Korean regulator monitors non-listed token amidst peer-to-peer trading surge

Bithumb and Korbit Struggle to Gain Traction Despite Zero Trading FeesSouth Korean cryptocurrency exchanges Bithumb and Korbit have recently eliminated trading fees, but their bold decision hasn’t yielded much results. Bithumb was the first to implement this change and attracted users for about a week, but it is now seeing a loss in market share. Korbit, following Bithumb’s example, is also struggling to achieve meaningful outcomes.Photo by Alexander Grey on UnsplashLimited impactLocal media outlet Chosun Biz used data from crypto data platform CoinGecko to draw this conclusion. On October 26, Korbit’s daily trading volume represented 0.19% of the total trading volume among South Korea’s top five crypto exchanges (Upbit, Bithumb, Coinone, Korbit, and Gopax). This figure marked a 0.14 percentage point increase compared to the 0.05% recorded on October 19. Korbit had implemented a zero trading fee policy at 9 a.m. (KST) on October 20. Additionally, they launched a promotion offering KRW 5,000 ($3.69) worth of bitcoin to users who transferred virtual assets totaling KRW 1 million or more from Travel Rule-compliant exchanges to Korbit. While the promotion did contribute to Korbit’s market share, it still remains below 1%.Bithumb’s performance showed some improvement, albeit briefly. As of October 26, Bithumb’s market share stood at 18%, marking a 4.7 percentage point increase from its 13.3% share on October 3, the day before it eliminated trading fees. However, it’s worth noting that its market share had reached almost 30% shortly after the promotion’s launch. This indicates that its strategy is losing efficacy over time.The less-than-enthusiastic results from their daring marketing endeavors can be attributed to their inability to draw in retail investors. To begin with, Upbit, the leading player in the market, had already been providing a relatively low fee of 0.05%. Furthermore, adapting to new user interfaces on these exchanges posed a challenge. Zero trading fees weren’t attractive enough for crypto investors to leave their current platforms.Trading volume mattersIn the case of Korbit, its lower trading volume was a disadvantage when it came to attracting users. On crypto exchanges, a higher trading volume typically translates to faster trade executions. As a result, users of Korbit might experience delays in executing trades at their preferred price.Jeong Hye-won, a research associate at crypto data analytics platform Xangle, told Chosun Biz that users on exchanges with lower trading volumes tend to experience slippages due to slower transaction speeds and sparsely populated order books. A slippage means the difference between the initially placed order price and the executed order price. Jeong further explained that Korbit’s zero trading fee policy didn’t have a significant impact because it offers fewer listed tokens compared to Upbit and Bithumb.There is speculation that the free-trading fee promotions introduced by Bithumb and Korbit, despite their revenue sacrifices, might conclude sooner than initially anticipated due to their perceived ineffectiveness. Bithumb derives 99.95% of its revenue from trading fees, while Korbit relies on trading fees for 99.79% of its income. An industry insider has commented that trading fees play a vital role in an exchange’s revenue, and given Bithumb’s reported loss in earnings during the second quarter, there are concerns about their capacity to sustain this strategy.

CMCC Global Launches $100 Million Fund for Asian Blockchain StartupsCMCC Global, a crypto-focused venture capital firm based in Hong Kong, has successfully raised $100 million for its newly established Titan Fund.That’s according to a report on Wednesday (local time) published by the South China Morning Post (SCMP). The fund is dedicated to providing crucial support to startups operating in Asia’s developing blockchain sector.Photo by Shubham Dhage on UnsplashProminent backersOver 30 prominent investors, including Winklevoss Capital and Animoca Brands Founder Yat Siu, have eagerly backed the initiative. Last month, CMCC led a funding round into Animoca. Among the notable investors joining this venture are EOS blockchain developer Block.one, Richard Li’s Pacific Century Group, and Hong Kong-based growth equity investment firm Jebsen Capital.The Titan Fund is structured to channel its capital into three primary investment categories: blockchain infrastructure, consumer applications, and crypto financial services. Martin Baumann, Co-Founder of CMCC Global, emphasized the fund’s commitment to fostering innovation in the blockchain space. He stated:“If Hong Kong continues on its route of embracing Web3, there will naturally be more and more entrepreneurs starting companies in that space. And we can be their first capital.”Exploiting Asia’s Web3 opportunityBased on commentary by Baumann earlier this year, the CMCC Global Co-Founder certainly believes that an opportunity has opened up in Asia where Web3 is concerned. In May Baumann told Bloomberg TV that regulatory issues unfolding in the United States represented an opportunity for Asia.In criticizing the US, Baumann stated:“The US has been quite negative from the regulatory perspective and it really seems to us that the US is shooting itself in the foot with a machine gun.”Developing upon the inherent opportunity implicated in that difficulty in the US, he said: “We see places like Hong Kong having a real opportunity at this point in time to bring those firms and entrepreneurs to the city.”There’s plenty of capital sitting on the sidelines waiting for the right entry valuations to pull the trigger,” he added.Hong Kong’s crypto ascendencyThe venture capitalist may have been right on both counts. This funding announcement coincides with Hong Kong’s resurgence in the crypto arena. Historically, the city had been home to industry giants like BitMEX and Alameda Research.Recent developments indicate that Hong Kong is actively collaborating with China to establish itself as a thriving hub for crypto innovation. The Chinese autonomous territory has been encouraging crypto start-ups on the Mainland to relocate to Hong Kong. In August, it granted licenses to HashKey Exchange and OSL to offer crypto trading services to retail traders.The Titan Fund’s successful capitalization demonstrates the growing interest and confidence in Asia’s blockchain ecosystem. CMCC Global, with its pool of investors, is aiming to play a pivotal role in supporting and nurturing the next wave of blockchain startups in the region.

Yuan Surpasses Dollar in China Cross-Border TradeThere has been a lot of talk in recent weeks and months about the continued use of the US dollar as the global reserve currency and newly published data from Beijing now demonstrates that the Chinese yuan became the most widely used cross-border currency in China for the first time in March.©Pexels/VOLKAN SORKUNErosion of dollar dominanceOver the course of the month of March, the US dollar was used in 46.7% of cross border transactions. That’s down 1.1% on the preceding month. Meanwhile, the yuan was the currency of choice in cross border Chinese trade last month, used in 48.4% of all cross border transactions.While this may seem impressive and it is encouraging for the Chinese authorities, it is still just a drop in the ocean when compared with the overall global cross border transaction statistics. Data produced by international financial messaging service, SWIFT, demonstrates that while the yuan’s share of global currency transactions relative to trade finance increased to 4.5%, that’s just a drop in the ocean. The same data set reveals that the US dollar accounted for around 84% of global cross border transactions in March.While it’s unlikely that the US dollar will be usurped in its global reserve currency role over the short to medium term, certain cracks are beginning to emerge that serve to weaken the leading fiat currency. According to a recent report by emerging market focused management firm Eurizon SLJ Capital, the dollar demonstrated a decline in reserve currency use of 8% in 2022. Since 2016, the leading international currency has declined in use on an adjusted basis by 11%. It also emerged this week that Argentina will begin to pay China in yuan for imports. The move comes at a time when the South American country is experiencing an acute shortfall in its dollar reserves following a drought-induced decrease in agricultural exports which would have ordinarily brought more dollars into the country’s coffers.SanctionsIn the case of Russia, China’s yuan replaced the US dollar in monthly trading volume in February for the first time, according to data compiled by Bloomberg. The emergence of the Russia Ukraine conflict in 2022, and more specifically the United States’ response to Russia as a consequence of the conflict, appears to have led to major change in terms of dollar use. Prior to the invasion, the trading volume of the Chinese yuan in Russia was negligible.The United States introduced a raft of sanctions that made it difficult for Russian banks and Russian corporations to trade internationally. It also confiscated sovereign funds held in US dollars belonging to Russia.It’s thought that this move has had wider repercussions as other nations have started to feel increasingly insecure in holding US dollars against that background. The logic is that any potential conflict between a nation and the United States could lead to a similar outcome. The US may have crossed a line that destroys confidence in other countries’ use of the US dollar.Implications for cryptocurrencyWhile these weaknesses in the global reserve status of the US dollar are unlikely to lead to its demise in that role any time soon, they may well be a bellwether of what plays out over the longer term. US dollar weakness is one aspect. Set against that, it’s hard to imagine the yuan being so dominant as to ever be the leading world currency relative to international trade.It’s far more likely that we may see several global ‘reserves’ share the role in the longer term. Bitcoin has been mentioned in the past as a candidate for this role given that it is not associated with any one nation. However, its current market capitalization and trading volume is minuscule by comparison with what would be required of a global reserve currency. That said, in a future where various currencies play a part in holding that reserve status, Bitcoin could very well see a modest but increasingly significant increase in its use for global trade purposes in the years ahead.