Upbit Operator Doubles Down on ESG Management

Experts Offer Insights into Bitcoin ETFs, Stablecoins, and On-Chain Data AnalysisDuring Korea Investment Week 2023, hosted by local newspaper Korea Economic Daily, experts in the field of virtual assets gathered at the Korea Exchange (KRX) PR Hall on Thursday. They came together to share their expertise on the cryptocurrency market and discuss various investment strategies.Key topics covered at the event ranged from the global outlook for virtual asset exchange-traded funds (ETFs) to the prospects of the US approving Bitcoin spot ETFs. Strategies based on on-chain data analysis were also on the agenda.Photo by Kanchanara on UnsplashThe potential of Bitcoin spot ETFsOne of the notable speakers, Lee Tae-yong, the Chief Global Strategy Officer at Wavebridge, a cryptocurrency market index provider, argued that the potential approval of Bitcoin spot ETFs could attract global investors to the market. He opined that this could subsequently improve market liquidity and contribute to stabilizing the Bitcoin market.Lee has made a prediction that Bitcoin spot ETFs will likely receive approval in the United States. He cited examples from Europe, Australia, and Brazil, where such financial products are already being managed effectively. He also suggested that the US Securities and Exchange Commission (SEC) would likely take note of this global trend and may find it challenging to go against it.Experts believe that among the various Bitcoin spot ETF applications submitted to the US SEC, Grayscale Investments’ proposal to convert the Grayscale Bitcoin Trust (GBTC) into an ETF stands the best chance of receiving approval first. Data from The Block indicates that the Grayscale Bitcoin Trust manages crypto assets totaling $16.13 billion as of September 7.Lee predicts that the approval of Bitcoin spot ETFs will serve as a pivotal milestone for the cryptocurrency market, potentially triggering a significant uptick in the price of Bitcoin. To support this assertion, Lee pointed to the historical precedent set by the introduction of a gold-backed ETF in 2004. Since its inception, the gold-backed ETF has swelled in value to exceed $45 billion. Importantly, gold does not have a fixed supply, yet the availability of an ETF mechanism boosted its value considerably. Lee argues that the impact on Bitcoin could be even more pronounced given its fixed supply cap.There was also a projection that virtual assets are set to play a crucial role in expanding the size of the ETF market, potentially more than doubling it. Lee pointed out that conventional ETFs typically charge fees of around 0.15%, whereas virtual asset ETFs tend to charge over 1%. This underscores that virtual assets are seen as a new revenue source among asset managers.Stablecoins and regulationsSome viewed that stablecoins would emerge as a focal point among the innovations taking place within the cryptocurrency industry. Kim Yong-beom, the CEO of Hashed Open Research and a former vice minister of the Ministry of Strategy and Finance, noted that Asia has been actively advancing regulations related to stablecoins. Stablecoins are a category of cryptocurrencies that are pegged to traditional fiat currencies like the US dollar.Highlighting the efforts of many countries to develop a comprehensive regulatory framework for cryptocurrencies, Kim noted the importance of establishing regulations that accommodate stablecoins. In his view, the introduction of such regulations will amplify the impact of stablecoins within the market.Kim mentioned that Asian countries are leading in blockchain research and digital competitiveness. He said that Asian universities, particularly those in China, are among the world’s best in producing blockchain research papers and offering related lectures. Kim also pointed out that while the leadership in the blockchain industry has shifted towards Asia, South Korea is now emerging as a prominent hub for virtual assets in the region. He emphasized the need for South Korea to position itself as a more influential nation in this context.On-chain data and investmentDuring the event, a cryptocurrency investment strategy based on on-chain data was also presented. On-chain data refers to publicly accessible information about transactions conducted on a blockchain network. This data can be utilized as an investment indicator that is not available within the traditional financial sector.Ju Ki-young, the CEO of on-chain analytics resource CryptoQuant, underlined that virtual asset investors are particularly interested in tracking who is selling which tokens at any given moment. He stressed that examining on-chain data, such as deposit and withdrawal information from major cryptocurrency exchanges, can be a valuable tool for risk mitigation.

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.

Korean Blockchain Firm Proposes Fintech Collaboration in CambodiaSouth Korean fintech and blockchain company KONDOR recently made an announcement through a press release regarding the establishment of a blockchain fintech advisory board in Cambodia. The firm has proposed a business agreement to the Securities and Exchange Regulator of Cambodia (SERC) with the aim of ensuring sustainable growth in the financial sector and capital markets.Photo by allPhoto Bangkok on PexelsFintech advisory boardThe advisory board comprises experts from various fields, including finance, economics, law, blockchain technology, fintech, and artificial intelligence. They will function independently, offering counsel on policy decisions.Sou Soucheat, Director General of SERC, highlighted that Cambodia is currently in the process of rebuilding and has a youth-driven economy and financial markets. He sees the collaboration with KONDOR as a valuable opportunity to develop a future-oriented financial system.The advisory board will see participation from KONDOR and other notable members, namely VEXK, a global digital asset exchange in Vietnam; Blue Contents, a Honolulu-based digital economy research center; and the Paññāsāstra University of Cambodia, a key player in the country’s educational field.KONDOR and VEXK have put forth a proposal for the joint establishment of a trust company and the pursuit of a custody license in alignment with Cambodia’s revised trust law of 2019.Procuring licensesFollowing the proposal’s approval, VEXK plans to procure a license as a digital asset exchange, as well as a license to establish a trust company. This would enable VEXK to effectively oversee clients’ digital and physical assets through accounts within the established trust company. The safety of these assets will be ensured through insurance coverage provided by reputable global insurers. Furthermore, VEXK will acquire the ability to facilitate USD trading and will retain the digital asset exchange license for five years.The license application will gain support from the SDG Impact Fund, a US-based organization managing $11 billion worth of assets, and the Estates & Infrastructure Exchange (EIX), a project bond exchange based in London.EIX CEO Mark Worrall said that active support from a securities regulator in the dynamic and expanding Web3 era would certainly contribute to Cambodia’s economic growth.