to invest $100 million of its internal resources in Web 3.0, or a decentralized internet built on blockchain and crypto assets. It also announced it was bringing in Fu Frank Kan, a tech veteran with crypto expertise, as an independent non-executive director. Fu is a co-founder of Math Global Foundation, which develops digital money wallets and software."}],[{"start":73.96000000000001,"text":"China Renaissance’s imminent dive into the wild world of cryptocurrencies comes as its main investment banking business struggles amid an economic slowdown that is dampening dealmaking in China. Last year, the company’s revenue, excluding investment gains, dropped about 23% to 777 million yuan ($108 million). The company could return to growth this year on the back of one of Hong Kong’s strongest IPO and fundraising markets in years, though it has yet to give out any guidance on its recent business."}],[{"start":112.31,"text":"While the Hong Kong investment banking market has been spotty in recent years, cryptocurrencies have been on a bull run for more than a year now, with bitcoins smashing records to sell for more than $100,000 apiece, up more than 70% in the past year. An asset class with that can kind of return is a rarity — so it’s no wonder money is pouring into digital tokens."}],[{"start":138.59,"text":"The total market capitalization of cryptocurrencies now exceeds $3 trillion. And the combined 24-hour trading volume for the top five coins alone amounted to nearly $90 billion as of Tuesday this week, according to data from CoinGecko. That’s about 16% of the total daily trading volume on the Nasdaq last Friday, which was the exchange’s busiest day last week."}],[{"start":168.63,"text":"China Renaissance “believes that Web 3.0 and cryptocurrency assets possess immense future growth potential and align with global financial and commercial development trends,” the company said in the announcement of its digital asset investment plan."}],[{"start":185.37,"text":"Cryptocurrencies are notorious for huge price volatility, and went through a prolonged slump until the latest upswing dating back to the start of last year. That means there’s no reason the current euphoria may not quickly vanish, leading to another deep downturn."}],[{"start":204.02,"text":"But the optimists believe that things will be different this time as cryptocurrencies rapidly gain global credibility and look increasingly likely to become an important new asset class. For starters, the actual user base for virtual money is growing quickly, with endorsements from big companies and financial institutions including heavyweights like JPMorgan and Goldman Sachs. Regulators are also increasingly receptive to digital assets, especially as U.S. President Donald Trump has vowed to make the country the “crypto capital of the planet,” which has given new momentum to digital assets lately."}],[{"start":244.85000000000002,"text":"Hong Kong is also in the race to build a cryptocurrency hub, even though such assets are illegal across the border in Mainland China. Among other initiatives, last Thursday, the city’s government released a Policy Statement 2.0 on the Development of Digital Assets in Hong Kong, laying out big plans to nurture development of the space with a comprehensive regulatory framework."}],[{"start":269.93,"text":"Hong Kong’s crypto ambitions"}],[{"start":272.62,"text":"Such efforts by Hong Kong appear to be a key reason behind China Renaissance’s decision to expand into cryptocurrencies. The company said it aims to align its cryptocurrency investment plan with Hong Kong’s “proactive” policies to support the development of Web 3.0 and virtual assets."}],[{"start":294.41,"text":"China Renaissance is part of a second wave of companies embracing cryptocurrencies, following an earlier boom around five years ago that included names like former lottery ticket seller BIT Mining Ltd. (BTCM.US). But China Renaissance’s crypto interest isn’t completely out of the blue either. The investment bank focuses on the tech sector, so it’s not surprising that it’s setting its sights on one of the hottest corners of that space. And it has already dabbled in the cryptocurrency industry."}],[{"start":331.45000000000005,"text":"Back in 2018, the company invested in Circle Internet Group (CRCL.US) — a U.S. venture that issues USDC, a type of virtual currency known as a stablecoin pegged to the U.S. dollar — via its Huaxing New Economy Fund. That investment has paid off nicely, at least so far, as Circle’s shares more than doubled on their first day of trading early last month following an $18 billion New York IPO. Building on that success, Circle has applied for a trust banking license in the U.S as well, which could further fuel the company’s growth, leading to an even bigger return for China Renaissance on the investment down the road."}],[{"start":376.33000000000004,"text":"China Renaissance’s digital asset ambitions also feature prominently in its 2024 annual report, which suggests that the company isn’t just looking to ride the current cryptocurrency fad."}],[{"start":389.73,"text":"It’s not entirely clear what the company plans to do with its $100 million investment, for example, whether it’s looking to invest in cryptocurrency-related companies like Circle or trade in such currencies itself for short-term gains. In its announcement, the company hinted at the potential for both. It said it will intensify “its investment and development efforts” for cryptocurrencies, including stablecoins like Circle’s USDC. But it also said that it may buy and sell digital assets, warning investors of how such transactions can be risky."}],[{"start":428.52000000000004,"text":"Regardless, the $100 million is a substantial sum for China Renaissance, equal to more than half of its cash holdings at the end of last year. That underscores the urgency the company is feeling to right its ship and return to growth as its founder and former Chairman Bao Fan faces bribery charges after suddenly disappearing more than two years ago. The company has been unprofitable for the past few years."}],[{"start":458.30000000000007,"text":"China Renaissance shares have recovered some ground since they resumed trading last year following a 17-month suspension after Bao’s detention. While they are down heavily from their IPO price in 2018, they still fetch a price-to-sales (P/S) ratio of about 2.5, on par with the multiple for Hong Kong-listed shares in CICC (3908.HK; 601995.SH), generally considered China’s largest homegrown investment bank."}],[{"start":496.2300000000001,"text":"If the cryptocurrency bet goes well, it may help to further charge up China Renaissance’s valuation. But given digital money’s volatility, that’s far from guaranteed."}],[{"start":516.1100000000001,"text":""}]],"url":"https://audio.ftmailbox.cn/album/a_1751505932_1757.mp3"}