Harvest Global to establish fixed income tokenized fund

Korea to Ban Virtual Asset Deposit Services from Next JulyDuring a recent criminal law seminar held at the Supreme Prosecutors’ Office, Park Min-woo, Director of the Capital Markets Bureau at the South Korean Financial Services Commission (FSC), underscored that starting next year, virtual asset service providers (VASPs) will no longer be permitted to offer deposit and management services for virtual assets. That’s according to a report by local crypto news outlet Digital Asset.This is seen as a response to the suspension of virtual asset deposits and withdrawals carried out by virtual asset yield platforms Haru Invest and Delio a few months ago.Photo by Mathew Schwartz on UnsplashLegal backgroundDirector Park referred to Article 7, Paragraph 2 of the Virtual Asset User Protection Act, clarifying that the intention behind this provision is to ensure that VASPs have the ability to fulfill asset withdrawal requests, even in the scenario where all their customers make such requests. This Act is scheduled to go into effect in July of next year, and Article 7 prohibits VASPs from entrusting customer assets to third parties.Deposit service providers receive cryptocurrency deposits and then distribute the resulting yields to their customers. In a bull market, these entities can manage yields on their own. However, in a flat or bear market, these asset managers may face challenges in paying yields unless they can generate profits by handing over customer assets to external custodians.Signs of giving upIn fact, centralized finance (CeFi) company HeyBit made an announcement last month, stating that it will discontinue its virtual asset deposit service starting from October 2. They cited this specific provision as the reason for their decision.Fraud chargesBoth Haru and Delio have been indicted by the Seoul Southern District Prosecutors’ Office on fraud charges.As an unregistered VASP, Haru suspended its deposit and withdrawal services on multiple occasions in June, causing substantial financial losses to numerous investors. This suspension was triggered by significant losses incurred at B&S Holdings, another unregistered entity to which Haru had entrusted virtual assets.Similarly, Delio, although registered, entrusted a considerable amount of virtual assets to Haru and Traum Info Tech but was unable to recover them.

Bullish Market Analysis Finding as Asia Doubles Crypto UsersComing off the back of the last bull run, the crypto sector has been challenged with cooling price levels also affected by global macroeconomic headwinds. Despite that, a recent crypto market study by financial news platform Finbold has found encouragement with a significant increase in crypto users, most notably in Asia.Photo by Jéan Béller on Unsplash37% increase in global usersAccording to the market data presented by Finbold on Thursday, the number of global crypto users has reached 417.5 million as of 2023, representing a year-over-year growth of 36.88%. This translates to an increase of 112.5 million users compared to the 2022 count of 305 million.Several factors contribute to the growth in crypto user numbers. The fear of missing out (FOMO) phenomenon plays a significant role, as individuals see market downturns as an opportunity to enter the market and potentially benefit from their investments.Mainstream adoption and awareness of cryptocurrencies have also attracted new users, aided by the accessibility and convenience of crypto platforms and exchanges. Additionally, the acceptance of cryptocurrencies as a form of payment by businesses has further fueled user growth.In emerging markets with unstable economies and limited access to traditional banking services, cryptocurrencies have been embraced as an alternative and inclusive financial solution, driving adoption in those regions.Standout growth in AsiaAsia leads the way with 260 million users as of May 2023, marking an astonishing 100% growth from the previous year’s figure of 130 million. North America follows with 54 million users, witnessing an addition of 3 million compared to the 2022 count of 51 million.When examining crypto ownership in relation to the population of each country, Thailand claims the top spot in 2023 with a share of 9.32%. India comes in second with 7.23%, followed by Brazil at 6.98%. Pakistan ranks fourth with 6.4%, while France rounds out the top five with 5.9%.Observers believe that regional crypto user trends will be influenced by regulations. Asia dominates the market, driven by the increasing adoption of blockchain-based payment solutions in countries like India, China, Singapore, South Korea, and Japan, particularly within the banking, financial services, and insurance sectors.African & European user declineAfrica experienced a decline of 28%, going from 53 million to 38 million users. Similarly, European users dropped from 43 million to 31 million. Notably, Europe has witnessed a drop in usage, coinciding with the enactment of the Markets in Crypto Assets (MiCA) law, which aims to create a legal framework for the crypto asset market.The growth in global user numbers is remarkable, considering the challenging phase the crypto sector has been going through. High-profile incidents, including the FTX crypto exchange collapse and the Terra (LUNA) ecosystem crash, have eroded trust within the sector. Moreover, the crypto market has had to navigate an uncertain regulatory landscape, with jurisdictions like the United States cracking down on the sector.Lawsuits filed by the US Securities and Exchange Commission (SEC) against Ripple, Binance, and Coinbase for alleged securities laws violations are likely to discourage investor involvement. Regions with stricter regulations, such as North America and Europe, are expected to lose crypto business to the Asia-Pacific region.

Hong Kong’s insurance regulator is drafting rules that would bring insurers’ cryptocurrency exposure under a risk-based capital framework. According to Bloomberg, the Insurance Authority of Hong Kong is preparing a risk-based capital framework that would impose a 100% risk charge on insurers’ crypto holdings. The proposal distinguishes among crypto exposures, assigning stablecoin investments risk charges based on the fiat currency backing the Hong Kong-regulated token rather than applying a uniform treatment. The regulator is also considering capital incentives to channel insurers’ investment into infrastructure projects supporting Hong Kong or mainland China, including those listed or issued within the city. The Insurance Authority said the regime is designed to bolster the industry while promoting broader economic development. A public consultation on the rules is scheduled to run from February to April, ahead of any legislative submission.Photo by Vlad Deep on UnsplashStablecoin licensing focuses on robust reservesSeparately, the Financial Services and the Treasury Bureau is advancing other regulatory initiatives in the digital asset space. Secretary Christopher Hui indicated that the first batch of stablecoin licenses is expected to be issued early next year. According to the Hong Kong Economic Times, Hui noted that the government had received 36 stablecoin license applications by the end of September, following the implementation of the Stablecoins Ordinance in August. Regulators are prioritizing applicants that demonstrate strong reserve management, price stability, and robust anti–money laundering (AML) controls. Hui added that the government is currently collaborating with the Securities and Futures Commission (SFC) to finalize licensing rules for virtual asset trading platforms and custodial service providers, with proposals expected to reach the Legislative Council next year. StanChart and Ant’s tokenized depositsWhile regulators refine the rulebook, the traditional banking sector is moving forward with the technology underpinning the digital pivot. Standard Chartered has collaborated with Ant International to launch a tokenized deposit solution on Whale, Ant’s blockchain-powered treasury management platform. As reported by Tech in Asia, the solution enables real-time transfers in Hong Kong dollars, offshore yuan, and U.S. dollars. This initiative falls under the umbrella of Project Ensemble, a program launched by the Hong Kong Monetary Authority in March 2024 to shape the city’s tokenization ecosystem. Market headwindsThese developments follow the crypto sector’s entry into Hong Kong’s equity market. According to Bloomberg, HashKey Holdings, a licensed exchange operator, listed on the Hong Kong Stock Exchange on Dec. 17, raising HK$1.6 billion ($206 million). While shares initially debuted above the offer price, they had fallen approximately 15% to HK$5.69 by Dec. 22. The lackluster performance coincides with a broader pullback in the crypto market. Bitcoin is currently trading below $89,000, roughly 30% off its October peak. Institutional caution is also evident in global flows. According to CoinShares, crypto investment products recorded $952 million in net outflows for the week ending Dec. 20. Ethereum and Bitcoin products led the exit with outflows of $555 million and $460 million, respectively. Conversely, altcoins XRP and Solana bucked the trend, seeing inflows of $62.9 million and $48.5 million. James Butterfill, head of research at CoinShares, attributed the negative sentiment to delays regarding the CLARITY Act, a U.S. bill designed to clarify digital asset regulation, and continued selling by whale investors.