UBS Pioneers Tokenized Money Market Fund on Ethereum

NFTs not subject to South Korea’s Virtual Asset User Protection ActIn anticipation of the Virtual Asset User Protection Act coming into effect in July of next year, the South Korean Financial Services Commission (FSC) has issued an advance notice regarding its subordinate statutes.Photo by Ethan Brooke on UnsplashSeven specific provisionsThe subsidiary regulations under the Act detail seven specific provisions aligned with the Act’s objectives. Firstly, assets categorized as electronic securities, mobile vouchers, deposit tokens backed by the Bank of Korea’s central bank digital currencies (CBDCs) and non-fungible tokens (NFTs) will not be classified as virtual assets and hence, not regulated by this Act. However, in instances where NFTs are used as a means of payment for specific goods or services, they will be regarded as virtual assets.Secondly, banks will take responsibility for managing the deposits of users on cryptocurrency exchanges. This aligns with the Act’s requirement for virtual asset service providers (VASPs) to keep users’ funds separate from their own, either by depositing them in, or entrusting them to, reputable institutions. Under these regulations, banks are required to manage users’ assets in a manner consistent with how investors’ deposits are handled under the Capital Markets Act. This means that banks are allowed to invest VASP users’ assets only in secure instruments, such as state and local government bonds, and are also obligated to pay fees to deposit owners, taking into account the yields of these investments.80% of user assets in cold walletsThe third key aspect of the regulations is that VASPs are required to store a minimum of 80% of user assets in cold wallets, which are not connected to the internet. This is higher than the current requirement of 70%, enhancing the security measures for users of virtual assets. To calculate the total value of a virtual asset at any given time, its total supply is multiplied by its average daily price over the past year. VASPs are obligated to assess the value of virtual assets every month.The fourth regulation mandates that VASPs must enroll in an insurance plan, contribute to a rainy day fund or accumulate reserves. This is to ensure they can fulfill their compensation responsibilities in the event of incidents like security breaches or technical failures. The required preparation amount is set at a minimum of 5% of the user assets stored in hot wallets, as these are more susceptible to risks. VASPs are required to update their compensation thresholds or reserves monthly and must take any necessary actions to comply with these requirements by the next working day following the update.Information disclosure guidelinesAnother regulation addresses the issue of insider trading in the context of the virtual asset market. Under the current Capital Markets Act, information is considered disclosed when it’s made available through disclosure systems of the FSC or the Korea Exchange (KRX). However, since the cryptocurrency market lacks a similar system, the new statute provides criteria for determining when information is deemed disclosed.For instance, if a VASP, including exchanges, releases crucial information about a virtual asset on an exchange and six hours pass, that information is regarded as disclosed. This acknowledges the non-stop nature of the crypto market. Moreover, information disclosed post 6 p.m. is treated as officially disclosed after 9 a.m. the next day.Additionally, if a virtual asset issuer publishes significant information about its token on a website hosting its white paper, the information is deemed public after one day. This is conditional upon the website being publicly accessible and having consistently provided important token information for the preceding six months.These rules aim to provide clarity and fairness in information disclosure in the crypto market, adapting the principles of traditional financial markets to the unique dynamics of virtual assets.No arbitrary suspension of transactionsThe sixth regulation restricts VASPs from arbitrarily halting deposits and withdrawals of virtual assets unless there are justifiable reasons for such actions. Acceptable circumstances for suspending these transactions include situations where the VASP experiences a technical disruption in its system, where regulatory authorities instruct a VASP to cease deposits and withdrawals or where cyberattacks or similar incidents have occurred or are clearly imminent.Lastly, virtual asset exchanges are required to monitor for abnormal transactions continuously. These are transactions that show substantial shifts in the prices or trading volumes of virtual assets, particularly in response to news or rumors that could influence cryptocurrency prices. If VASPs suspect unfair trading practices, they must report to the FSC or the Financial Supervisory Service (FSS). When there is ample evidence of such activities, crypto exchanges are obligated to notify the police or the prosecutors’ office. In addition, the financial regulator has the authority to levy fines based on the prosecution’s decisions or after completing consultations with the prosecution if a year has passed since the day of the report.During the period of advance notice, which spans from Nov. 11 to Jan. 22, the FSC will seek comments from relevant organizations, experts and businesses. This process is aimed at refining the rules and regulations subordinate to the Virtual Asset User Protection Act. Moving forward, the financial authorities plan to publish a set of guidelines and Q&A materials and conduct explanatory sessions, with the goal of ensuring a smooth implementation of the Act.

Velo Token (VELO) has experienced a significant surge in popularity within Southeast Asia's crypto market, drawing comparisons to established players like XRP. Market intelligence platform Santiment highlighted VELO's meteoric rise, noting a substantial 358% increase in price over the last six weeks. This remarkable performance has captured the attention of investors and analysts alike, leading to discussions regarding its potential to become the "XRP of Southeast Asia."Photo by Lucas George Wendt on UnsplashFactors driving VELO's growthThe primary factor fueling VELO's rapid ascent is its substantial trading volume, particularly in the Asian market. According to Santiment data, VELO's trading volume has surged to $95.95 million, a noteworthy figure for a token outside the top 100. This surge in volume reflects growing interest and confidence in VELO, attributed to its integration with leading blockchain platforms such as Solana (SOL) and Binance Smart Chain. VELO has demonstrated significant progress, with a 57% increase over the past seven days and an impressive 225.51% surge over the last 30 days. Despite recent market fluctuations, VELO has maintained a bullish trend, recording a 16.88% rise from a 24-hour low. Santiment's Weighted Sentiment metric indicates a bullish outlook for VELO compared to XRP, further bolstering investor confidence in VELO's potential. Contributing factors to VELO's successSeveral factors have contributed to the unprecedented surge in VELO's value. Notably, VELO tokens are stored in reputable self-custody wallets such as Ledger, Lobstr, and Freighter, enhancing their popularity among investors. Endorsements from crypto influencers, who have labeled VELO as the "XRP killer," have also amplified investor interest. Additionally, VELO's strategic partnerships with industry leaders like iRemit, Visa and Lightnet have expanded its regional market and validated its capacity to revolutionize cross-border payments and digital financing solutions. As a result, VELO has witnessed substantial growth in trading volume, with its price reaching $0.029 per token. VELO's rise signifies its potential as a catalyst for innovation in the cryptocurrency sphere, akin to XRP. Its unique combination of smart contracts, absent in the XRP blockchain, adds to its appeal for investors seeking efficiency and versatility in financial transactions. Velo Labs' focus on revolutionizing international remittance markets further solidifies VELO's position as a game-changer in the crypto landscape. With the possibility of expanding its popularity beyond Asia, VELO's market cap could experience significant growth, further cementing its presence in the cryptocurrency market. 

Terraform Labs civil trial proceeds with confidential filingsSingaporean blockchain development firm Terraform Labs, the creator of the failed Terra blockchain protocol, has reached an agreement on a protective order in their ongoing civil case with the United States’ Securities and Exchange Commission (SEC).Photo by Thomas Habr on UnsplashData shielded from public disclosureThe decision, sanctioned by the U.S. District Court Judge Jed Rakoff in the Southern District of New York on Wednesday, ensures that materials marked as confidential by the involved parties will remain shielded from public disclosure. The court is obligated to seal any discovery filings labeled confidential ahead of the trial.Judge Rakoff conveyed his likelihood of denying requests to unseal these confidential documents, although the order did not delve into the specific rationale for maintaining their confidential status beyond citing “good cause.” The finalized agreement on this protective order took place on Dec. 18, with legal representatives from both the SEC and Terraform Labs, including co-founder Do Kwon, giving their consent. Kwon, presently detained in Montenegro, faces potential extradition to the United States or South Korea.Pivotal momentThe depegging of Terraform’s stablecoin TerraUSD (UST) from the U.S. dollar marked a turning point in the cryptocurrency sector. This event is believed to have significantly contributed to the crypto market downturn in 2022, as it had a knock-on effect on countless other crypto businesses and platforms that were over-exposed to the flawed algorithmic currency.That chain of events led to the SEC taking action after the fact. However, it has subsequently also pursued a much criticized “regulation by enforcement” policy relative to the crypto sector. To that end, the Commission has pending cases against Coinbase, Ripple, Kraken and Binance, among others.In February, the SEC accused Terraform Labs and Do Kwon of conducting a multi-billion dollar crypto asset securities fraud by offering and selling unregistered securities. As proceedings have unfolded, both Terraform and the SEC have traded unsuccessful attempts to obtain summary judgment.Far-reaching consequencesThe ongoing SEC vs. Terraform civil case carries potential far-reaching consequences in terms of legal precedents within the cryptocurrency sector. In a separate ruling in August, the court allowed Terra to issue subpoenas to FTX entities as part of FTX’s bankruptcy proceedings. Judge Rakoff, in November, accepted confidential materials from Jump Crypto Holdings for discovery in this case.Troubled crypto lender Genesis Trading has also been tangled up in the proceedings with the courts directing it to comply with a subpoena initiated by Terraform Labs. The outcome of this case is poised to offer essential legal guidance for numerous companies operating in the crypto space.The SEC’s regulatory approach toward cryptocurrency firms in the United States has been subject to considerable debate and criticism. The commission’s alleged “regulation by enforcement” strategy, especially in dealings with major players in the crypto industry, has drawn accusations.While many in the U.S. have been unhappy with “regulation by enforcement,” the upside is that over the longer haul, the courts will be able to eventually furnish the regulatory clarity that the SEC refuses to provide. The ongoing scrutiny of regulatory approaches and the outcomes of cases like Terraform Labs vs. SEC will undoubtedly shape the future legal landscape of the cryptocurrency industry.