Korean Securities Firms Unite to Build Shared Security Token Infrastructure

GDAC Joins Hands with Bitgo to Fortify Crypto Wallet SecurityCryptocurrency trading platform GDAC, which is operated by South Korean blockchain fintech company Peertec, revealed on October 19 (local time) a partnership with crypto wallet provider Bitgo. This collaboration aims to bolster the security measures for the exchange’s wallets.Bitgo, headquartered in Palo Alto, California, and backed by investment bank Goldman Sachs, is renowned for its secure wallet solutions. As a qualified custodian for digital assets across various jurisdictions such as the United States, Switzerland, and Germany, Bitgo has been serving more than 1,500 institutional clients in over 50 countries since 2013. The company also touts that it processes about 20% of all on-chain Bitcoin transactions by value.Photo by Shubham’s Web3 on UnsplashBitgo’s growing presence in KoreaBitgo’s latest partnership with GDAC isn’t its first venture in the Korean market. Just last month, the company entered into a strategic partnership with Hana Bank, one of Korea’s leading banking institutions. This collaboration aims to drive the development of security solutions, foster technical cooperation, and even explore a potential joint venture in the future.With this collaborative initiative, GDAC is now a partner of two major digital asset custodians: Bitgo and Fireblocks. Through this cooperative network, the Korean exchange seeks to take a leading role in enhancing security as a virtual asset service provider (VASP). In May, GDAC launched a mobile application where users can seamlessly enjoy all of its crypto services, including exchange, custody, and staking.Han Seung-hwan, CEO of GDAC, said that the company places the utmost priority on bolstering its security technology and ensuring the secure storage of customer assets. He added that having solidified its position as an exchange dedicated to institutional clients, GDAC will focus on delivering customer-centric, high-quality services.

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.

American crypto exchange and custodian Gemini announced via its blog on Oct. 29 that it has been awarded in-principle approval for a Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS). In an X post on Oct. 23, Dan Clarke, who worked for Gemini in Singapore in an International Marketing & Operations role in 2021, outlined that back then the company ran the first crypto-related full page ad in the Straits Times with the slogan “We’re in Singapore. For Good.” Fast forward three years and it appears that Gemini is making good on that commitment through this latest regulatory-compliant milestone.Photo by Swapnil Bapat on UnsplashSingapore to play a crucial roleThe MPI license will enable Gemini to offer digital payment tokens and cross-border money transfer services in Singapore. Gemini’s Asia-Pacific (APAC) business is headed up by Saad Ahmed. Ahmed commented that Singapore has been at “the heart” of its operational expansion within the APAC region. Expanding on that further, he stated:“While the United States remains our largest market and global headquarters, Asia and Singapore in particular play a crucial role in our global strategy.”  Ahmed outlined that Singapore represents the company’s second-largest market, with plans to double its current Singaporean workforce and move to a larger office space. The Gemini executive believes that this in-principle licensing approval takes the company one step closer to offering services that cater to the needs of residents of the city-state.  Serving users across the APAC regionIn its blog announcement, the firm said that “since establishing our regional headquarters in Singapore, we’ve focused on expanding our footprint, ensuring that we bring a localized, secure, and compliant trading experience to users across the region.” With the regulatory environment in its home market being currently hostile to crypto, Gemini has pursued a strategy followed by many of its peers in looking for growth opportunities overseas instead. In April of last year, the company announced that it was in the process of opening an engineering center in India.  In June 2023 the company publicized its intention to pursue a crypto trading license within the United Arab Emirates (UAE). At the time the company’s co-CEOs, Tyler and Cameron Winklevoss, referred to the “hostility and lack of clarity” when it came to the regulatory environment within the United States. Regulatory clarity to drive growthAhmed believes that regulatory clarity in Singapore will be a driver of growth, leading to greater adoption across the region. With regard to the U.S., he has the expectation that the crypto industry will grow regardless of whether former U.S. President Donald Trump or Vice President Kamala Harris wins the upcoming presidential election.  Notwithstanding that, Gemini’s Winklevoss twins have donated over $2 million to Trump’s campaign, while also contributing funds to a super political action committee (PAC) supporting John Deaton, a Republican challenger to the Senate seat of fierce crypto critic Senator Elizabeth Warren.  Regulatory conditions in Canada have proven to be too much to handle for the company. At the end of September, Gemini announced that it would close all customer accounts in Canada by December 31 as a direct consequence of new regulations which have been introduced by the Canadian Securities Administrators (CSA).