Crypto boom drives $17.5B surge in demand deposit at Korean banks

Wemade has signed an agreement with Swedish gaming company Crypto Rogue Games to onboard the developer’s blockchain game Crystals of Naramunz to WEMIX PLAY, according to an official press release on Tuesday (KST).Photo by Anas Alshanti on Unsplash“Our collaboration represents a convergence of expertise and creativity,” said Åke Andre, CEO of the development studio. “Crypto Rogue Games is thrilled to announce our partnership with WEMIX PLAY. This marks a significant milestone in our vision to reach the pinnacle of excellence in the Action RPG genre by providing everlasting experiences and value to our players.” Post-apocalyptic funCrystals of Naramunz is an upcoming free-to-play action role-playing game (RPG) set in a post-apocalyptic steampunk world called Naramunz. Players can explore Naramunz, which is characterized by ruins and dungeons, maximize the benefits of their in-game items and skills, and collect and trade in-game assets. The game also features fast and explosive action sequences, character upgrades and a barter economy. Unveiling potentialCrypto Rogue Games recently held an Alpha playtest for Crystals of Naramunz to gather feedback and assess improvements that can be made. A report published on the game’s official Medium page disclosed that reactions were positive, noting strengths and weaknesses of the game in its current stage of development. Crypto Rogue Games is led by a team of industry veterans from various RPG projects like the Path of Exile series and Pillars of Eternity, as well as the strategic simulation game Stellaris.

Japanese Exchanges Canvas Regulator to Permit 10x LeverageJapan’s cryptocurrency exchanges are advocating for looser regulations on margin trading, despite the global digital asset market crash experienced last year.According to a report published by Bloomberg on Monday, The Japan Virtual & Crypto Assets Exchange Association has revealed that many industry insiders are seeking leverage limits of four to 10 times for retail investors.Currently, customers are limited to doubling their exposure through borrowing. Genki Oda, the Vice Chairman of the association, believes that relaxing the leverage rule could enhance Japan’s appeal to crypto and blockchain companies, thereby stimulating increased trading activity.Photo by Su San Lee on UnsplashOngoing discussionJapanese digital asset exchanges are currently engaged in discussions to establish a consensus on the recommended leverage limit. They are planning to present their proposal to the Financial Services Agency (FSA) as early as next month.While Japan has made some efforts to ease certain cryptocurrency regulations, such as token listing and taxation, the overall regulatory environment is considered strict. The FSA expects crypto firms to provide solid justifications for loosening margin trading caps, demonstrating how it would contribute to the government’s objective of expanding blockchain-based industries. However, the agency remains open to discussions with digital asset businesses on the matter.Plummeting trade volumesPreviously, Japanese crypto platforms offered leverage up to 25 times, resulting in annual margin trading volumes of approximately $500 billion in 2020 and 2021. However, after the FSA imposed a limit of two times to curb excessive speculation and protect investors from amplified losses, trading volumes plummeted by 75% in 2022.In other parts of the world, digital asset exchanges typically offer spot margin trading with leverage ranging from five to 10 times the initial deposit, depending on local regulations. Some platforms even offer more aggressive lending options, often associated with speculative behavior that can generate waves of greed and fear within the crypto market.Oda argues that digital asset volatility has decreased since 2020 and asserts that Japanese exchanges are well-prepared to assist investors in managing the risks associated with margin trading positions. However, any relaxation of leverage rules is not expected to occur before 2024.Leverage dangersLast year’s global cryptocurrency downturn exposed risky practices and resulted in numerous bankruptcies. Regulators worldwide have responded by implementing new rules and regulations that address the lessons learned. While leverage might be in the interests of the exchange operators, many industry commentators have warned that leverage brings about market weakness.Caitlin Long, Founder and CEO of Custodia Bank, has been one such commentator, warning that massive leverage “built an industry of insolvent intermediaries” on a “foundation of sand”. It’s commonly believed that leverage leads to unsustainable market bubbles rather than iterative organic market growth.In 2022, an index tracking the top 100 cryptocurrencies partially recovered, showing a 33% increase since the beginning of this year. However, the market still faces challenges, as institutional and individual investors have exited, leading to reduced liquidity and lower expectations for price volatility in Bitcoin and other cryptocurrencies.

Japan's Financial Services Agency (FSA), the nation's primary financial regulator, has recently proposed a series of measures aimed at safeguarding users against "unlawful transfers" to cryptocurrency exchanges. This move, however, may pose significant challenges to the peer-to-peer (P2P) transactions market. Bolstering user protection measuresCiting findings from the National Police Agency, which highlight that damages resulting from specialized fraud involving unlawful money transfers are predominantly facilitated through cryptocurrency, the FSA has urged financial institutions to bolster user protection measures. The agency emphasized the importance of assessing risks associated with transfers to crypto-asset exchange service providers. In a request published on Wednesday directed towards Japanese banks, the FSA underscored the persistently high incidence of fraudulent transactions in the country, facilitated through crypto. To address this concern, the FSA and the National Police Agency have proposed various initiatives. One such initiative entails directing banks to enhance monitoring of unlawful transfers to cryptocurrency exchange service providers.Photo by Jayjayli on UnsplashPeer-to-peer (P2P) market implicationsHowever, another proposal from the regulator may have a profound impact on the P2P market. The FSA suggests halting transfers to cryptocurrency exchange service providers if the sender's name differs from the account name. This recommendation, explained in the Japanese version of the press release using the term "reject," implies the suspension of such transfers from both individual and corporate accounts. For users of P2P platforms, where transactions often involve different names between the sender's and receiver's fiat and crypto accounts, this directive could significantly disrupt the market. Rejecting transactions from an individual's bank account to another individual’s crypto wallet could undermine the functionality of P2P transactions. Positive crypto developmentsDespite this potential issue needing to be clarified and resolved and the East Asian nation not having a comprehensive regulatory framework for cryptocurrencies in place, Japan is showing indications of gearing up for broader adoption. The Bank of Japan (BoJ) is preparing to pilot a Japanese central bank digital currency (CBDC) pegged to the Japanese yen.In June of last year, the country established a legal framework for stablecoins. Additionally, the FSA has proposed a legislative amendment to support the development of decentralized autonomous organizations (DAOs) in Japan. The proposed amendment aims to designate potential DAO tokens as "Limited Company Type DAO Employee Rights Tokens," granting holders legal rights akin to regular limited liability company (LLC) members. Last December the Japanese government considered and later acted on revising crypto tax policy to exempt unrealized crypto gains from being taxed. This proposal was originally put forward by the FSA earlier in 2023. In another development, authorities in the city of Kochi signed an agreement on Feb. 7 to virtualize the city on the Start Lands metaverse application, with plans to welcome online tourists later this summer. Despite these most recent recommendations from the FSA potentially signaling a less crypto-friendly stance, the Japanese authorities have otherwise demonstrated that they’re working towards creating workable conditions for the development of crypto and Web3 within the country.