HSBC's RedCoin stablecoin goes live, and more crypto news

The following article is adapted from The Block's newsletter, The Daily, which comes out on weekday afternoons.

Happy Friday! Bitcoin is trading lower at around $81,200 as the tech stock sell-off spreads to Asian markets, while U.S. spot bitcoin ETFs recorded $636 million in net outflows.

In today's newsletter, HSBC launches its first Hong Kong dollar stablecoin for retail users, Initia halts its network following a security incident, Sen. Blumenthal questions Tether over payments to a firm founded by a former White House crypto adviser, and more.

Meanwhile, Singapore, Malaysia, and Thailand are expanding a cross-border stablecoin initiative, and South Korea plans to regulate stablecoins as payment instruments.

P.S. Don't forget to check out The Latent, our sister website covering AI. Get The Latent Daily here and all other The Block newsletters here. Also, follow The Block and The Latent on X for more updates.

HSBC launches Hong Kong dollar stablecoin for retail users

HSBC has launched its first Hong Kong dollar stablecoin, RedCoin (RCHKD), through its PayMe app, allowing retail users to make transfers and payments using the digital currency.

• Users will be able to activate a stablecoin wallet in the app in the coming days. They will be able to send money to other users and pay more than 100,000 merchants through PayMe.
• HSBC is one of three commercial banks authorized to issue Hong Kong dollar banknotes. The bank plans to introduce more digital asset products and expand into corporate and institutional uses.
• HSBC already offers digital bonds through HSBC Orion, a gold token for retail customers and tokenized deposits for wholesale payments.

Initia halts network after attacker reportedly mints $2.7 million in tokens

Initia halted its Layer 1 blockchain and rollups on Friday after a security incident allowed an attacker to create tokens without authorization and move funds out of the network.

• Initia co-founder Ezaan Mangalji said an unknown bug in the network's MoveVM implementation allowed unauthorized token minting, but did not affect native INIT tokens.
• The attacker minted and transferred about $2.7 million worth of AUSD, ETH, and USDC before the network was paused, according to Mangalji.
• Initia has not officially confirmed the amount lost.

US senator questions Tether over payments to former White House crypto adviser's firm

Sen. Richard Blumenthal has asked Tether for information about reported multimillion-dollar payments to Nxum, a consulting firm founded by former White House crypto adviser Bo Hines and his father. Blumenthal said the relationship raises legal and ethical concerns.

• The Wall Street Journal reported that Tether began working with Nxum weeks after Hines became the White House's top crypto adviser. Hines later helped advance the GENIUS Act, which established federal stablecoin rules.
• Blumenthal asked Tether to provide records of its dealings with Nxum and Hines, raising concerns about possible violations of ethics, anti-corruption, and lobbying laws.
• Tether said it is reviewing the letter and that an earlier internal investigation by outside lawyers found no evidence of wrongdoing.

Netanyahu seeks blockchain plan to prepare Israel for possible sanctions

Israeli Prime Minister Benjamin Netanyahu said he has asked for a blockchain-based plan to help Israel prepare for possible economic sanctions, including restrictions on its banking system.

• Netanyahu said Israel needs to prepare an economy that could bypass sanctions. Asked whether blockchain could be an alternative, he replied, "One of them, certainly. I have already asked for a plan to be prepared for that."
• He did not explain which blockchain or currencies the plan might involve, who would prepare it or when it could be implemented.

Phantom brings Kalshi prediction markets to US users

Crypto wallet Phantom has started rolling out Kalshi prediction markets to U.S. users, allowing them to trade event contracts directly through its app.

• The launch comes as Kalshi faces legal challenges from several states over its prediction market offerings. Phantom will restrict certain markets in Michigan, Nevada and Washington because of ongoing legal disputes.
• Phantom General Counsel Kevin Jacobs said the company is "confident and comfortable" proceeding, citing federal regulatory oversight and its CFTC no-action relief.

In the next week

• The Fed's interest rate decision is due Wednesday, while September durable goods orders, new home sales and October consumer confidence data are due Tuesday. Third-quarter GDP, September PCE inflation and weekly jobless claims are due Thursday, followed by the employment cost index and Chicago PMI on Friday.
• The ECB's interest rate decision and October economic sentiment data are due Thursday, while third-quarter GDP and September unemployment data are due Friday. September bank lending and money supply data are due Tuesday.
• Plasma (XPL), Humanity (H), Collector Crypt (CARDS), and Kamino (KMNO) are among the tokens scheduled to unlock.

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