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Dunamu likely to extend CEO Lee’s tenure, ensuring continuity in Upbit leadershipDunamu, the operator of Upbit, South Korea’s largest cryptocurrency exchange, recently convened a board meeting where a key decision was made to extend the term of Lee Sirgoo as Dunamu’s CEO, as reported by local news outlet Newsis, citing industry sources.Photo by Benjamin Child on UnsplashFinal decision on Dec 5The final decision on the extension of CEO Lee’s term at Dunamu is set to be made at the extraordinary general meeting on Dec. 5. The crypto industry is largely confident about Lee’s reappointment, especially given the presence of major executives, including Chairman Song Chi-hyung, at the recent board meeting.Responding to changing regulationsIn light of these developments, industry insiders are keenly observing whether CEO Lee will maintain Upbit’s market dominance in Korea. A key factor influencing Upbit’s future success will be Dunamu’s strategy in adapting to the changing market conditions, particularly in response to the upcoming Virtual Asset User Protection Act, which is due to come into effect in July next year.One source familiar with the matter said that Lee’s reappointment is almost assured, barring the emergence of any unexpected factors.If confirmed, this will mark Lee’s second reappointment as CEO of Dunamu since his first in 2020. This extension would bring his total tenure to nine years, continuing through 2026, considering that he initially assumed leadership in December 2017.Emphasis on stability and blockchain adoptionThis move likely underscores Dunamu’s prioritization of stability, especially considering Chairman Song’s emphasis on the company’s commitment to the widespread adoption of blockchain technology, as highlighted in the recently convened Upbit D Conference (UDC). Such a focus suggests that the company is leaning more towards maintaining its current status rather than embarking on new ventures.An executive from a Korean crypto research firm observed that Dunamu’s annual UDC event is a significant indicator of the company’s business direction. The person highlighted this by comparing it to last year’s event, where Dunamu officials focused on new initiatives, particularly in the realm of NFTs. This was evident in their collaboration with Levvels, a joint venture between Dunamu and HYBE, the management agency of the popular K-pop boy group BTS.The executive further elaborated that the widespread adoption of blockchain technology requires strengthening the Upbit business, an area in which Lee excels. The research expert suggested that if he had diverted his efforts towards other new projects outside of Upbit, the outcomes might have been different.CEO Lee’s ability to steer Upbit effectively in the burgeoning field of blockchain technology can be attributed to his rich academic and professional journey. He holds a diverse academic background with degrees from Seoul National University, the University of Hawaii at Manoa and Lewis & Clark Law School. His career spans journalism, law and corporate leadership, including roles as a reporter for JoongAng Ilbo, counsel for IBM Korea, CEO of NHN USA and co-CEO of Kakao Corporation.

In a move to enhance the oversight of cross-border wire transfers involving virtual assets, Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, is fortifying the implementation of regulations relative to crypto transfers.Photo by C Bueza on UnsplashTravel rule clarificationsLocal news outlet, the English language newspaper The Philippine Star reported that central bank memorandum 2023-042 provides clarifications on the travel rule for virtual asset service providers (VASPs). The travel rule requires financial institutions to pass on information to the next institution where a transaction takes place. The BSP aims to bring greater clarity to several aspects, including the applicability of the P50,000 transaction threshold and expectations regarding transactions involving jurisdictions without travel rules. Additionally, further interpretation is being provided concerning the extension of the Philippine travel rule to non-custodial VASPs and regulatory expectations surrounding transactions with unhosted wallets or crypto wallets controlled directly by their owners, rather than managed by third-party service providers. FATF compliance ambitionThis regulatory move is in response to the directives from the Paris-based Financial Action Task Force (FATF). In 2021 the Philippines came under greater scrutiny from the intergovernmental organization, when it was included on its "gray list," making it a candidate for increased monitoring. The FATF has called upon the Philippines to establish guidelines for the travel rule to prevent terrorists and criminals from exploiting virtual asset transfers for the unrestricted movement of their assets and to detect and prevent misuse effectively.BSP-supervised financial institutions (BSFIs) are now mandated to scrutinize specific details of virtual asset transfers, including the originator's name, account number used in the transaction, originator's physical address or national identity and the beneficiary's name and account number. International moves towards complianceThis latest move by the Philippine central bank is not unusual. In recent months, a plethora of similarly motivated central banks around the world have tightened up on crypto regulation as it relates to the FATF directives. Being on the FATF's "gray list" is bad for a country’s reputation. It has the potential to result in loss of investor confidence and lead to higher compliance costs and greater monitoring. Additionally, it may have an impact on trade relations and damage a country’s ability to access international finance.  Turkey has also found itself on the organization’s gray list. Working towards repairing that situation, Turkey is in the process of establishing a crypto regulatory framework that will be FATF compliant.In May, Pakistan went a step further in banning cryptocurrency. At the time, its Minister of State for Finance and Revenue, Aisha Ghaus Pasha, stated that the ban had been a requirement for Pakistan’s removal from the FATF gray list. A tightening of crypto regulations has also occurred in the United Arab Emirates (UAE) and in Hong Kong more recently, as those territories work towards ensuring FATF compliance. The BSP emphasizes that transactions not surpassing the P50,000 threshold or its equivalent in foreign currency must include the names and account numbers of both the originator and beneficiary. Both originating and beneficiary VASPs are required to establish and adhere to robust sanction screening procedures, ensuring compliance with sanctions lists and preventing transactions involving sanctioned individuals, entities, or jurisdictions.

Korean Crypto Expert Claims NFTs and Security Tokens Shouldn’t Be a Priority for Investors YetAlthough there has been a lot of speculation recently regarding the prospects of non-fungible tokens (NFTs) and security tokens as lucrative investment opportunities, these topics should not be of concern yet, said Kim Dong-hwan, CEO of Korean crypto consulting firm Wonder Frame, at Tuesday’s 2023 FNTimes Investment Forum hosted in Seoul by the Korean Financial Times.Photo by Markus Winkler on UnsplashFrom a price-to-earnings perspective, these types of investments should not be of priority to the average investor, Kim said, stating that this argument is rooted in historical context. Bitcoin, the kingpin of cryptocurrencies, had its first breakthrough in 2012 when its price was around $13. Since then, its value has skyrocketed nearly 2,000 times. Those who profited from Bitcoin then went on to invest in Ethereum, the second-largest cryptocurrency by market capitalization. Ultimately, the money earned from Bitcoin was constantly circulating in the crypto market.Grappling for liquidityHowever, Bitcoin’s liquidity — the frequency at which assets are bought and sold, which can be deemed the most important aspect of investing in and trading cryptocurrencies — is currently down. Liquidity in the crypto market usually flows in order from Bitcoin first, to altcoins, then to NFTs, Kim explained, because investments in NFTs are made by people who hold cryptocurrencies, not Korean won. Therefore, NFTs, which have now experienced more than a 90% decline from their peak, must depend on Bitcoin’s price recovery for their own resurgence.Securing liquidity for security tokens is also difficult, considering the fact that while these assets share common characteristics with cryptocurrencies, they are subject to strict regulatory oversight by financial authorities such as the Korea Exchange. Therein lies the difficulty in forecasting the prospects for security tokens.Kim thus questioned whether there would be market makers or liquidity providers that would be willing to boldly step into the role of satisfying the market, given the close scrutiny of authorities such as Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS). Although crypto exchanges like Upbit act as market makers by facilitating daily trading worth trillions of won, speculation suggests that securities firms that are responsible for supplying security token liquidity may find it challenging to do the same.Weak investments and negative perceptions of DeFiAnother concern for security tokens is fractional investments, which tend to be concentrated on assets of lower value. “Security tokens are fundamentally about dividing underlying assets and then selling them. However, in many cases, these underlying assets are of lower value or have no choice but to be traded this way,” Kim said.Kim also mentioned the regulatory hurdles hindering decentralized finance (DeFi) in general, despite its reputed appeal. “DeFi is perceived by international organizations like the Financial Stability Board (FSB), the US Federal Reserve System, and the European Union (EU) as a public enemy that causes financial instability in the real world,” he said.Taking all these factors into consideration, Kim recommended against investing in security tokens or NFTs at this time, given the current situation where even Bitcoin’s liquidity is at an all-time low. He suggested that, with market interest rates approaching 5%, unless there is a specific need to invest in virtual assets, it may be better to explore investment options positioned for higher interest rates.Kim is an industry expert who has previously written articles for crypto news site CoinDesk Korea for four years and has taken on the role of Chief Business Development Officer (CBDO) at Blitz Labs, a virtual asset research firm. He founded Wonder Frame in 2022, where he currently works as a professional consultant.