$100M funding sees HashKey unlock unicorn status

South Korean financial regulators have decided, at least for the time being, to maintain the current policy requiring cryptocurrency exchanges to partner with only one bank, according to a report from the Seoul Economic Daily.Photo by POURIA 🦋 on UnsplashDominance and money laundering concernsA government official cited concerns that allowing multiple banking relationships could potentially strengthen market dominance by leading platforms and increase money laundering risks. Regulators plan to revisit the issue after monitoring new developments following upcoming regulations that will permit institutional participation in the crypto market. This decision runs counter to a recent proposal put forward by the People Power Party (PPP) ahead of the presidential election that seeks to eliminate the one-bank-per-exchange requirement. Bizwatch reported that while the crypto industry initially supported the removal of this restriction unanimously, opinions have recently diverged among market participants. Divided industryMajor exchanges offering Korean won-based trading are mostly against the potential policy change. Except for Upbit, the country's largest platform, competitors express concern that modifying the rules could weaken their existing banking relationships if more financial institutions choose to partner with the market leader. Conversely, crypto-only exchanges, which cannot offer Korean won trading services, generally favor eliminating banking restrictions. These platforms believe relaxed regulations could create more opportunities to establish banking partnerships. Under current rules, virtual asset service providers must secure real-name accounts from a local bank to offer Korean won trading, placing those without such accounts at a competitive disadvantage. Banks also want changeKorean commercial banks align with crypto-only exchanges in supporting the easing of banking regulations. Jung Jin-wan, CEO of key financial institution Woori Bank, recently called for allowing multiple banks to serve individual crypto exchanges. He argues that the current one-bank-per-exchange system not only undermines systemic stability but also limits customer choice. While an official from a crypto-to-fiat exchange acknowledged the need for eventual reform of the one-bank-per-exchange system to improve customer options and market development, they also pointed out that industry stakeholders hold different views depending on their position in the market. The official said that dominant platforms perceive minimal practical benefits from permitting multiple banking relationships. 

Recently, the top five Korean banks have seen a significant outflow of funds in their demand deposits – worth about KRW 2 trillion ($1.52 billion) – to crypto markets as local investors are rushing to withdraw their money from banks to invest in the crypto and stock markets. The recent surge of Bitcoin to KRW 100 million prompted the funds’ outflow, local media Etoday reported. This is a substantial turn from just a week ago, when these banks saw a KRW 23.5 trillion increase in their demand deposits just in a month.  The previous rise in demand deposits at banks, however, was also driven by local investors who used these accounts as a “station” to temporarily store their money for future crypto investments. These accounts are highly liquid, since users can deposit or withdraw funds at any time without incurring penalties from banks.Photo by Emile-Victor Portenart on UnsplashBank deposits flowing into crypto Data from the five banks –  KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and NH Nonghyup Bank – show that their combined demand deposits totaled KRW 612.4 trillion on Friday, down KRW 2.2 trillion from late last month.  The crypto investing trend has prompted investors to withdraw their funds not only from demand deposit accounts, but also from fixed deposit and installment savings accounts. During the same period, the five banks’ fixed deposits saw a KRW 5.1 trillion decline from KRW 886.2 trillion to KRW 881 trillion, with installment savings decreasing by KRW 2.5 trillion, from KRW 33.2 trillion to KRW 30.6 trillion.  In particular, NH Nonghyup Bank, which offers real-name accounts to the crypto exchange Bithumb, has witnessed a decline of over KRW 2 trillion in its demand deposits over the past week. Shinhan Bank also reported an increase in dealing with more crypto assets.  Bullish crypto and stock market With Bitcoin prices hitting a new high, the U.K. bank Standard Chartered forecasts that Bitcoin could eventually reach $200,000 by 2025. The excitement around crypto has boosted the amount of cryptocurrencies traded against the Korean won across the top five crypto exchanges in Korea, reaching KRW 78 trillion.  Korean stock markets are also signaling a bullish sentiment, with the amount of investor deposits exceeding KRW 53 trillion this month. Investor deposits refer to customer deposits at securities companies saved for investment purposes or those left unclaimed after selling stocks.  Declining interest rates Meanwhile, local savings products with over 4% interest rates are no longer to be seen. According to the Korea Federation of Banks, a one-year savings product with the highest interest rate among the top five local banks offers an annual rate of 3.55%.  Online-only banks, which typically offer relatively higher rates than other traditional banks, are rapidly lowering rates on their saving products. The highest annual rate for Kakao Bank’s fixed deposits products stands at 3.5%, down by 0.1 to 0.2 percentage points depending on their maturity.  Kbank has also decreased rates for fixed deposits by 0.05 percentage points, lowering the rate for its flagship fixed deposits product from 3.7% to 3.65%. 

3AC Founders Vow to Donate Future EarningsThe co-founders of the Singapore-headquartered bankrupt crypto hedge fund Three Arrows Capital (3AC) have publicly committed to donating their “future earnings” to creditors who suffered losses during the fund’s dramatic collapse.Kyle Davies and Su Zhu made this groundbreaking announcement during a candid Twitter Spaces session hosted by Mario Nafwal, aiming to establish a “shadow recovery process” parallel to the ongoing liquidation proceedings.Photo by Josh Appel on UnsplashBelieving in karmaDavies explained that their intended donations would be separate from the formal recovery process, designed to supplement any reimbursements that creditors might receive through the liquidation proceedings. While acknowledging that some early creditors have already been made whole, he emphasized the founders’ unwavering belief in the concept of “karma.”They see their act of giving back as a way to balance the scales and provide an avenue for creditors to potentially recover their losses.Creditor skepticismHowever, these noble intentions expressed by Davies and Zhu have been met with skepticism from the crypto community and the very creditors they seek to assist. Teneo, the liquidator overseeing the 3AC liquidation, responded to Davies’ comments by expressing disappointment in the founders’ lack of cooperation during the ongoing process. They stressed that the founders should prioritize engaging in the court-ordered activities rather than making promises about future earnings from a new venture.Acknowledging concerns about optics, Davies addressed questions surrounding the launch of their new crypto exchange, Open Exchange (OPNX), while their previous company undergoes liquidation. He stressed the inherent connection between OPNX and the creditors, suggesting that the success of their new entrepreneurial endeavor would ultimately benefit those affected by the collapse of Three Arrows Capital.OPNX success requiredOPNX, the newly launched Dubai-based trading platform, is specifically designed to facilitate the trading of bankruptcy claims. Since its announcement in February, the platform has garnered significant attention, boasting an impressive user base of 20 million individuals holding a collective $20 billion in claims. It is worth noting that the collapse of Three Arrows Capital resulted in the loss of $2.5 billion in customer deposits, making the success of OPNX crucial for creditors seeking redress.Davies also revealed that OPNX currently records approximately $50 million in daily trading volume, showcasing promising early traction for the platform. However, the exact mechanics of the “shadow recovery process” were left unspecified.While OPNX currently only facilitates the trading of claims from lender Celsius, the platform has ambitious plans to include claims from other high-profile bankruptcies in the near future. The list of potential additions encompasses notable entities such as FTX, Genesis, BlockFi, Voyager, Hodlnaut, Mt. Gox, Vauld, Zipmex, and even Three Arrows Capital itself.When taken at face value, the founders’ pledge to donate future earnings to creditors takes on the appearance of a significant and commendable gesture. However, doubts persist within the crypto community due to the founders’ prior actions and the ongoing liquidation process. Only time will reveal the true impact of this “shadow recovery process” and whether it will genuinely alleviate the losses suffered by creditors in the wake of Three Arrows Capital’s collapse.