Korean Financial Watchdog to Penalize Bankers Involved in Illegal Foreign Remittances

Hong Kong Pressing Banks to Facilitate Crypto ClientsHong Kong’s banking regulator is urging banks, including HSBC and Standard Chartered, to onboard crypto exchanges as clients, despite increasing regulatory scrutiny of the industry in the United States.That’s according to a report published by the Financial Times (FT) on Wednesday. The FT cited three people who it claims are familiar with the matter, together with a letter seen by the publication as the basis for the assertion.Photo by Ansel Lee on PexelsChallenging crypto banking reticenceAt a recent meeting, the Hong Kong Monetary Authority (HKMA) questioned these UK-based lenders, together with the Bank of China, about their reluctance to accept crypto exchanges as customers, according to sources familiar with the matter. The HKMA emphasized that due diligence on potential clients should not create unnecessary burdens, particularly for those seeking opportunities in Hong Kong. While banks do not have a ban on crypto clients, concerns over potential money laundering and illegal activities have made them cautious.The pressure faced by banks highlights the challenges Hong Kong is facing in establishing itself as a global hub for the crypto industry, especially in light of previous high-profile collapses, such as the implosion of FTX. However, the HKMA is encouraging banks to overcome their reservations, as the regulator believes there is resistance from senior executives who adhere to traditional banking mindsets.The enthusiasm of some Hong Kong officials for the sector is evident as pro-Beijing lawmaker Johnny Ng invited Coinbase and other crypto exchanges to set up operations in the city following the recent SEC lawsuit against Binance and Coinbase.Caught between opposing forcesBanks in Hong Kong find themselves walking a fine line between supporting the crypto industry as encouraged by the government and being cautious due to the US regulatory environment. They want to ensure the industry’s development aligns with government policies, but they are also concerned about potential anti-money laundering and know-your-customer issues.The HKMA and the Securities and Futures Commission (SFC) have been vocal about their expectations, setting them apart from regulators in other jurisdictions that may be more skeptical of cryptocurrencies. Last month it emerged that crypto startups are having difficulties in establishing banking facilities in the autonomous Chinese territory. At the time, the HKMA did convene a meeting to bring parties together in order to forge a path forward.While Hong Kong has a history as a crypto center, its position weakened after Beijing’s crackdown on the industry in 2017. However, the Hong Kong government aims to reestablish the city as a hub for digital assets, having expressed its desire to provide a supportive environment for crypto-related businesses. The introduction of a new licensing regime for crypto platforms in Hong Kong is part of the government’s efforts to attract more crypto groups to the city.HSBC, Standard Chartered, and the Bank of China hold influential positions in Hong Kong as issuers of the city’s currency and have key roles in the Hong Kong Association of Banks lobby group. Standard Chartered claims that it maintains regular dialogue with regulators on various subjects, while HSBC has claimed that it is actively engaging in policies and developments within the nascent industry.

Earlier this month, CoinNess reported on a flurry of Asian companies who had announced plans to add crypto to their balance sheets. That trend continued this week with two Chinese companies announcing similar plans. In a press release published on June 24, Aurora Mobile, a marketing technology firm based in Shenzhen, announced its intention to begin to invest in digital assets. The Nasdaq-listed company (JG) outlined that its Board of Directors had approved the investment of up to 20% of the firm’s cash and cash equivalents in various digital assets in a strategic initiative involving Aurora Mobile’s treasury management.Photo by Traxer on UnsplashGaining exposure to emerging asset classIt described the initiative as an example of the company’s “commitment to innovative treasury practices,” focusing on long-term value creation for Aurora Mobile’s shareholders. The firm’s CEO, Weidong Luo, said that the initiative will enable the company to diversify its portfolio, “gaining exposure to an emerging asset class with low correlation to traditional markets.” Luo also asserted that the move would demonstrate that the firm is “aligning with the technological advancements reshaping global finance.” Aurora Mobile indicated that it would look to purchase Bitcoin, Ethereum, Solana, Sui and other tokens. China’s crypto trading banA trading ban on crypto was introduced in mainland China in 2021. With that, it’s unclear how Aurora Mobile will establish its crypto treasury. It may opt to do so through Singapore-based subsidiary EngageLab or through an affiliated corporate entity in Hong Kong. No such ban applies in Hong Kong, where VMS Group, another company which has decided to invest in digital assets, is headquartered. VMS Group is a family office which provides investment solutions and advisory services, while specializing in alternative investments.  According to a report published by Bloomberg on June 23, the company, which has $4 billion worth of assets under management (AUM), intends to allocate up to $10 million to investment strategies run by a decentralized finance (DeFi)-focused hedge fund, Re7 Capital. VMS Group managing partner Elton Cheung told Bloomberg that the investment decision was taken as part of an effort to diversify into more liquid investments. Cheung added: “We thought this was the right time [to invest in digital assets] because of growing demand and because we see clearer legislative and government support from various jurisdictions, as well as large institutional support and endorsement.” Potential partnershipsVMS Group executive Zhi Li, who has been tasked with leading digital asset investments for the company, said that the firm is examining potential partnerships with blockchain payments and infrastructure projects. Li stated that “there is very strong institutional and family interest in getting regulated digital asset exposure,” adding that VMS has “seen the younger generation of families wanting to do something different.” Alongside these investments into cryptocurrencies, demand for crypto-related stocks in Hong Kong is also surging. Shares in publicly-listed licensed digital asset platforms in the Chinese autonomous territory surged by as much as 200% on June 25 as the market reacted positively to the city’s developing digital assets policy.

South Korea’s financial regulator outlined plans on Jan. 28 to transition crypto exchanges from a registration system to a licensing regime to boost capital market appeal, Financial News reported. Financial Services Commission (FSC) Chairman Lee Eok-won stated that the proposed licensing framework—part of the Digital Asset Basic Act—would grant exchanges ongoing authorization while assigning them broader responsibilities.Photo by Tara Winstead님 on PexelsRuling party plans Lunar New Year crypto bill filingThe FSC has recommended capping individual ownership stakes in exchanges at 15–20% to prevent ownership concentration, a view broadly supported by the ruling Democratic Party’s Digital Asset Task Force, according to Edaily. However, party officials noted that internal disagreements remain over whether to include these limits directly in the bill, which they aim to submit before the Lunar New Year holiday next month. Progress on the legislation faces hurdles regarding stablecoins. The Democratic Party has presented a mediation proposal, but the Bank of Korea and the FSC remain at odds. The central bank argues that stablecoin issuance rights should be restricted to consortia where banks hold a majority stake of at least 51%. The regulatory push coincides with a surge in crypto participation. Data from the Financial Supervisory Service (FSS)—cited by People Power Party lawmaker Lee Heon-seung and reported by the Asia Business Daily—shows the number of won-based traders rose about 70% over the past three years. Users on the five major exchanges (Upbit, Bithumb, Coinone, Gopax, and Korbit) reached 9.91 million last year, up from 5.82 million in 2023. Despite the growing user base, trading volumes have been volatile. Volumes surged to 2,411 trillion won ($1.8 trillion) in 2024 from 1,122 trillion won ($801.6 billion) in 2023, before easing to 2,140 trillion won ($1.6 trillion) last year amid a market slowdown. Tax rulings and crime cases test crypto oversightAs regulations tighten, courts are clarifying tax treatments. According to the news outlet Digital Asset, a court recently upheld the National Tax Service’s decision to tax digital assets received through promotional events. The court rejected a claimant’s request for an 80% tax deduction, dismissing the argument that the promotion was a competition determined by participant rankings. The ruling clarified that the giveaways did not meet the legal definition of a competition eligible for such tax benefits under the Income Tax Act. Authorities are also grappling with crypto-related crime. According to another Edaily report, the Gwangju District Prosecutors' Office has launched a probe into five investigators after 320 seized Bitcoin was stolen from a phishing site during a handover of duties in August. Prosecutors have denied internal collusion. Separately, MBC News reported that Seoul police are investigating two teenagers accused of luring a buyer to a face-to-face trade in Gangnam on Jan. 27 and fleeing with 28 million won ($21,000).