China’s Fuzhou City Offers Incentives to Entice Blockchain Start-Ups

The Korea Association of Game Industry (K-GAMES) – the body responsible for overseeing and nurturing the country’s successful gaming industry – released its 2023 Global Game Policy and Legislation Study on Tuesday (KST) in collaboration with the Korea Creative Content Agency (KOCCA).Photo by Tingey Injury Law Firm on UnsplashThe report summarizes gaming-related regulations and laws in six Western European countries – the United Kingdom, Germany, Belgium, the Netherlands, Spain and France – including those on standard terms and conditions, the protection of minors, personal privacy, payment and more. "Through cooperation between public and private sectors, we have been able to achieve tasks like collecting information and securing databases on overseas gaming markets by country and continent," said Kang Shin-chul, President of K-GAMES. "We will continue to contribute to the development of the domestic game industry," he added. Regulatory landscapeThe study found that operators in the specified countries are not required to obtain special licenses, appoint local representatives, or set up servers in order to operate a gaming business in their respective countries. It also details country-specific requirements, such as in Germany, where the use of content that glorifies or justifies Nazi-related symbols or actions is prohibited. A closer look at Belgium’s stanceInterestingly, the report revealed that the regulation of randomly distributed in-game items varied by country. The UK, Germany, Spain, the Netherlands and France have no legal restrictions on such items, but the UK and the Netherlands have recommended that information on the odds of winning them in games of chance should be disclosed before a player obtains or opens an item. Meanwhile, Belgium has implemented a regulation that prohibits paid games of chance for stochastic items altogether due to its laws regarding gambling. However, there are no regulations on Play-to-Earn (P2E) games unless they constitute gambling, which is also true of the other five countries. Minting game items into NFTs is also not subject to oversight in all six nations unless they are considered financial instruments. There are also no standard terms and conditions set by Belgium’s national government for gaming services, which are instead governed by the European Union’s (EU) General Data Protection Regulation (GDPR). 

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.

Fraud Defense Sees Terraform Labs Pursue Access to FTX WalletsTerraform Labs, the Singapore-based cryptocurrency firm at the center of a lawsuit filed by the United States Securities and Exchange Commission (SEC) in February, is taking steps to bolster its defense against fraud charges.Photo by Anete Lusina on PexelsSubpoena for debtors’ recordsAccording to a motion filed with the FTX bankruptcy court in Delaware on Wednesday, the company is seeking permission from a judge to subpoena data from the bankrupt crypto exchange. The filing shows that Terraform’s legal team is requesting access to information about digital wallets utilized by short sellers between March and May 2022.The company believes that its algorithmic stablecoin’s collapse was not a result of natural market forces but rather a coordinated attack by short sellers, potentially involving Alameda Research, FTX’s sister company.The motion states: “To establish these defenses, TFL needs Debtors’ records about wallets, accounts, and assets used to transact on the FTX International and US exchanges and sales/offers of large volumes of cryptocurrencies developed by TFL, if any, by FTX Trading and West Realm Shires Services Inc. d/b/a FTX US.”Alleged securities fraudThe SEC’s lawsuit, filed on February 16, accuses Terraform Labs and its founder, Do Kwon, of orchestrating a multi-billion dollar crypto asset securities fraud. The regulator alleges that Terraform offered unregistered securities through its algorithmic stablecoin, TerraUSD (UST), and the Terra Luna (LUNA) token. The failure of Terraform in 2022 led to a staggering loss of over $40 billion in the crypto markets.The motion also targets Jump Trading, another entity accused by the SEC of colluding with Terraform to manipulate the price of the UST stablecoin. Jump Trading is facing a separate lawsuit in Illinois in the US, accused of purchasing millions of UST tokens in 2021 as part of an agreement with Terraform to maintain the stablecoin’s peg to $1.“Defendants misrepresented UST’s recovery by claiming that the algorithm was able to restore and maintain the price peg. According to the SEC, UST instead recovered its price peg because Defendants entered an arrangement with a U.S. trading firm, Jump Trading, […] to purchase substantial amounts of UST to support the price,” reads the court filing.Jurisdictional argumentsAside from its pursuit of FTX’s data, Terraform is also seeking to dismiss a class-action lawsuit in California, having already sought to have the SEC lawsuit dismissed. The company argues that since it is based in Singapore, US securities laws referenced in the lawsuit are not applicable to its foreign-developed protocols.Using a similar jurisdictional argument, Do Kwon also tried to conceal documents held in Singapore by the Singaporean company from the SEC, but he failed in that endeavor.Another significant development at Terraform has seen a new CEO appointed to lead the troubled company. According to a report in the Wall Street Journal on Wednesday, Chris Amani, who has been acting as Terraform’s Chief Operating Officer and Chief Financial Officer up until now, has been appointed as CEO.