Rising Cryptocurrency Arbitrage Transactions Raise Concerns in South Korea

Bitget Targets MENA Business ExpansionBitget, the Seychelles-based cryptocurrency derivatives exchange, is setting its sights on the Middle East and North Africa (MENA) as the region emerges as a fast-growing crypto hub.The firm announced its expansion plans via a press release which was published on Thursday. With countries like the United Arab Emirates (UAE) and Bahrain embracing crypto, more exchanges are taking notice and entering the market. Bitget has now joined the ranks of a series of crypto companies seeking to establish a foothold in the region.Photo by Kyle Glenn on UnsplashIncreasing crypto adoption and interestCiting the region’s impressive crypto adoption rate, which accounted for 9.2% of global transactions between 2021 and 2022, Bitget is capitalizing on the growing interest in digital assets. The UAE alone experienced a remarkable 400% increase in registered crypto businesses over two years, driving a surge in global digital asset trading by 10%. Moreover, blockchain-related educational programs have tripled in the region, which contributes to 8% of the overall mining hash rate. All of these are creating a favorable environment for Bitget’s expansion.Dubai officeTo support its entry into the Middle East, Bitget has opened an office in the heart of Dubai and has already hired 60 new employees for various mid and back-office positions. The company aims to scale its Middle East team further, with plans to hire 30 to 60 more professionals over the next two years.Bitget is not alone in recognizing the potential of the Middle Eastern market. Bybit, another major cryptocurrency exchange, recently obtained local licenses to operate in the digital assets space in the UAE, having moved its global headquarters to Dubai in April.OKX, one of the largest exchanges by volume, also received a Minimal Viable Product (MVP) Preparatory License from the Dubai Virtual Assets Regulatory Authority (VARA). Binance is also eyeing the Middle East, with Binance Dubai poised to become the primary focus for the company’s development efforts, given regulatory challenges in Europe and the US.Global expansion strategyBitget’s expansion into the Middle East is part of its broader global scaling strategy. The company has already registered as a Virtual Asset Service Provider (VASP) in Poland and Lithuania, and it launched a localized Turkish website earlier this year.Founded in 2018, Bitget boasts a user base of over 8 million users across more than 100 countries, offering copy trading services. The company’s move to the Middle East showcases its determination to tap into new markets and solidify its position as a global player in the cryptocurrency exchange landscape.There’s been a lot going on at Bitget in recent months, in addition to these regional expansion plans. In May the company announced a corporate social responsibility project named “Blockchain4Youth,” cleverly identifying the importance of connecting with the younger demographic which is far more likely to drive crypto and blockchain adoption.Earlier this month it launched a crypto loans product offering while last week it provided transparency via its proof of reserves initiative, demonstrating a 223% level of reserves and outlining that the company is debt free.

Taiwan to Restrict Offshore Non-Complaint ExchangesTaiwan’s Financial Supervisory Commission (FSC) has been working towards taking proactive steps to regulate the cryptocurrency industry within its borders recently. One key guiding principle it has developed is to impose strict regulation on offshore crypto exchanges operating in Taiwan.Photo by Vas on UnsplashTen guiding principlesTaiwan’s Central News Agency reported on Thursday that in an effort to ensure compliance and protect consumers, the FSC has developed ten guiding principles for virtual asset service providers (VASPs). These principles are set to be officially released by the end of this month, according to a government official.The guiding principles will encompass several important aspects of the crypto industry. They will emphasize the need for enhanced information disclosure, requiring businesses to establish clear review standards for the listing and delisting of virtual assets. Additionally, there will be a focus on ensuring the separation and proper custody of assets belonging to both companies and customers.Focusing on offshore complianceThe FSC intends to make it clear that offshore crypto exchanges must adhere to proper compliance registration if they want to conduct business onshore. The move is in line with what appears to be a commitment by the Taiwanese authorities to promote responsible and secure cryptocurrency operations.One particularly significant restriction is the prohibition of illegal solicitation of business by foreign crypto firms. The FSC is determined to enforce this rule strictly. Foreign VASPs that fail to register according to company law and declare their compliance with anti-money laundering regulations to the FSC will be barred from soliciting business in Taiwan or catering to domestic residents.It’s worth noting that Taiwan has been proactive in implementing anti-money laundering laws for VASPs since July 2021. Although this particular measure has been in place, the cryptocurrency industry in Taiwan has largely operated in a regulatory vacuum. However, recent developments suggest a shift towards greater oversight and accountability.One notable example is Binance, the world’s largest cryptocurrency exchange, which has initiated the process of registering for anti-money laundering compliance in Taiwan. Despite not being fully regulated in the country, Binance has established a local entity, “Binance International Limited Taiwan Branch (Seychelles),” and received government approval for company registration.Building a regulatory frameworkIn addition to these regulatory efforts, the Ministry of Economic Affairs has proposed the creation of a new business category within relevant regulations. This move aims to facilitate the formation of cryptocurrency-related industry associations, encouraging the development of self-regulatory guidelines.The forthcoming guiding principles for VASPs are expected to provide much-needed clarity and structure to the rapidly evolving world of cryptocurrencies within Taiwan’s borders.Many leading jurisdictions have been behind the curve in developing a clear, workable regulatory framework for crypto. That has led to many exchanges establishing themselves in offshore locations where light touch regulation is applied. It’s highly likely that the Taiwanese have examined the fallout from this development, best exemplified by the spectacular collapse of Bahamas-based FTX last November.

Hong Kong’s Securities and Futures Commission (SFC) is gearing up to issue additional crypto exchange licenses before year’s end.  11 applicants under considerationThat’s according to SFC CEO Julia Leung. Leung commented on the matter while speaking with Hong Kong-based online news portal, HK01, on Oct. 7. She stated that 11 companies are considered as applicants for licensing and new progress is expected before the end of the year. Overall, 16 firms have applied for licenses and of these, the regulator is indicating that 11 will likely be awarded licenses at this stage. The 11 firms underwent reviews carried out by the SFC in August to determine and ensure their compliance with the current regulatory framework. The virtual asset service providers (VASPs) inspected included HKbitEX, PantherTrade, Accumulus, DFX Labs, Bixin.com, EX.IO, YAX, WhaleFin and Matrixport HK. Overseas applicants inspected included Crypto.com and Bullish. The regulator’s intention is to work towards an SFC objective of drafting these VASPs into the regulated environment established by the SFC. Leung explained that the SFC intends to award licenses in batches. Those applicants who have already had SFC on-site reviews carried out have been asked by the regulator to rectify issues identified based on the regulators findings. "Applicants who do not meet the requirements will lose their qualifications for licensing, while applicants who meet the requirements will be granted a license conditionally,” Leung told HK01.Photo by Bowen Chin on UnsplashSFC roadmapLeung also told the media outlet that relative to over-the-counter (OTC) crypto services, a new licensing system has been put in place to regulate OTC custody provision. The SFC CEO outlined that the organization’s roadmap for the period 2024 to 2026 incorporates plans to promote the tokenization of real-world assets (RWAs), further advance regulations relative to virtual asset platforms and gain further understanding of Web3 technologies and regional blockchains. Last week the regulator awarded a license to HKVAX, allowing it to join OSL and HashKey as the only fully licensed VASPs in Hong Kong thus far. While Hong Kong has made great strides over the course of the past two years to work towards becoming a regional hub for crypto businesses, it has faced criticism recently for having an overly restrictive regulatory framework.  Regulators felt the need to tighten up regulations in the aftermath of the collapse of the JPEX crypto exchange which implicated fraud and resulted in around 2,600 Hong Kong residents experiencing financial losses in the region of $200 million. The regulatory requirements have resulted in some platforms turning away from attempts to acquire licensing. In May, Gate.io’s local platform Gate.HK ceased operations in Hong Kong, while withdrawing its licensing application.In July HKX followed suit, advising its users to withdraw their funds from the platform, while notifying them that it had withdrawn its application for Type 1 and Type 7 licensing, as well as VASP licensing.