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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.

Hong Kong regulator, the Securities and Futures Commission (SFC), has established guidelines for crypto staking service providers. That’s according to a statement published by the SFC to its website on April 7. The guidance is aimed at licensed virtual asset trading platforms (VATPs) and SFC-authorized funds with exposure to digital assets.Photo by Markus Winkler on UnsplashExpanding service offeringThe regulator points out that the guidance on staking falls in line with its recently announced “ASPIRe” roadmap, which is geared towards ensuring that the Chinese autonomous territory remains relevant in its efforts to maintain its status as a global hub for crypto businesses. Expanding product and service offerings within the crypto sector was one of the five pillars of that plan. Smoothing the way for the offering of staking works towards fulfilling that aspect of the ASPIRe plan. Written approvalIn this guidance, the SFC sets out that licensed service providers must obtain written approval from the regulator before any such product can be offered to investors in Hong Kong. That stipulation applies to both VATPs and authorized funds with digital asset exposure. Additionally, VATPs must retain control over staked assets, with no delegation in the custody of such assets to third parties permitted. In the case of authorized funds that include crypto assets, they must stake virtual asset holdings through licensed VATPs and other authorized institutions. Required disclosuresThe regulator has also stipulated that certain disclosures must be made by licensed exchanges to potential customers in respect of staking products. These include the disclosure of all associated risks, full transparency with regard to fees, minimum lock-up periods and custodial arrangements. Commenting on the provision of this guidance, SFC CEO Julia Leung said that the provision of a greater range of regulated services and products is crucial in order to sustain continued growth of Hong Kong’s virtual asset ecosystem. However, she added that any broadening of the range of services offered “must be done in a regulated environment where the safety of client virtual assets continues to be front and centre of the compliance framework for offering such service.”   The SFC outlined that it recognizes “the potential benefits of staking in enhancing the security of blockchain networks and allowing investors to earn yields on virtual assets within a regulated market environment.” The authorities in Hong Kong are not the only ones who recognize the benefits that the incorporation of staking within crypto investment products can bring. Last month, Robert Mitchnick, head of digital assets at the world’s largest asset manager, BlackRock, told the Digital Assets Summit in New York that Ether ETFs would benefit from the addition of staking.  Mitchnick suggested that the current inability to earn a staking yield within such products is a key limitation. He outlined that such a change is dependent upon relevant regulatory changes being implemented in the U.S. A more crypto-friendly climate in the U.S. since U.S. President Donald Trump took office has resulted in various lawsuits being dropped against companies like Coinbase related to the staking services that had been offered. A number of U.S. Ether ETF issuers, including Franklin Templeton, Grayscale and Bitwise, have put forward proposals to the Securities and Exchange Commission (SEC) to have staking included in these products.

Bitfinex Turkiye Facilitates Zero-Cost Deposits via VakıfBank PartnershipIn a strategic move to bolster its presence in Turkey, cryptocurrency trading platform Bitfinex has introduced a seamless and cost-free method for Turkish customers to deposit Turkish lira directly into their accounts.According to a press release published by the company on Thursday, this integration comes as a result of collaboration between Bitfinex Turkiye and VakıfBank, Turkey’s second largest bank in terms of asset size, and a significant player in the Turkish banking sector.Photo by Meg Jerrard on UnsplashExpanding market accessBitfinex’s Chief Technology Officer, Paolo Ardoino, emphasized the user-centric benefits of this partnership. He stated that Turkish customers can now deposit lira effortlessly and economically, streamlining their access to the cryptocurrency market.This development could potentially aid Bitfinex in expanding its operations within Turkey, which stands as one of the largest markets for leading global crypto exchange Binance. Ardoino stated that the move facilitates “the ability to deposit [lira] seamlessly and cost-effectively.” Additionally, Ardoino maintained that market access was being enabled “by integrating with VakıfBank,” and that “[Bitfinex] is making it easier” for customers to participate.Collaborating with the crypto sectorFounded in the 1950s, VakıfBank has 935 brick-and-mortar branches, a network of over 4,000 ATMs and almost one million point-of-sale (POS) terminals in use. This latest partnership is not the first touch point for the bank when it comes to the crypto sector. It has a similar deal in place with Istanbul-based crypto platform, CoinTR. In that instance, CoinTR customers can deposit or withdraw Turkish lira to or from their CoinTR accounts via VakifBank instantly, 24/7 and with zero fees.The bank has also participated in a blockchain-based trade finance initiative, the Turkish Trade Chain Project. In a press release published by the bank last year, it expressed the belief “that blockchain technology will make data sharing more transparent, traceable, verifiable and controllable by reducing the communication traffic between parties in the foreign trade process that requires many documents.”Partnering with TradFiBy aligning its services with a traditional financial institution, Bitfinex joins the ranks of other industry players like Fidelity, BlackRock, and PayPal, which have demonstrated increasing openness to cryptocurrencies despite the ongoing bear market.Turkey has proven to be an important market for cryptocurrencies like Bitcoin and USDT, the US dollar stablecoin issued by Bitfinex’s sister company, Tether. Runaway inflation in recent years has led to an outsized interest in decentralized money in the country.Bitfinex’s business in Turkey has not been without its hiccups. Earlier this year, a Wall Street Journal report alleged that Bitfinex Turkiye user accounts had been implicated in terrorist financing. One particular account was alleged to have been used for money laundering purposes by the armed wing of Palestinian militant group, Hamas.This latest initiative follows Bitfinex’s recent announcement of the launch of Bitfinex P2P, a peer-to-peer exchange catering to clients in Argentina, Venezuela, and Colombia. With such expansions and collaborations, the cryptocurrency sector continues to evolve, demonstrating resilience and adaptability in the face of bear market conditions and regulatory challenges.