Mixed opinions on crypto as investment instruments revealed in Korean surveys

Ant Group Restructuring With Implications for BlockchainAnt Group, an affiliate company of Chinese conglomerate Alibaba, is understood to be undertaking a significant restructuring that could have broader implications for the digital asset industry.Photo by Shubham Dhage on UnsplashPotential IPOAccording to a recent report published by Bloomberg, the company is contemplating a separation of its blockchain and database management services, as well as its international business, from its core financial operations in China. It’s being speculated that the move is a precursor to Ant Group’s application for a financial holding license in China. Furthermore, it could be part of a bid to revive its suspended initial public offering (IPO) in Hong Kong.The company had been under regulatory scrutiny from the Chinese authorities over the course of the past three years. That investigation culminated in a hefty fine of 7.12 billion yuan ($995 million). The consequences of that regulatory investigation have taken a toll on the company’s valuation, plunging from a peak of $280 billion before the IPO cancellation in 2020 to a current estimated value of $79 billion.Blockchain business implicationsBy pursuing this restructuring, Ant Group seeks to refocus on its core financial services within China. It’s unclear what the outcome will be for non-core businesses such as blockchain-based ventures. Potentially spinning these businesses off could unlock hidden value in blockchain-related activities. However, such a move would also raise questions regarding the future of these non-core businesses and their potential impact on the broader digital asset industry.AntChain, the blockchain technology developed by Ant Group, holds a prominent position in China, being widely adopted across various sectors. Should Ant Group decide to spin off or divest this business, it could significantly alter the blockchain landscape in the country.Originally introduced as “Ant Blockchain” in 2017 alongside Alipay, AntChain expanded its services to provide blockchain-as-a-Service (BaaS) to Ant Group’s partners in 2018. In mid-2020, Ant Group took a step further by transforming Ant Blockchain into a separate entity and rebranding it as AntChain. Besides blockchain solutions, AntChain is also actively involved in developing Artificial Intelligence of Things (AIoT), risk control technologies, and other value-added tech services.The wide adoption of Ant Group’s blockchain technology has played a pivotal role in promoting blockchain implementation in China. Last year the company unveiled a blockchain storage engine called Letus, as a mechanism to lower storage costs of blockchain networks. Another project saw it partner with a Malaysian investment bank in an effort to develop a crypto trading and portfolio management app. These are individual instances of the company’s varied activities in the blockchain space.Any alterations to its blockchain operations could impact the pace and scale of blockchain adoption in the country. While the Chinese authorities have discouraged crypto trading and mining, they have very much encouraged blockchain development.The restructuring appears to be a response to the increasing regulatory pressures in the fintech industry. A further tightening of regulations on blockchain operations for fintech companies might potentially hinder innovation and growth in the sector.Most likely the guiding hand of the government in China will have a material effect on how these blockchain-based businesses develop in the event of an Ant Group restructuring that would see them being spun out.

Incheon Joins Hands with The Sandbox to Promote City in the MetaverseIncheon Metropolitan City is partnering with global metaverse platform The Sandbox to create innovative marketing content aimed at promoting its urban landscape within the virtual realm and establishing an overseas promotional network. This move makes it the first South Korean public institution to work with a metaverse platform.Photo by Jiho Choi on UnsplashThe Sandbox’s virtual worldBuilt on the Ethereum blockchain, The Sandbox enables users to employ non-fungible tokens (NFTs) for creating play-to-earn (P2E) games that can be monetized. The ecosystem’s utility token, SAND, facilitates this mechanism as it is used for in-game purchases. Currently, the platform boasts one of the highest cumulative NFT collection volumes among virtual world projects on the world’s largest NFT marketplace, OpenSea. It has also formed partnerships with over 400 entities around the world.City marketing strategyThrough this collaboration, Incheon plans to develop and introduce engaging content for users to experience the city virtually, such as a variety of events. Furthermore, the city also intends to utilize its intellectual property (IP) for activities such as NFT donation campaigns and metaverse creator training programs to implement extensive NFT content within The Sandbox’s virtual world.“We plan to continually develop content that enables people around the world to experience Incheon through our collaboration with the global metaverse platform,” said Lee Se-woong, Head of Incheon’s City Branding Division.

Nomura Holdings, Japan's largest brokerage and investment banking company, along with its digital asset arm, Laser Digital, has unveiled a survey indicating a significant shift towards cryptocurrency investment among Japanese investment managers.  54% of investment managers favor cryptoThe survey, conducted in April with over 500 respondents, reveals that 54% of investment managers plan to invest in crypto assets within the next three years, aiming to stabilize their portfolios and mitigate risks through diversification and hedging against inflation. According to the survey, approximately 25% of respondents hold a positive impression of cryptocurrencies, particularly Bitcoin and Ether. Meanwhile, 62% view crypto assets as a viable diversification opportunity. Around half of those that responded indicated an interest in crypto exchange-traded funds (ETFs) while 31% are considering direct investment. This trend follows the Japanese cabinet's February approval of a proposal to include crypto in the list of assets that local investment limited partnerships can acquire or hold. Nomura anticipates a revision to the Limited Partnerships Act later this year to accommodate this change.Photo by Jezael Melgoza on UnsplashNew product development to drive demandThe survey also highlights the primary drivers for future investments in crypto assets. These include the development of a variety of financial products such as exchange-traded funds, investment trusts, staking, lending and other innovative offerings. These developments align with Japanese Prime Minister Fumio Kishida's "new capitalism" economic policy. Within that policy, Kishida outlined that fostering Web3 innovation is a key priority in a keynote address at the WebX conference in Tokyo in 2023. Metaplanet bond issuanceIn a related move, Tokyo-based investment and consulting firm Metaplanet plans to issue 1 billion yen ($6.26 million) worth of bonds to finance its Bitcoin acquisitions. The firm announced on June 24 that its board had approved the bond issuance, with the Bitcoin intended for long-term holding. A separate notice detailed that the bonds would offer an annual rate of 0.5%. Metaplanet appears to be following a business strategy first pioneered by MicroStrategy in the United States. The American business intelligence firm, now focused on Bitcoin development, holds the record for a public company with the most Bitcoin, possessing 226,331 BTC worth $15 billion. It provides an alternative means through which corporations can gain exposure to Bitcoin investment. Metaplanet is likely to fulfill a similar role within the Japanese market, meeting that developing investment need identified among Japanese investment managers in Nomura’s survey. While the Nomura survey findings are largely positive, there were a number of concerns expressed by investment managers also in relation to crypto. Among them were concerns about counterparty risk, regulatory requirements and high asset volatility. However, the report suggests that there is a path through which these concerns can be minimized. The report states: “These hurdles could soon be lowered, as Japan’s digital asset laws and regulations are rapidly being developed, enabling increased engagement from institutional investors in the future.” In December, the Japanese government approved a tax regime revision to exempt corporations from paying tax on unrealized crypto gains if they hold the assets long-term.