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

Korean Lawmakers Make Progress on Virtual Asset User Protection BillOn Tuesday, the subcommittee for legal deliberations under the South Korean National Assembly’s National Policy Committee reached a consensus during the first review of the Virtual Asset User Protection Bill, according to Yonhap Infomax.©Pexels/Andrea PiacquadioFirst review phaseThe bill is undergoing a two-phase review process before being legislated. During the first phase, the primary focus was on safeguarding customer assets and preventing unfair transactions. The second phase is expected to concentrate on market order regulations, including the issuance and disclosure of virtual assets.Application of Capital Markets ActSeveral stipulations were included in the approved draft of the Virtual Asset User Protection Bill during the initial review phase. These stipulations include prioritizing the application of the Capital Markets Act to virtual assets that are classified as securities, while excluding central bank digital currencies (CBDCs) from the definition of virtual assets to avoid any potential confusion. The bill also seeks to impose compensatory damages and penalties for any unfair trading practices, and establish a virtual asset committee responsible for investigating any unfair transactions in the digital asset market.The virtual asset committee will also engage in preliminary deliberations regarding the management, supervision, and monitoring of the digital asset market. The committee will carry out tasks assigned to it by the Financial Services Commission (FSC). Furthermore, the Bank of Korea has been granted the right to request data from virtual asset operators since virtual assets, although not currencies, are necessary to consider when establishing monetary credit and financial stability policies.No class action systemHowever, the introduction of a class action lawsuit system was not adopted, and details about inspecting virtual asset operators will be stipulated in a presidential decree rather than a law.Second review phaseFor the second review phase, the FSC will report several matters to the National Assembly. These will involve tasks such as establishing a regulatory framework for stablecoins, security tokens, and utility tokens. In addition, the agency will be responsible for creating a regulatory system for virtual asset valuation, advisory, and disclosure services, as well as an integrated computerized system that provides reliable and reasonable information on digital assets. The FSC will also explore ways to enhance the business conduct discipline of cryptocurrency operators by commissioning research from external organizations.Additionally, the FSC and the Financial Supervisory Service will work on supporting virtual asset exchanges to establish uniform standards for the circulation supply of virtual assets. The regulatory bodies will also enforce the requirement for transparent disclosure and strict internal control on virtual asset operators. Moreover, regulations will be developed to enhance virtual asset usability and remove any obstacles that may impede the development of innovative real-life services.

The Shanghai office of a Chinese regulatory body which oversees assets belonging to state-owned enterprises (SOEs) is reported to have held a session dedicated to the topic of digital assets and in particular, stablecoins, fueling speculation of a positive shift in outlook on crypto in China.Photo by Hanny Naibaho on UnsplashOn July 11, Reuters reported that the State-owned Assets Supervision and Administration Commission (SASAC) held the meeting in Shanghai on July 10, with the publication suggesting that the event represented “a marked shift in tone” in the consideration of digital assets in China, bearing in mind that crypto trading and mining are banned within the country. Following the “development trend and response strategies” study session, He Qing, director of the organization, said that there was a need for "greater sensitivity to emerging technologies and enhanced research into digital currencies." The regulator called on Chinese state-backed agencies to consider the adoption of blockchain technology for use cases like real-world asset (RWA) tokenization, supply chain finance and cross-border trade. A policy expert from Shanghai-headquartered securities firm, Guotai Haitong Securities, attended the meeting, outlining details on the history, characteristics and categories of cryptocurrencies and stablecoins, while also discussing global regulatory frameworks. Last month, a subsidiary company of Guotai Haitong Securities, Guotai Junan International (GTJAI), became the first company from the Chinese mainland to be given approval by the Hong Kong securities regulator to offer digital asset trading services. Adapting to the stablecoin trendIn June, state-owned financial newspaper, Securities Times, called on Beijing to adapt “to the trend of stablecoins.” The publication claimed that industry insiders “generally believe that, as an emerging payment tool, the unique advantages and potential risks of stablecoins cannot be ignored, and that the development of [yuan-backed] stablecoins should be sooner rather than later”. The same month, Pan Gongsheng, governor of the People’s Bank of China, acknowledged that stablecoins are playing a role in disrupting global payments infrastructure.  It also emerged recently that JD.com, a Chinese e-commerce giant, and Ant Group, an affiliate company of the Alibaba Group, have been lobbying the Chinese authorities for the authorization of yuan-based stablecoins. On X, Shanghai Macro Strategist, a China strategist, claimed that the recent surge in the Bitcoin unit price had come about as a consequence of this stablecoin-focused SASAC meeting in Shanghai. At the time of writing, BTC has appreciated 9.3% over the course of the past seven days. The strategist suggests that the event is fueling speculation that “the Chinese government may be in the early stages of reassessing its official stance on the crypto industry.” In their monthly report for May, the strategist pointed out that “Beijing’s outright rejection of [Bitcoin] as a legitimate asset” was holding the leading asset back on its path to “reserve status.” The strategist added: “Over the longer term, a shift in China’s stance could prove to be the single most powerful bullish catalyst—elevating Bitcoin from a fringe asset to a globally recognized store of value.”

Bybit Denies Plans to Leave UK MarketReporting related to Dubai-based crypto exchange Bybit had suggested in recent days that the firm was leaving the UK market. However, the company has since responded to state that it has strongly reaffirmed its commitment to the UK market and its dedication to collaborate with regulators to find mutually agreeable solutions.Photo by Marcin Nowak on UnsplashCompany clarificationThat speculation had arisen in the first place on the basis of difficulties the business may experience as a consequence of the upcoming implementation of new strict marketing rules for crypto firms in the UK. Taking to social media on Thursday, the company stated:”At Bybit, we consider the UK to be a highly important market for the advancement of crypto and blockchain technologies. Our commitment to this market is unwavering, and we intend to maintain our presence in the UK for the long term. Meanwhile, we are dedicated to working collaboratively with regulators upon the new law to ensure the responsible and secure development of the industry.”The reports published earlier in the week had fueled speculation that Bybit might exit the UK market, along with other jurisdictions characterized by rigorous crypto regulations. The concerns primarily centered around the UK’s recently introduced financial promotion rules, designed to bolster customer protection and enhance understanding of crypto investments.Ben Zhou, Co-Founder and CEO of Bybit, commented on the situation, underscoring the exchange’s unwavering commitment to regulatory compliance. Zhou confirmed that ongoing discussions with UK regulators aimed to find mutually beneficial solutions, aligning the interests of all stakeholders involved. He emphasized Bybit’s commitment to keeping its community well-informed about the progress of these discussions.Regulatory changesThe recent move by Bybit is in direct response to regulatory changes introduced by the UK’s Financial Conduct Authority (FCA) in June. These changes were implemented to improve transparency and enhance customer protection within the crypto sector, with a particular focus on ensuring that UK customers have a clear understanding of the risks associated with crypto investments. The FCA also outlined various pathways for asset promotion, including those involving FCA-authorized personnel or crypto companies registered with the FCA.Exchanges have been very much under the cosh in 2023 when it comes to regulatory pressures. Bybit, accompanied by MEXC Global, Bitforex, and Bitget, were all issued with a warning by the Japanese regulator, the Financial Services Agency (FSA), in April on the basis that the exchanges were running unregistered crypto asset exchange business operations within Japan. In May Binance left the Canadian market.In the months that followed, the leading global crypto exchange was forced out of markets in Germany, Belgium, The Netherlands, and Cyprus due to regulatory pushback. In May Seychelles-based Huobi was ordered to cease its business offering in Malaysia by the local regulator.Moving forwardDespite these setbacks, Bybit has been making efforts to move the business forward. In May it obtained approval from the authorities in Kazakhstan to offer its services within the country. Some weeks prior, it announced that it had chosen Dubai as the global exchange’s headquarters.The firm also introduced TradeGPT recently, an AI-powered educational tool designed to enrich traders’ engagement with the crypto market.