Korean FSS Governor meets U.S. SEC Chair Gensler to cooperate on crypto regulations

Venture Smart Financial Holdings Ltd. (VSFG), a Hong Kong-based financial services company, is gearing up to initiate an exchange-traded fund (ETF) directly investing in bitcoin in the first quarter of this year.Photo by Kanchanara on UnsplashThat’s according to a report by Bloomberg on Friday. The move aligns with Hong Kong's strategic efforts to establish itself as a digital asset hub, and with that, the company plans to submit an application to the Securities and Futures Commission (SFC) for ETF approval. Brian Chan, the group head of investment and product at VSFG, expressed optimism about the potential of this market, setting a goal of achieving $500 million in assets under management by the end of the year. Long-term objectiveWhile the firm has taken the decision to focus on spot crypto ETFs amid a backdrop of spot bitcoin ETF approval in the United States earlier this month, it’s an objective the firm has been working on for some time. In June of last year, crypto media reported that VSFG were planning the launch of such a product. Notwithstanding that intention, the recent launch of several high-profile bitcoin funds in the United States, including offerings from BlackRock and Fidelity Investments, will likely assist the company in getting product approval in Hong Kong. Immediately following U.S. approval, a Hong Kong lawmaker suggested that the Chinese autonomous territory should respond proactively. Johnny Ng outlined that Hong Kong had to respond to secure its global position in developing the digital assets space in Hong Kong. Positive soundingsTowards the end of December, there appeared to be positive soundings on the possibility of spot bitcoin ETF approval in Hong Kong emerging from the local regulator. SFC CEO Julia Leung stated that the regulator was open to the notion of retail participation in spot crypto ETF products. Her comment was followed shortly afterwards by a joint announcement from the SFC alongside the Hong Kong Monetary Authority (HKMA) that they were prepared to accept applications for such funds. The approval process for such products typically takes weeks to months, following the precedent of traditional ETFs. Hong Kong presently permits futures-based crypto ETFs, with three already listed: CSOP Bitcoin Futures, CSOP Ether Futures and Samsung Bitcoin Futures. However, these funds have a combined asset value of around $50 million. Samsung Asset Management has not ruled out exploring the launch of a spot ETF, while CSOP Asset Management remains silent on the matter. VSFG is one of Hong Kong's first SFC-approved virtual asset managers, offering both traditional and digital wealth management services. Aegis Custody, a digital asset custodian, is in discussions with four asset managers about listing spot crypto products in Hong Kong. The regulatory requirements in the city may lead issuers to impose higher fees compared to the low management levies seen in many new U.S. spot bitcoin ETFs. Although bitcoin experienced substantial growth in anticipation of these U.S. products, it has seen a 10% decline since their trading commenced on Jan. 11. Nevertheless, many industry commentators expect a stronger bitcoin unit price in the medium to long term as a direct consequence of these products. 

Hana Securities Holds Second Event to Promote Security Token VentureHana Securities, the securities arm of South Korean financial holding company Hana Financial Group, is currently holding the second event of its Meta1 project, which aims to bridge future assets with modern finance as part of the company’s security token platform venture.This comes after the first event in April, which was organized in collaboration with the art gallery Print Bakery (PBG), during which it showcased paintings and NFT artwork by PBG exclusive artists Kim Sunwoo and DADAZ.Photo by Zach Key on UnsplashA fusion of NFT art and creative workshopsThe second event, dubbed “Meta1 Art & Play,” is being held in collaboration with PBG again at Airdrop Space in Garosu-gil, southern Seoul, and will continue until September 3. It showcases an art exhibition of 20 works, including new NFT artwork by Kim Sunwoo and DADAZ as well as pieces by collage artist Sunhotan and illustrator Boat. The latter two artists will also teach one-day art workshops for pre-registered guests, and their works will later be issued as NFTs, Hana Securities said.Collaborative pop-ups and diverse eventsIn addition, the event features a pop-up bar jointly operated by Hana Securities and online liquor retailer Dali. Visitors can enjoy a cocktail made with the Johnnie Walker Blue Label Nomad Seoul edition whisky by signing up for Dali and opening a Hana Securities banking account. Johnnie Walker and Dali are participating as sponsors of the event.Visitors who make reservations beforehand will also be eligible to receive a cup of coffee and an NFT made by one of the participating artists. Surprise gifts will also be prepared for 100 guests every day on a first come, first served basis.“We have prepared ‘playable, visual, and enjoyable’ content for visitors to have hands-on engagement in line with the recent trend of experience-based consumption,” said Im Sang-soo, Head of the Wealth Management division at Hana Securities.

Backpack Exchange, a crypto exchange that joined the Japan Virtual Currency Exchange Association (JVCEA) last December, has recently acquired FTX EU, the European arm of the failed crypto exchange business FTX. According to a press release, the business comes with a European MiFID II license, with the acquisition having been approved by the Cypriot regulator, the Cyprus Securities and Exchange Commission (CySEC). Furthermore, a Delaware bankruptcy court in the United States, which is dealing with the FTX bankruptcy, has also rubber-stamped the acquisition. Backpack Exchange was co-founded by CEO Armani Ferrante, alongside other former FTX executives. According to the firm’s LinkedIn page, it has established its headquarters in Japan. The company also has links to Dubai, having acquired a Virtual Asset Service Provider (VASP) license for its Backpack Wallet product from  Dubai’s Virtual Assets Regulatory Authority (VARA) in 2023.Photo by Christian Lue on UnsplashRebuilding trust As a consequence of having acquired FTX’s European arm, Backpack Exchange will now assume responsibility for the distribution of court-approved FTX bankruptcy claims to FTX EU users. In the company’s press release, Ferrante spoke of the importance of the distribution process in rebuilding trust. He stated: "Customer restitution is a crucial step to rebuild trust and confidence in the industry, and Backpack is committed to returning FTX EU customers’ funds as fast and as safely as possible." In response to a query from FTX creditor activist Sunil Kavuri on X, Ferrante outlined that FTX EU users “will only be able to claim their euro claims funds directly from Backpack EU.” Ferrante clarified that FTX EU customers who had pending crypto withdrawals at the time of the bankruptcy will have their crypto claims dealt with via the FTX bankruptcy estate. In a Series A financing round early last year, Backpack was valued at $120 million. Through FTX EU, it now acquires a MiFID II license, further facilitating the global expansion of the company. With FTX EU now forming Backpack’s EU arm, the company will offer crypto-derivative products, including perpetual futures. This product offering is scheduled to go live in Q1 2025. Bankruptcy process controversy The bankruptcy of FTX EU has been controversial, starting off with the European entity being illegally filed into a U.S. bankruptcy process. In early 2024, the FTX Debtors suggested that the entity was worthless. It later wanted to buy out the entity itself, outbidding a third-party bidder. A short time afterwards, the FTX Debtors reached a settlement with the former FTX EU team. It’s understood that Backpack has acquired FTX EU for $32 million.  The FTX Debtors’ attempt to buy the business itself has cast a cloud over the bankruptcy process. When it first emerged that the business had been sold, there was some speculation as to if this would mean a rebooted FTX within the European market, but Backpack’s acquisition confirms that this was not to be the outcome.  Japan could have offered another opportunity to reboot the business, but instead, FTX Japan was acquired by bitFlyer and absorbed into its existing business. With regard to the main FTX business entity, the FTX Debtors told the bankruptcy court that there was no interest in the business from buyers.