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Animoca Brands, already a major player in the Web3 space with investments in more than 400 start-ups, is looking to expand its footprint. Photo: Shutterstock

Exclusive | Animoca Brands expands Web3 investment to the Middle East after John Lee’s visit seeking stronger business ties

  • The blockchain gaming giant plans to put tens of millions of dollars into the region, starting with a partnership with Saudi Arabia’s Manga Productions
  • Animoca co-founder Yat Siu said the visit from Hong Kong’s chief executive gives the company ‘more official channels we can leverage’
Blockchain
Hong Kong-based blockchain video gaming unicorn Animoca Brands is planning a major push into the Middle East after the Hong Kong government recently sought closer ties to the region, as the company continues to make big bets on Web3 start-ups amid cooling enthusiasm in the industry.
The firm, whose investors include Sequoia China and Singapore’s state fund Temasek Holdings, is looking to put “significant investment” into the Middle East valued “in the tens of millions of dollars”, co-founder and executive chairman Yat Siu told the South China Morning Post in an interview on Tuesday.

The Middle East’s emerging markets offer Animoca great opportunities given the region’s crypto-friendly regulations, strong gaming culture, and young population, Siu said.

Hong Kong’s Web3 push includes US$6.4 million in funding and a new task force

Among its planned projects for the region is a partnership with Manga Productions, a subsidiary of the Mohammed bin Salman “MiSK” Foundation, an organisation established by Saudi Arabia’s crown prince that produces animations, comics and games. The two companies will co-create a Web3 project leveraging the studio’s content, Animoca announced on Thursday.
Hong Kong sought to boost business ties in the Middle East last month when the city’s chief executive John Lee Ka-chiu visited Saudi Arabia and the United Arab Emirates (UAE). The trip came about three months after Hong Kong announced plans to turn the city into a virtual asset hub with an overhauled regulatory regime that would allow for retail participation and more legal clarity on cryptocurrencies. Dubai, the UAE’s most populous city, has also positioned itself as a crypto-friendly territory.

Siu said Lee’s trip “legitimises and validates the relationships between the parties”, resulting in “more official channels we can leverage”.

Amid surging interest in non-fungible tokens (NFTs) and the metaverse in 2021, Animoca emerged as a leading Web3 company owing largely to its blockchain gaming platform The Sandbox. The virtual world helped kick off intense investment interest in digital plots of land sold as NFTs, before interest cooled last year amid a crypto market rout that saw asset valuations plummet.

Animoca is also one of the biggest investors in Web3, a loosely defined term that refers to a next-generation World Wide Web built around decentralised technologies such as blockchain. It boasts a portfolio of more than 400 companies.

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Hong Kong’s latest tech unicorn Animoca Brands is betting big on video game NFTs

Hong Kong’s latest tech unicorn Animoca Brands is betting big on video game NFTs

A series of industry scandals, bankruptcies and other financial troubles cost crypto investors billions of dollars last year. The resulting turmoil pushed regulators around the world to tighten their oversight of the assets. Venture capital firms have also scaled back their bets.

Animoca, however, is still seeking to expand its empire. Valued at about US$6 billion last July, it is aiming to close US$1 billion in investment this quarter to start its new Animoca Capital fund. The venture will focus on investing in later-stage Web3 companies, which Siu said will be less risky bets than the early-stage start-ups that the company directly backs.

Since Hong Kong announced its virtual asset plans at the end of last October, regulators have been moving quickly to try to entice business back to the city after an exodus in the preceding few years to places like Singapore, Dubai and the Bahamas.

New measures include allowing exchange traded funds for cryptocurrency futures and the world’s first government tokenised green bonds.

Web3 is confused for crypto, NFTs and the metaverse, but what is it really?

Last month, Hong Kong’s Securities and Futures Commission formalised a proposal to allow retail investors to buy crypto tokens with large capitalisations through licensed platforms. Starting from June, crypto platforms in the city must be licensed, but a previous optional licensing scheme only allowed approved exchanges to sell to investors with at least HK$8 million (US$1 million) in their portfolios.

“This happened in the space of less than six months … There’s an urgency and a rush that’s unprecedented in Hong Kong’s history,” Siu said. “I think the [crypto industry’s] narrative for 2023 and maybe up until 2024 will be led by Asia, and I think Hong Kong has a very strong chance of being a leader in the space.”

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