SBI and Saudi Aramco to explore digital asset business partnerships

Bithumb records declining performance in Q3 amid market challenges and interest rate hikesBithumb Korea, the operator of the South Korean cryptocurrency exchange Bithumb, reported an on-year decline in performance compared to last year, driven by deteriorating market conditions. According to data from the Korean Financial Supervisory Service on Tuesday (local time), the exchange recorded a net loss of KRW 10.6 billion (approximately $8.1 million) and operating losses of KRW 650 million in Q3. Its revenue amounted to KRW 32.4 billion, a 53% decrease from the same period last year.Photo by Алекс Арцибашев on UnsplashFalling figuresBithumb had recorded KRW 28.8 billion and KRW 32.6 billion in operating and net profits, respectively, in Q3 last year, but both of these figures turned into a deficit for the same period this year.This worsened performance can be attributed to weakened investor sentiment amid the U.S. Federal Reserve’s ongoing interest rate hikes and a decrease in trading volumes.However, just last month, these conditions have begun drastically improving as excitement mounts for the potential approval of a spot bitcoin exchange-traded fund (ETF).Murky futureNevertheless, concerns about Bithumb’s profitability in Q4 are arising following the exchange’s zero trading fee policy that it implemented last month in a bid to regain its market share, especially because the primary source of revenue for crypto exchanges is trading fees. Bithumb had previously charged trading fees of between 0.04% and 0.25%.“We will do our best to enhance the competitiveness of our services to boost our market share,” Bithumb said. “At the same time, we will enhance the transparency of our operations through efforts such as our recent preparations for an initial public offering (IPO) and improvements in corporate governance.”The exchange’s upcoming IPO is part of efforts to be listed on Korea’s KOSDAQ stock exchange by 2025, which would make it the first virtual asset company to do so. It had previously considered preparing for an IPO in 2020 but suspended plans due to a lack of clear regulations for virtual assets. But with the upcoming Virtual Asset User Protection Bill set to take effect next July, Bithumb decided that the current regulatory landscape would be conducive to an IPO.Should it take effect, this IPO is also expected to pose a challenge to Upbit, which currently holds over 80% of the country’s market share. However, there is still a considerable amount of uncertainty shrouding this development, as financial authorities are maintaining a wary stance towards virtual assets.

Short-Term Crypto Investment Prevails Among Hong Kong’s Retail InvestorsHong Kong’s retail investor interest in virtual assets has experienced a significant surge in recent years, albeit a recent survey suggests that most retail investors take a short-term investment view relative to crypto assets.Photo by Robert Bye on UnsplashIFEC studyThis newfound enthusiasm for virtual assets emerges from a recent study published by the Investor and Financial Education Council (IFEC), a subsidiary of the Securities and Futures Commission (SFC), Hong Kong’s securities regulator. The survey found that 6% of retail investors in the city had entered the virtual asset market in 2023, as compared to merely 1% in 2019.Conducted from June to July of this year, the study encompassed 1,000 individuals aged between 18 and 69. The survey uncovered a trend toward crypto investing among retail investors who’ve been enticed by the allure of the emerging asset class. Intriguingly, every single one of the digital asset retail investors in the study held cryptocurrencies in their portfolios. Non-fungible tokens (NFTs) and stablecoins, while still relatively niche, were also present in the portfolios of 6% and 2% of investors, respectively.11% to invest in crypto within 12 monthsAnticipating a further uptick in interest, the IFEC report posits that 11% of those surveyed have intentions to invest in virtual assets or related products within the next 12 months. This indicates that the allure of virtual assets continues to exert its magnetic pull on investors in Hong Kong.Despite the growing interest, a noteworthy finding in the survey is that 75% of retail virtual asset investors admitted to their primary motivation being the pursuit of short-term gains. Simultaneously, 74% of these investors perceived virtual assets as a prevalent investment trend, and 73% cited the fear of missing out on popular investment opportunities as a driving factor. These statistics underscore the need for enhanced investor education within the sphere of virtual assets.Lack of regulatory awarenessAnother interesting aspect of the data which emerged from the survey was the finding that only 47% of all surveyed investors are aware of Hong Kong’s recently introduced virtual asset trading regulations, which came into effect on June 1.An additional facet of this investor behavior study was illuminated by research conducted by the Department of Applied Social Science at Hong Kong Polytechnic University (PolyU). This research, based on data from a separate IFEC report that surveyed 501 people from November to December of last year, revealed that many retail investors in virtual assets exhibited overconfidence in their judgment.These investors were also found to have a proclivity to overemphasize past information, lean heavily on readily available and easily recalled information, and overestimate personal intuition.With that in mind, Eric Chui, Head of PolyU’s Applied Social Science unit, advised virtual asset investors to adopt a more deliberate and rational approach. Chui emphasized the importance of building financial literacy and collecting high-quality market information to make informed investment decisions, while steering clear of irrational investment behavior and biases.

Hong Kong Setting High Bar on Crypto RulesLucy Gazmararian, a Fintech Advisory Group member of Hong Kong’s Securities and Futures Commission (SFC) and founder of crypto venture firm Token Bay Capital has said that the standards for Virtual Asset Service Providers (VASPs) in Hong Kong are incredibly high.©Pexels/Brayden LawThe Securities and Futures Commission (SFC) has established these strict guidelines as they want the crypto industry to adhere to the same compliance standards as traditional financial firms.Gazmararian made the comments in discussion with Cointelegraph on the fringes of the Hong Kong WOW Summit. Although the bar is set high, Gazmararian maintains that it is not without good reason. The SFC’s approach is to ask VASPs to apply the same standards that existing financial institutions such as huge banks and asset managers must comply with.Short term challengesAccording to a consultation paper released by the SFC on February 20th, licensed VASPs may serve retail investors, but the standard of investor protection measures imposed needs to be considered. Additionally, Anti-Money Laundering (AML) and Know Your Customer (KYC) policies were also discussed.While these high standards may benefit the industry in the long run, Gazmararian believes they may pose challenges for the crypto industry in Hong Kong over the short term. She explained that many crypto businesses are in the startup phase and have funding but not huge amounts. Therefore, complying with the framework may incur significant costs. Gazmararian mentioned the need for local VASPs to have insurance, independent assessment reports, and store crypto in cold storage. It is important to note that these costs may prevent some startups from entering the market, which may have consequences on the industry’s growth in Hong Kong.The Token Bay Capital founder believes that with a solid regulatory framework in place, more well-capitalized financial firms will be willing to help promising startups get off the ground. In her opinion, the companies that receive a license will be upholding the most stringent standards.Ambitions to be global crypto hubThe SFC has encouraged individuals, corporations, and crypto firms to review the 361-page consultation paper and provide feedback. The securities regulator wants these entities to share their views and point to things that may have been missed. According to Gazmararian, the SFC is “absolutely focused” on getting everything right, so they are seeking input from a wide range of sources.Submissions for feedback on the consultation paper closed on March 31. Hong Kong has made significant strides in recent months to establish itself as the world’s next crypto hub. According to a March 20 statement by the Secretary for Financial Services and the Treasury, Christian Hui, more than 80 digital asset firms have expressed interest in establishing a presence in Hong Kong over the last few months. This interest is a testament to the growing importance of the crypto industry and the favorable environment that Hong Kong is creating for its growth.