Singaporean Authorities Uncover $1.3M Crypto Mining Scam

The launch of Hong Kong's inaugural spot crypto exchange-traded funds (ETFs) is expected to occur by mid-2024, according to one of Hong Kong’s leading crypto executives. Gary Tiu, the executive director and head of regulatory affairs at OSL, a licensed cryptocurrency exchange based in Hong Kong, made that assertion in discussion with The Hong Kong Economic Journal. Tiu provided the publication with insights into the accelerating pace of negotiations between cryptocurrency exchanges and fund companies in the region.Photo by Stella P on UnsplashUp to ten firms contemplating ETF launchOSL is actively engaged in discussions with multiple fund companies, with five to ten firms contemplating the introduction of spot crypto ETFs. Tiu revealed that certain firms have made notable progress, raising the possibility of the debut of these ETFs in Hong Kong by the middle of the year. Additionally, the OSL executive emphasized the significance of maintaining reasonable fees in collaborations between OSL and fund companies, given the limited presence of licensed crypto exchanges in the city – a total of two at present. This suggestion from Tiu aligns with similar recent soundings emanating from HashKey, another licensed crypto exchange in Hong Kong, which recently disclosed its ongoing discussions with asset managers exploring the potential launch of spot crypto ETFs. Livio Weng, the CEO of HashKey, indicated that approximately ten fund companies are considering the introduction of such ETFs in the city. VSFG’s ETF plansAligned with Tiu’s thoughts on the matter, according to a Bloomberg report last week, Venture Smart Financial Holdings Ltd (VSFG), a Hong Kong-based financial services firm, expressed plans to potentially launch a spot bitcoin ETF within the first quarter of this year. Bloomberg reported the company's goal of growing the ETF's assets under management to $500 million by the end of 2024. The regulatory landscape in Hong Kong is actively adapting to accommodate spot crypto ETFs, with the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) announcing in December that they have reviewed their existing policies. Two circulars were published, outlining the requirements for spot crypto ETFs, with the SFC stressing that transactions should be conducted through SFC-licensed crypto platforms or authorized financial institutions. Currently, Hong Kong has listed several futures-based crypto ETFs, including the Samsung Bitcoin Futures Active ETF, CSOP Bitcoin Futures ETF and CSOP Ether Futures ETF. Hong Kong venue for Bitcoin conferenceIn a related development, local lawmaker Johnny Ng revealed on social media on Monday that Hong Kong will host The Bitcoin Conference this year. Earlier this month Ng urged the local administration in Hong Kong to swiftly follow the United States' approval of spot bitcoin ETFs and position the city as a leading hub in the cryptocurrency space. With Hong Kong and Singapore vying for hub status in the Asian region relative to the digital assets space, the launch of ETF products would give the Chinese autonomous territory a competitive head start given that Singapore doesn’t appear to be close to accommodating crypto ETFs for the time being.

Bybit Extends Service Offering to Include LendingDubai-headquartered crypto spot and derivatives trading platform Bybit announced on Tuesday that it has expanded the range of services it offers to now also encompass crypto lending.Photo by Traxer on UnsplashHourly interestIn the announcement which has been published to the platform’s website, the company set out the nature of the Bybit Lending product. “With Bybit Lending, users can deposit their unused cryptocurrencies into Asset Pools, which will be lent out to borrowers,” the service update outlines.Expanding on the features that the new service offering brings with it, the crypto platform outlines that customers will have the ability to accrue interest on an hourly basis. That interest will be calculated at a variable rate, with a variance in the rate depending upon the level of borrowing activity. “In extreme cases where there are no borrowers at all, the interest rate could drop to 0%,” the company clarified.Low risk claimsBybit points out that “loaned assets are kept safe by Bybit’s strict risk management system, enabling you to earn returns with peace of mind.” While this is comforting to hear, it remains to be seen to what extent crypto market participants will take this statement at face value.2022 proved itself to be a graveyard for most of the leading crypto lending firms, and with that, such failures also proved to be a graveyard for the hard earned funds of retail market participants in their hundreds of thousands. Many are dubious about the integrity and sustainability of the crypto lending model, at least at a retail level.Withdrawal restrictionsBybit added that the product facilitates flexible redemptions. However, in an accompanying note, it added that the withdrawal of funds is dependent upon “ the funds in the Asset Pool [not being] fully lent out and you have not exceeded your Daily Withdrawal Limit.”It’s important to note that as many of the failed crypto lenders were getting further and further into difficulty in 2022, they added more arduous withdrawal limits and withdrawal conditions as a mechanism to stem the bleeding that was the outward flow of deposits against a backdrop of a deficit in customer funds held by these platforms.In further marketing of the product on Twitter, the company is claiming that customers can benefit from interest rates of up to 16.46%. While one could take the view that limited promotion of exceptionally high interest rates is harmless, the lesson learned from recent crypto lender failures is that such platforms were offering excessive and unsustainable interest rates as a mechanism to reel in retail deposits, only to later proceed to mismanage those funds.Competing offeringsBybit is not alone in offering this service. While a plethora of lending services exited the market via bankruptcy, exchanges such as OKX and KuCoin have their own variations on lending. OKX extends a loan facility to platform users proportionate to digital assets the user has deposited on the platform. Seychelles-based KuCoin offers a lending service across a broad spectrum of crypto assets.The intent of US based platforms Coinbase and Kraken in this regard has been retarded due to the actions of US regulators. Kraken fell foul of the Securities and Exchange Commission (SEC) relative to its staking service and paid a $30 million fine as a consequence. Meanwhile, Coinbase shelved plans to launch lending-based services in September 2021 having been warded off the idea by the SEC.

With Bitcoin prices hitting an all-time high, the daily crypto trading volume in South Korea has surpassed that of the stock market, local media outlet The Financial News reported.  As of yesterday at noon (KST), the local daily trading volume of cryptocurrencies over the past 24 hours stood at over KRW 11.8 trillion, or nearly $9 billion, according to data from crypto platform CoinMarketCap. Meanwhile, the daily trading volume on the Korea Composite Stock Price Index, or KOSPI, was KRW 11.4 trillion on Friday.  The total daily crypto trading volume was tallied by adding trading volume across Korea’s five major crypto exchanges – Bithumb posted KRW 8.8 trillion, Upbit KRW 2.7 trillion, Coinone KRW 176.4 billion, Gopax KRW 55.2 billion and Korbit KRW 32 billion. Photo by Alexander Mils on UnsplashUnlike stock markets which have a closing time, crypto assets are traded 24/7, which makes it difficult to do an apple-to-apple comparison. Still, the numbers clearly demonstrate retail investors’ bullish sentiment toward the crypto market.  According to the U.S. crypto exchange Coinbase, the Bitcoin price touched $70,199 on Friday (UST), just three days after the flagship coin surpassed $69,000 on March 5, an already record-breaking price in 28 months since November 2021.  Inflation and recession drive retail investors to crypto Financial experts say that Korea’s persistently high inflation and slowing economic growth are driving local retail investors to seek relatively riskier yet high-yielding assets such as cryptocurrencies. Young investors in their 20s and 30s are particularly leaning towards investing in crypto, as they fear not being able to buy houses solely with their wages. Moreover, Koreans’ average monthly real wage declined by 1.1% year-on-year, which marks a continuous decline for two consecutive years since 2022.  Despite the country’s economic slowdown, the KOSPI has actually risen, fueled by capital influx from foreign investors who are expecting a valuation increase in local firms. In contrast, local retail investors are rushing out from the stock market as they see a lack of outperforming companies.  Data from the Korea Exchange (KRX), the sole securities exchange operator in the country, showed that foreign investors purchased KRW 4.4 trillion in stocks over the past month on the KOSPI market, while local retail investors sold KRW 3.3 trillion worth of stocks during the same period.  Local crypto boom prompts ‘Kimchi Premium’ effectThe recent bullish sentiment in the Korean crypto market can largely be attributed to local retail investors, because current laws prohibit foreign investors from trading crypto assets in the country and regulations limit enterprises from making direct investments in crypto.  While the KOSPI market grapples with the so-called Korea Discount effect, which refers to the undervaluation of the Korean stock market, the local crypto market is experiencing the exact opposite trend – crypto investors are benefitting from something called the Kimchi Premium effect, a newly coined term referring to the overvaluation of crypto assets in Korean crypto markets compared to those in their foreign counterparts. As of yesterday at 14:00 (KST), Bitcoin changed hands at KRW 917.4 million on foreign exchanges while at KRW 971.8 million on Korean exchanges, per data from local crypto exchange Upbit.  Cho Dong-keun, a professor at the Economics Department at Myongji University, described the current Korean economic situation as “a competition for the country’s limited wealth”. He said that the stagnant national growth has pushed people to fight for more wealth, urging them to invest in crypto assets, adding that Kimchi Premium could substantially appeal to many retail investors.