Phoenix Group strikes $380M deal with MicroBT

South Korea’s cryptocurrency market experienced notable growth in the second half of 2024, as total trading volume climbed to 1.35 quadrillion won ($968.5 billion). This marks a 24% increase compared to the 1.09 quadrillion won ($782.7 billion) recorded in the first half of the year. The data was released on May 20 by the Financial Intelligence Unit (FIU), which operates under the Financial Supervisory Service (FSS).Photo by Daniel Bernard on UnsplashTrading volume and market cap surgeThe average daily trading volume rose by 22%, reaching 7.3 trillion won ($5.26 billion), with a significant surge observed after October. According to the financial authority’s report, this sustained momentum was driven by a broader bullish trend in the global crypto market, led by Bitcoin hitting all-time highs. Growing institutional interest following the launch of multiple spot Bitcoin ETFs in the U.S. and increasingly favorable crypto-related policies have further fueled the rise in asset prices. To evaluate the state of the domestic crypto market, the FIU conducted a survey of 25 virtual asset service providers (VASPs) during the second half of 2024. The survey covered 17 exchanges as well as eight entities providing either custodial or wallet services. By the end of 2024, South Korea’s total crypto market cap had surged to 107.7 trillion won ($77.55 billion), representing a 91% increase from 56.5 trillion won ($40.68 billion) in June. In contrast, the global crypto market grew by 60% over the same period, reaching a total of $3.59 trillion. However, the Korean market experienced a sharp decline in assets held by custodial and wallet service providers, which fell by 89% to 1.5 trillion won ($1.08 billion). This drop was largely attributed to a rise in business closures. Additionally, the number of users on these platforms plummeted by 99%, falling to just 1,300 customers who had completed Know Your Customer (KYC) verification. Performance and token preferencesDespite these setbacks, the 25 VASPs reported combined revenues of 1.22 trillion won ($878.5 million), marking a 15% increase. Operating profit also rose by 27% to 744.6 billion won ($536.2 million). However, capital adequacy weakened, with the capital-to-asset ratio falling by 12 percentage points to 36.5%. Meanwhile, Korean won deposits—cash held on platforms for trading—more than doubled, surging 114% to 10.7 trillion won ($7.7 billion). The number of employees at crypto exchanges increased by 18%, reaching 1,862, while staff dedicated to anti-money laundering (AML) efforts rose by 46% to 207 individuals. On average, fiat-to-crypto exchanges offered trading in 224 different tokens, an increase of 28 compared to the previous half-year. Among the top 10 cryptocurrencies by market cap in Korea, six—Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Solana (SOL), Dogecoin (DOGE) and Cardano (ADA)—also appeared in the global top 10. Collectively, these accounted for 71% of Korea’s total crypto market cap. However, the remaining four differed: Korean investors favored Ethereum Classic (ETC), Shiba Inu (SHIB), Stellar (XLM) and Bitcoin Cash (BCH), whereas global investors leaned toward Tether (USDT), Binance Coin (BNB), USD Coin (USDC) and TRON (TRX). User base growth and demographic trendsThe number of KYC-verified users eligible to trade reached 9.7 million in the second half of 2024, representing a 25% increase from the previous period. Individual users accounted for the vast majority, while corporate users made up less than 0.01% of the total. By age group, users in their 30s accounted for the largest share at 29%, followed by those in their 40s (27%), 20s and younger (19%), 50s (18%) and 60s and older (7%). The majority of users—66%, or roughly 6.37 million people—held less than 500,000 won ($360) in digital assets. In contrast, 12% of users held over 10 million won ($7,180), while 2.3% had portfolios exceeding 100 million won ($71,820). 

The long-awaited approval of spot bitcoin exchange-traded funds (ETFs) in the U.S. on Tuesday is anticipated to have a more substantial impact on the development of cryptocurrencies in Asia. That’s the view of Yat Siu, the co-founder of Animoca Brands, a Hong Kong-based crypto venture capital and game software firm. The U.S. Securities and Exchange Commission's (SEC) approval is expected to attract new capital to the crypto industry, providing a safer avenue for the crypto-curious.Photo by André François McKenzie on UnsplashPotential for surge of interest in AsiaIn an interview with The Block, Siu emphasized the positive effect on Asia, attributing it to the region's regulatory clarity and the willingness of governments and regulators to build a crypto ecosystem. Strengthening regulatory oversight was a finding of a recent report relative to a number of Asian hubs. Industry leaders believe that the approval of spot bitcoin ETFs in the U.S. could lead to a surge of interest in Asia, where crypto adoption is already higher than in other continents. The perception of cryptocurrencies as investment assets, rather than just for transactions, might shift in the Asian market, with the ETF offering a regulated and lower-risk avenue for investment exposure. Additionally, Yat Siu noted that Asian investors, particularly the younger generation, have a more open view towards capitalism compared to their U.S. counterparts. In a recent interview with CNBC, Australian venture capitalist and founder of MHC Digital Group, Mark Carnegie, also expressed the opinion that the digital asset markets in Asia would flourish once the hype of the U.S. ETF approval has subsided. ETF focus on Singapore and Hong KongPost the U.S. approval, attention turns to Asia, with Hong Kong and Singapore emerging as potential candidates for introducing spot crypto ETFs. Hong Kong, in particular, has undergone regulatory renewal, positioning itself as a crypto hub, with it reportedly already attracting interest from fund managers, including those backed by Chinese capital, looking into launching spot crypto ETFs. Yat Siu alongside Glenn Woo, Head of Sales of APAC at Web3 infrastructure company Blockdaemon, were both positive in their assessment of Hong Kong as a worthy location for the offering of spot bitcoin ETFs in comments made last month. In November, the CEO of Hong Kong’s Securities and Futures Commission (SFC) indicated an openness to considering proposals for spot crypto ETF products aimed at retail investors. Singapore, known for its mature regulatory environment, is also considered a strong contender. Meanwhile, Japan may witness significant regulatory movement following the U.S. ETF approval. However, challenges and variables remain for Asia. The scale of capital inflows in Asia, compared to the U.S., and the caution of regulators in the face of crypto industry volatility and trust issues are cited as potential hurdles. Some experts suggest that Hong Kong and Singapore may initially be cautious in encouraging retail participation in virtual asset investments due to previous losses experienced by residents. Still, in the medium to longer term, increased interest and appetite for virtual assets are expected.  

Crypto-Friendly Xapo Bank Enters Indian MarketXapo Bank, a cryptocurrency bank based in Gibraltar, has set its sights on India and plans to offer banking and cryptocurrency services in the country.Xapo, which claims to be the first bank in the world to integrate traditional private banking with crypto, issued a press release which was published via Bloomberg on Thursday to announce the development.Photo by Julian Yu on UnsplashMassive market opportunityWith a population of over 1.3 billion, India presents a massive opportunity for Xapo Bank, which is backed by prominent investors like SoftBank, DST Global, and Ribbit Capital. This move comes at a time when India has seen impressive foreign inflows of $15.5 billion in the first quarter of 2023.The CEO of Xapo Bank, Seamus Rocca, suggested that the absence of conventional banking services in certain parts of South Asia has created a void that Xapo Bank aims to fill. By providing innovative financial products and services, the bank hopes to empower individuals and businesses with access to reliable and inclusive banking solutions.Rocca stated that the move “represents an opportunity to provide our hybrid banking and investment solutions to its large underserved populations, bridging an important gap in the region’s financial systems and allowing its savvy savers, investors, and professionals the freedom to explore their financial potential with a single mobile application.”Competitive interest rate offeringOne of the attractive features of Xapo Bank for customers in India is its competitive interest rates on deposits. The bank offers attractive returns, with a yearly interest rate of 4.10% on US dollar deposits and 1.00% on Bitcoin deposits. Notably, the daily interest payments on Bitcoin deposits are distributed in the smallest denomination of the cryptocurrency, a satoshi.Xapo Bank’s expansion into India aligns with the country’s projected economic growth of 6.3%, according to Fitch Ratings. Despite the worldwide economic downturn, India’s GDP demonstrated robust growth of 6.1% in the first quarter, showcasing the country’s resilience.Government policy challengesHowever, Xapo Bank will face challenges as it enters the Indian market. The world’s most populous country has implemented strict measures regarding cryptocurrencies, including a 30% tax on all cryptocurrency income and the elimination of deductibility for losses. Such regulations could potentially impact Xapo Bank’s operations and profitability in India.Authorities like the country’s central bank, the Reserve Bank of India (RBI), have been more inclined to encourage the financial services sector to adopt blockchain technology rather than offer cryptocurrencies directly. Earlier this month, American multinational financial services company JPMorgan Chase partnered with six major Indian banks in a blockchain offering that aims to improve the interbank settlement process.Nevertheless, Xapo Bank remains undeterred, recognizing the immense potential of India’s growing economy and the urgent need for accessible financial services. The bank’s expansion promises to create opportunities for individuals and businesses across the nation, contributing to India’s economic development and financial inclusion.Moreover, Xapo Bank’s entry into India reflects a broader trend of fintech innovation and the convergence of traditional banking and digital currencies. As the world becomes increasingly interconnected, financial institutions like Xapo Bank are reshaping the financial services landscape by offering forward-thinking solutions that bridge gaps, ultimately empowering individuals and fostering economic growth.