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South Korea is ramping up its scrutiny on cryptocurrency exchanges, with the Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC) announcing its intention yesterday to remove platforms that lack the necessary qualifications, according to the Korea Economic Daily.Unqualified exchangesIn its announcement yesterday, the FIU revealed its aim to block unqualified virtual asset service providers (VASPs) from facilitating trades in Korean won, the currency of the country. Those currently providing Korean won trading services will be eliminated from the market unless they can demonstrate they meet the required standards. With many exchanges set to renew their registrations in the latter half of this year, the FIU is gearing up for thorough evaluations through June to identify and remove unqualified VASPs. The FIU's assessments will focus on determining whether VASPs have adequate measures in place for user protection and are safeguarded against risks of money laundering. To bolster its efforts in preventing money laundering risks, the FIU intends to establish a framework where lawyers and accountants participate in crypto oversight activities.Photo by Andrea Piacquadio on PexelsExamining majority shareholder of VASPThe financial watchdog is also looking to propose amendments to the Financial Transaction Reports Act, aiming to raise the standards for VASP registration by introducing more stringent requirements. Beyond the current assessments of a VASP operator and its executives, the new regulations will involve close examination of its majority shareholder. This additional layer of scrutiny will evaluate the credibility of the major parties related to the VASP, taking into account factors such as their history of loan defaults. The FIU is set to create a system for analyzing cryptocurrency transactions and will strengthen its communication channels, not just with financial institutions but also with prosecutors and police forces. Furthermore, the agency is reviewing the Financial Action Task Force's (FATF) recommendation for freezing transactions in cases of suspicious activities. Once implemented, this will enable the FIU to temporarily halt suspicious transactions before bringing the issue to prosecutors.

CoinGecko Report Points to Q3 Market ContractionThe third quarter of 2023 was marked by a significant market downturn and market cap contraction. That’s one of a number of findings in a Q3 crypto industry report compiled by Malaysian cryptocurrency ranking platform CoinGecko.Photo by Kanchanara on UnsplashMarket cap contractionThe company released its latest research on Tuesday. In mid-August, Bitcoin (BTC) witnessed a sudden drop from approximately $29,000 to around $26,000, leading to a dip in the total cryptocurrency market capitalization from $1.2 trillion to $1.1 trillion.The total crypto market capitalization recorded a nearly 10% decline, amounting to a drop of $119.1 billion. Since reaching its local peak on April 17, the total market capitalization has experienced a decline of 16.3%.Notable shifts in the top 30 cryptocurrencies include Solana (SOL) climbing to #7, TrueUSD (TUSD) rising to #19, Litecoin (LTC) falling to #14, Avalanche (AVAX) dropping to #22, and Binance USD (BUSD) sliding to #27.Stablecoin shrinkageThe top 15 stablecoins saw a 3.8% decrease in market capitalization during Q3 2023, reaching $121.3 billion. Tether (USDT) maintained its market cap during this period. USD Coin (USDC) experienced the largest absolute loss at -$2.26 billion (-8.3%), while Binance USD (BUSD) faced the most significant percentage decline of -45.3%, amounting to a drop of -$1.87 billion. TrueUSD (TUSD) was the sole gainer among the top 5, with a 12.8% increase in market cap.NFT trading volume cut in halfTrading volume for NFTs declined by 55.6%, dropping from $3.67 billion in Q2 to $1.63 billion in Q3. Ethereum maintained its dominance, accounting for 83.2% of the NFT market during Q3. ImmutableX NFTs, driven by trading card game Gods Unchained, experienced a strong Q3, with a market share increase from 2.1% in Q2 to 3.9% in Q3.Continued growth for RWAsThe Real World Asset (RWA) sector has continued to grow in 2023, with tokenized US treasury bills gaining popularity. The market cap for these tokenized T-bills increased from $114.0 million in January 2023 to $665.0 million by the end of September, marking a 5.84x gain. Traditional financial institutions led the way, with American asset manager Franklin Templeton controlling almost half of the overall market share, followed by Ondo Finance at 27%. Ethereum held 49% of the market cap share, while Stellar followed closely behind with 48%.Spot DEX and CEX trading volume downIn Q3, spot trading volume on the top 10 decentralized exchanges (DEX) totaled $105 billion, a 31.2% drop from Q2. THORchain experienced a significant gain in volume, though this was partially attributed to illicit transfers.Spot trading volume on the top 10 centralized crypto exchanges (CEX) amounted to $1.12 trillion, a decrease of 20.1% compared to Q2. Binance’s market share dropped to 44%, facing regulatory pressures and significant executive departures. Among the Asian exchange platforms, HTX, previously known as Huobi, secured the third spot with an 8% market share. Only Upbit and Bybit saw gains, while Kucoin was edged out of the top 10.While Q3 may not have been the most positive industry quarter recently, things are looking a lot more promising as Q4 develops, with Singapore-based digital assets financial services platform Matrixport predicting a bitcoin unit price of $45,000 by year end.

FTX Opts Out of Plan to Sell off FTX JapanThe FTX Debtor that was brought in to manage the bankrupt estate of the failed FTX cryptocurrency exchange has decided to not follow through with a plan to sell off the Japanese business.That’s according to a report by Nikkei on Thursday. In November 2022 a new management team was brought in to restructure the FTX business immediately following the business having filed for Chapter 11 bankruptcy in the courts in Delaware in the United States.Photo by Jezael Melgoza on UnsplashOptimizing value for creditorsThe original plan was to look to sell off subsidiary companies within the group such as FTX Japan, FTX Turkey, and FTX Europe. Those plans have now at the very least been delayed. Nikkei cited an FTX executive who claimed that it’s not so much that plans have been delayed but rather that the FTX Debtor has identified another approach that will likely optimize value for creditors.“They hope to increase the price by selling the entire group, rather than selling subsidiaries in various regions,” Nikkei’s FTX source stated.Rebooting the exchangeThe response from creditors to this news has been largely positive. While the notion of a rebooted FTX business has proven to be controversial within the crypto space, most creditors recognize that the business can provide much greater value for them if it is restarted internationally.Global investment banking firm Perella Weinberg Partners (PWP) was brought in by the FTX Debtor in November 2022 to carry out a strategic review of the assets held by the FTX group. In a recent bankruptcy court hearing in Delaware, one of its partners stated that they are currently in the process of inviting bids from interested parties.At that time, PWP indicated that the Debtor was looking to revive the international FTX business. That would likely mean an entity headquartered outside the United States. It remains to be seen what will happen in the case of the FTX US business. Due to an unwelcoming regulatory approach in the US right now, setting up a crypto business there is seen as having additional risk factors.Asian interestA number of weeks ago, the Debtor filed a list of interested parties. The list included a number of high-profile Asian companies, although it’s not clear if their interest lies in the business in its entirety or specific FTX assets.Among them was Japanese telecoms firm Docomo. Tokyo-headquartered global financial services company Nomura also featured. Japan’s largest Ecommerce company, Rakuten, also signed a letter of intent in expressing its interest. FTX Japan had attracted 41 bidders. It’s being speculated that some of these Japanese entities will now bid on the entire business or join consortiums who will do so.FTX Japan solventCreditors of FTX Japan have fared much better than their international counterparts. In the wake of the collapse of the Mt.Gox cryptocurrency exchange in 2014, the Japanese authorities set to work on providing greater protections for customers. As a consequence, FTX Japan was required to ring-fence customer funds. For that reason, Japanese customers have already been given access to their funds.In a recent exchange on Twitter, well-known American investor Mark Cuban pointed out that Japanese regulators had been successful in protecting FTX investors in Japan. Cuban made the point to former US Securities and Exchange Commission (SEC) regulator John Reed Stark, underscoring the failure of US regulators in doing so.