Hong Kong Crypto Licensing Yet to Result in Job Surge

As the Virtual Asset User Protection Act is set to take effect in July, South Korean virtual asset services providers (VASPs) are preparing themselves for new crypto accounting standards. This development is pushing crypto businesses to take consultation services from accounting firms, local media outlet Yonhap Infomax today reported.  Pronounced last year, the new crypto accounting guideline is scheduled to be applied to VASPs starting this July. Rather than providing clear and explicit standards, the guideline requires crypto businesses to interpret it on their own based on “reasonable grounds.” One accountant in the crypto industry said that individual crypto exchanges are wrapping their heads around the new crypto accounting standards, pondering over numerous issues such as whether to manage customer assets in a single record-keeping system. Photo by Volkan Olmez on UnsplashThe most significant concern among VASPs is that the new standard will highly likely recognize crypto assets entrusted by customers as either assets or liabilities. So far, local crypto exchanges haven’t recognized custodial tokens as assets; instead, they have been including these tokens in the footnotes. Only the money users deposited in Korean won has been acknowledged as “customer deposit liabilities.” Dunamu, the operator of crypto exchange Upbit, stated in the footnotes of its previous quarterly report that virtual assets entrusted by customers do not meet the accounting definition of an asset, leading the exchange to exclude its users’ custodial tokens from the asset category.  Varying interpretation of ‘control over custodial assets’ A lot is at stake depending on how individual crypto exchanges interpret the new guideline. If crypto exchanges are deemed to have control over custodial assets, they must meticulously document the details of the assets in custody on their financial statements, including the total amount of custodial assets and how they are managed under what policies.  These details would serve as decisive factors in determining who bears the liabilities in the event of future incidents.  Crypto businesses’ accounting dilemmaThe Korean financial regulators have explained that the new guideline is not the ultimate golden rule, implying that there could be a leeway for crypto businesses if they have reasonable grounds for not following the new accounting standard. However, regulators said they will conduct thorough examinations on the financial statements following their publishment, to ensure that custodial assets are not left out in the documents. This is where VASPs face a difficult choice between two different options; they can either classify custodial tokens as something other than an asset and undergo thorough examinations, or they can recognize them as an asset and risk being included in the “mutual investment-restricted group.” This is a group consisting of large local firms with over nearly KRW 10 trillion ($7.5 billion) in total assets. The companies listed in the group are subject to strict government regulations.  Previous recognition of Dunamu as ‘big firm’ raises concerns among VASPsThe local regulatory authority previously classified Dunamu as part of the mutual investment-restricted group in 2022.  At the time, Korean won deposits made by Upbit users, categorized under the customer deposit liabilities, were recognized as part of its assets by the Korea Fair Trade Commission (KFTC). The KFTC determined that Dunamu had controlling power over the customers’ deposits. This judgment by the KFTC led the company to fall under the mutual investment-restricted group. Once the new accounting standard takes effect in July, the likelihood is that the exchange’s custodial tokens, currently valued at KRW 20.2 trillion, will also be recognized as assets. Meanwhile, another prominent crypto exchange Bithumb is reported to have KRW 4.5 trillion in total assets.   Another accountant in the crypto industry expressed concerns, saying that VASPs will have to deal with more regulations if incorporated into the mutual investment-restricted group. The person added that recognizing custodial tokens as assets could further heighten the management risks for crypto businesses. 

Cronos Labs $100 Million Accelerator Program Enters Hiring PhaseCronos Labs, a Web3 startup accelerator, is embarking on the hiring phase of its accelerator program with the objective of nurturing early-stage projects through financial support and mentorship. The endeavor has been bolstered by a substantial $100 million investment commitment aimed at fostering the growth of crypto startups.In an official announcement published to its website on Tuesday, Cronos Labs underscored the accelerator’s primary mission: to cultivate startups poised to “shape the future of Web3.” Moreover, the program seeks projects with a pragmatic focus on creating use cases that can drive the adoption of decentralized applications (DApps) genuinely, with a preference for authentic user engagement over bot-driven interactions.Photo by Shubham Dhage on UnsplashStartup selectionThe recruitment phase for the program officially kicked off on Monday, coinciding with the commencement of Korea Blockchain Week, scheduled to run until September 10. Cronos Labs will select eight startups to partake in a 12-week remote program laden with mentorship, master classes, marketing and financial support, and introductions to strategic partners. This rigorous journey culminates in a demo day designed to initiate discussions around fundraising opportunities.Charlotte Kapoor, the Head of Innovation Programs at Cronos, remarked on the immense interest previous accelerator iterations garnered, describing the number and quality of applicants as “overwhelming.” Kapoor emphasized the hunt for groundbreaking proposals capable of tackling real-world challenges while showcasing innovative applications of AI, blockchain, and decentralized technologies.Kapoor stated: “The number and quality of applicants to our previous accelerator program was overwhelming, and it’s going to be tough whittling the entrants for cohort three down to a final shortlist. With the Cronos Accelerator Program poised to open to applicants, we extend an open invitation to builders with original concepts and the willingness to turn them into a working product. We’re looking for novel proposals that solve real problems while demonstrating ingenious uses for AI, blockchain, and decentralized technology.”Heavyweight mentorsCronos has enlisted the expertise of a diverse array of industry leaders to serve as mentors and partners within the program. Among the notable contributors are technology titans like Google Cloud and Amazon Web Services (AWS), as well as blockchain security experts CertiK and PeckShield. Additionally, companies such as Protocol Labs, Hacken, and Covalent have also thrown their weight behind the accelerator program.Cronos, which was originally established by Singaporean crypto platform Crypto.com, recently received a further boost when world-renowned video game publisher Ubisoft became a Cronos network validator. Ubisoft has also been involved with the Cronos Accelerator project as a venture mentor.State funding for Web3In parallel, funding support for Web3 technology has been gaining steady momentum. Just last month the Monetary Authority of Singapore (MAS), the city-state’s central bank and financial regulator, committed a significant $150 million Singapore dollars ($112 million) to support various financial technology solutions, including Web3. This initiative aims to nurture innovation by providing backing to projects harnessing cutting-edge technology.The development of the crypto and blockchain ecosystem has been non-linear and imperfect, but accelerator programs like this one are likely to result in the emergence of pioneering startups that will shape the future of Web3 while fostering genuine adoption and practical use cases.

Zodia Custody and Blockdaemon Partner on Institutional StakingLondon-based cryptocurrency storage provider Zodia Custody, a portfolio company of Japan’s SBI Holdings, has entered into a partnership with blockchain infrastructure provider Blockdaemon relative to crypto staking.Photo by Traxer on UnsplashInstitutional interestBlockdaemon announced the crypto staking collaboration, tailored to institutional clients, on Twitter on Tuesday. This move comes as institutional interest in staking, the process of contributing digital assets to support blockchain networks and earning rewards, continues to surge.Following the Ethereum network’s Shapella upgrade on April 12, the amount of ether (ETH) staked increased by an impressive 4.4 million, reaching a total of 22.58 million ETH (equivalent to $42 billion) as of May 23. This remarkable growth in staked assets reflects the growing confidence in the Ethereum network and the potential for substantial returns.First bank-owned custodianZodia Custody is a subsidiary of the well-known multinational bank Standard Chartered and backed by prominent institutions such as Northern Trust alongside SBI Holdings. It claims the title of being the first bank-owned custodian to provide staking services exclusively to institutional clients. This collaboration enables Zodia Custody to leverage Blockdaemon’s infrastructure to deliver secure and efficient staking solutions, catering to the specific needs of institutional investors.Blockdaemon has been at the forefront of facilitating seamless integration between traditional financial institutions and the emerging crypto industry. Earlier this year, the company introduced a wallet service targeted at the institutions and crypto custodians. The wallet assists clients in managing their assets securely, eliminating the need for third-party storage solutions. By partnering with Zodia Custody, Blockdaemon expands its portfolio of services, capitalizing on the rising demand for staking among institutional investors.The firm’s CEO and Founder, Konstantin Richter, stated that the partnership with Zodia “allows stronger security, automation and simplification of the process to participate in staking, truly accelerating Web3 innovation.”LMAX collaborationEarlier this month Zodia partnered with digital asset trade execution specialist LMAX Digital to provide a combination of institutional-grade trading infrastructure and custody services to crypto asset manager, Coinshares.Institutional investors, traditionally cautious about entering the crypto ecosystem, are now becoming more proactive in engaging with digital assets. Staking, with its potential for consistent and predictable returns, has emerged as an appealing opportunity. By participating in staking, institutions not only contribute to the efficient functioning of blockchain networks but also enjoy the rewards associated with validating transactions and securing the network.The partnership between Zodia Custody and Blockdaemon exemplifies the industry’s efforts to bridge the gap between traditional finance and the rapidly evolving world of cryptocurrencies. As more institutional clients seek exposure to digital assets, it becomes essential to provide them with secure and reliable solutions tailored to their specific requirements.With demand for staking services continuing to rise, institutional players are recognizing the value of taking a more active part in the crypto ecosystem. With Zodia Custody and Blockdaemon leading the way, the opportunities for institutional clients to engage in staking and reap the rewards are set to expand, further fueling the growth of the entire crypto industry.