Kuwait Implements Full Ban on Crypto Activities

Blockchain Experts Gather at KBW 2023 Side Event to Discuss Future Prospects of South KoreaBlockchain experts from various corners of the industry converged to exchange insights on industrial and technological trends during “Unveiling Prospects in South Korea,” a side event affiliated with Korea Blockchain Week (KBW) 2023. This noteworthy gathering, co-hosted by Sui, Google Cloud, CoinNess, and Bitmain, took place on September 5 at Banyan Tree Club and Spa Seoul.Blockchain compatibility and Web3 adoptionAmong the distinguished speakers at the event, Derik Han, Head of APAC Partnerships at Mysten Labs, the team behind the layer-1 blockchain project SUI, discussed how the SUI project plans to enhance blockchain compatibility through a zero-knowledge (ZK) login feature, similar to single sign-on (SSO). SSO enables users to use a single set of login credentials to gain access to various applications.Han underscored the significance of reducing technical barriers for the widespread adoption of Web3 in our daily lives, and he pointed out that SUI’s ZK login feature would contribute to this goal. Additionally, Han shed light on SUI’s intention to add on-chain features highly favored among Korean gamers.Security tokens and RWAsJo Dong-hyeon, the CEO of Undefined Labs, a developer specializing in on-chain risk rating solutions, emphasized that the Korean decentralized finance (DeFi) market is poised for growth, driven by security tokens and real-world assets (RWAs). He highlighted the significant attention received by the Financial Services Commission’s announcement regarding guidelines for security token offerings (STOs) in February.Jo observed that tokens backed by real-world assets (RWAs) would serve as a bridge between the DeFi space and traditional financial markets, facilitating the development of the former. He also noted that this development would follow the pattern seen in the Korean cryptocurrency market whose liquidity has been supported by young investors.NFT ecosystemsMeanwhile, Kim Min-gu, Head of Web3 Business Development Lab at LG Uplus, a telecom company, expressed their commitment to expanding the Moono NFT ecosystem. This venture, anchored around their octopus character, intends to advance through collaborations with similar NFT projects like Lotte Homeshopping’s pink bear character, Bellygom. Kim highlighted that the company’s primary goal for this year is to make NFTs accessible even to customers who are unfamiliar with cryptocurrencies.Kim further explained that LG Uplus aims to delve into the differences between Web3 NFT communities and their Web2 counterparts. The company’s focus lies in improving the overall usability of its services, without narrowing down its target audience. They are particularly intrigued by the potential of wallets and decentralized applications (dApps) in this pursuit.Banks’ entry into the virtual asset landscapeFollowing this, Leem Min-ho, an analyst at Shinyoung Securities, predicted a strategic expansion by Korean banks, with an emphasis on offering digital asset custody services. This endeavor has been catalyzed by recent developments, including the introduction of security token guidelines in February and the passage of the Virtual Asset User Protection Act in June. These regulatory milestones are gradually shaping a more defined legal framework for virtual assets within South Korea. Leem went on to say that banks, known to favor engaging in business activities within established regulatory boundaries, are poised to concentrate their forthcoming initiatives on approved security tokens, ensuring compliance and adherence to regulatory standards.

The Virtual Assets Regulatory Authority (VARA), the regulatory body which oversees the digital assets market within the emirate of Dubai in the United Arab Emirates (UAE), has taken corrective action against seven unlicensed crypto entities. Fines issuedAccording to an enforcement notice, published to the VARA website on October 8, the agency issued fines relative to a number of firms that it found were engaging in unlicensed virtual asset-related trading activity. The fines ranged from between 50,000 to 100,000 UAE dirhams (AED), equivalent to between $13,600 and $27,200 in U.S. dollars. The agency outlined that it was taking this corrective action in order to continue its enforcement efforts so as to safeguard Dubai’s virtual asset ecosystem. In its enforcement notice, the regulator did not disclose the names of the entities that have been sanctioned. The agency said that its investigations are ongoing, in partnership with local law enforcement.  A statement from the Regulatory Affairs and Enforcement division within VARA was provided, stating: “VARA will not tolerate any attempts to operate without appropriate licenses, nor will we allow unauthorized marketing of virtual asset activities. Our marketing regulations further emphasize Dubai’s commitment to ensuring transparency and always protecting stakeholder interests.”Photo by Alex Block on UnsplashCease and desist ordersIn addition to fines, VARA also issued the seven firms with cease and desist orders for breaching marketing regulations. Marketing by crypto firms is an area the regulator has been focusing on recently. Last month, VARA published a press release, outlining that it had updated its crypto regulations to specifically deal with marketing-related matters. Alongside that update, it issued a guidance document, clarifying the responsibilities of virtual asset service providers (VASPs) relative to marketing practices. A schedule of fines was provided in the case of a breach of the regulations, while the update set out a need for a mandatory disclaimer on marketing material to indicate that virtual assets are volatile and may lose their value, fully or partially. The Dubai regulator is not the first to home in on the marketing activities of crypto businesses. In the UK, the Financial Conduct Authority (FCA) enforced additional rules related to crypto marketing in late 2023. Some crypto businesses found the requirements too arduous and left the UK market as a direct consequence. Public warningIn its enforcement notice, the Dubai regulator also had a message for the trading and investing public, stating: “This public warning is VARA’s market notice to all to avoid engaging with any unlicensed firms.” The regulator added that interacting with unlicensed entities exposes both individual investors and institutions to both financial and reputational risk.  Furthermore, it warned of “potential legal consequences” for regulatory violations. “Only firms licensed by VARA are authorised to provide virtual asset services in/from Dubai, and the Authority remains steadfast in its commitment to protect consumers and investors, and to preserve market integrity,” the regulator further asserted. 

Recently, the top five Korean banks have seen a significant outflow of funds in their demand deposits – worth about KRW 2 trillion ($1.52 billion) – to crypto markets as local investors are rushing to withdraw their money from banks to invest in the crypto and stock markets. The recent surge of Bitcoin to KRW 100 million prompted the funds’ outflow, local media Etoday reported. This is a substantial turn from just a week ago, when these banks saw a KRW 23.5 trillion increase in their demand deposits just in a month.  The previous rise in demand deposits at banks, however, was also driven by local investors who used these accounts as a “station” to temporarily store their money for future crypto investments. These accounts are highly liquid, since users can deposit or withdraw funds at any time without incurring penalties from banks.Photo by Emile-Victor Portenart on UnsplashBank deposits flowing into crypto Data from the five banks –  KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and NH Nonghyup Bank – show that their combined demand deposits totaled KRW 612.4 trillion on Friday, down KRW 2.2 trillion from late last month.  The crypto investing trend has prompted investors to withdraw their funds not only from demand deposit accounts, but also from fixed deposit and installment savings accounts. During the same period, the five banks’ fixed deposits saw a KRW 5.1 trillion decline from KRW 886.2 trillion to KRW 881 trillion, with installment savings decreasing by KRW 2.5 trillion, from KRW 33.2 trillion to KRW 30.6 trillion.  In particular, NH Nonghyup Bank, which offers real-name accounts to the crypto exchange Bithumb, has witnessed a decline of over KRW 2 trillion in its demand deposits over the past week. Shinhan Bank also reported an increase in dealing with more crypto assets.  Bullish crypto and stock market With Bitcoin prices hitting a new high, the U.K. bank Standard Chartered forecasts that Bitcoin could eventually reach $200,000 by 2025. The excitement around crypto has boosted the amount of cryptocurrencies traded against the Korean won across the top five crypto exchanges in Korea, reaching KRW 78 trillion.  Korean stock markets are also signaling a bullish sentiment, with the amount of investor deposits exceeding KRW 53 trillion this month. Investor deposits refer to customer deposits at securities companies saved for investment purposes or those left unclaimed after selling stocks.  Declining interest rates Meanwhile, local savings products with over 4% interest rates are no longer to be seen. According to the Korea Federation of Banks, a one-year savings product with the highest interest rate among the top five local banks offers an annual rate of 3.55%.  Online-only banks, which typically offer relatively higher rates than other traditional banks, are rapidly lowering rates on their saving products. The highest annual rate for Kakao Bank’s fixed deposits products stands at 3.5%, down by 0.1 to 0.2 percentage points depending on their maturity.  Kbank has also decreased rates for fixed deposits by 0.05 percentage points, lowering the rate for its flagship fixed deposits product from 3.7% to 3.65%.