Hong Kong regulator set to grant additional crypto exchange licenses

Following the recent bitcoin boom, transactions in cryptocurrencies among Korean investors have surged, significantly benefiting local banks that have made contracts with Korean crypto exchanges to offer real-name accounts for crypto investors. As the price of bitcoin soared to as high as KRW 90 million ($67.6 million) in Korea on Thursday, online-only bank Kbank saw an uptick in trading fee revenue, according to local media outlet The Seoul Economic Daily. Kbank is a partner with crypto exchange Upbit, which accounts for 70% of the Korean crypto market.  Under the current law, Korean crypto exchanges offering trading against Korean won must secure real-name accounts from a bank. These banks typically earn fees of KRW 300 to KRW 1,000 per transaction. Currently, other than Kbank, NongHyup Bank offers real-name accounts to Bithumb, Kakaobank to Coinone, Shinhan Bank to Korbit and Jeonbuk Bank to Gopax.Photo by Kanchanara on UnsplashCrypto trading volume up 68.2% in a monthAccording to Xangle, a crypto data intelligence platform, the total crypto trading volume in Korea rose by 68.2% between the last week of January and the last week of February, rising from KRW 2.39 trillion to KRW 40.2 trillion. During the same period, the daily average trading volume also grew from around KRW 4 trillion to KRW 5.7 trillion.   In particular, the bitcoin trading volume on Upbit surged to 19,254 BTC on Feb. 28, reaching the second-highest level since Nov. 10, 2022, when the asset’s trading volume stood at 20,710 BTC. After signing the real-name account contract with Upbit in 2020, Kbank raked in KRW 29.2 billion in fees during the last bull market of 2021, which was equivalent to 14% of its annual interest income of KRW 198 billion and exceeded its net income for the year, which stood at KRW 22.5 billion. Increased bank deposits from exchange usersKbank also saw a substantial rise in its balance sheet, with Upbit users depositing around KRW 2.94 trillion into their real-name accounts. The sum is six times greater than the deposits made into NongHyup Bank by Bithumb users, which stood at KRW 547.1 billion.  Experts see that the surge in Kbank’s user base, which recently surpassed 10 million users, is largely attributed to growing excitement surrounding bitcoin. One crypto insider said that crypto trading fees, which have been on the decline for the past 2 years, could take a turn this year, signaling further gains for the affiliated banks.  

HTX and Heco Chain exploited with $115 million lossSeychelles-incorporated cryptocurrency exchange HTX, linked to digital-asset entrepreneur Justin Sun, has fallen victim to a significant hack, only a few months after having suffered another hack in September.Photo by Markus Spiske on UnsplashSecond HTX hack in recent monthsThe last hack, involving a loss of digital assets to the value of $8 million, was resolved when the hacker agreed to return funds in October in return for a goodwill payment of around $400,000.This latest unfortunate incident follows another hack on Poloniex, also associated with Sun, just weeks ago. Sun acknowledged the HTX hack in a tweet, announcing the temporary suspension of deposits and withdrawals without specifying the exact amount pilfered.Separate Heco Chain hackIt is understood that approximately $30 million worth of cryptocurrencies was siphoned from the exchange wallet. The platform is actively investigating the breach, aiming to uncover the specifics surrounding the attack. Simultaneously, the HECO Bridge, which was established by HTX for cost-effective fund transfers across different blockchains, experienced a separate hack.This breach resulted in losses exceeding $85 million, including ETH, US dollar stablecoin Tether (USDT) and various other tokens. Although initially launched by HTX, HECO operates independently from the HTX exchange.Crypto community concernThese security breaches cast a shadow over Sun’s crypto ventures, especially considering the recent hack on Poloniex, which saw losses surpassing $100 million in various cryptocurrencies. A spokesperson for crypto security firm Hacken told Cointelegraph that these hacks could be the work of an insider.“We can see that all these attacks have the same target: Justin Sun’s projects,” the spokesperson stated. These related incidents are the cause of significant speculation within the crypto space, with some concern expressed about the financial health of HTX, given that the firm is currently offering unsustainable interest rates of up to 100% APY on a selection of digital assets.In response to the HTX hack, Justin Sun assured the community in a post on X (formerly Twitter) that HTX would fully compensate for the losses incurred in its hot wallet. The exchange has temporarily halted deposits and withdrawals as the investigation unfolds. Sun emphasized the commitment to resume services once the investigation concludes and the cause of the breach is identified.These incidents raise questions about the security infrastructure of platforms associated with Justin Sun. The crypto community awaits further details on the investigation’s outcomes and preventive measures that will be implemented to fortify these exchanges against future attacks.Such recent security breaches have not just affected Justin Sun-related enterprises. Earlier this month, decentralized exchange (DEX) KyberSwap was exploited to the tune of $46.5 million. Earlier this week, Kronos Research — a Taipei-based crypto trading, market making and venture capital platform — experienced a $25.6 million loss. The past twenty days have seen five major hacks resulting in an aggregate loss of a staggering $290 million.As the crypto industry grapples with increasing security challenges, the importance of robust protective measures cannot be overstated. These developments underscore the need for a cautious and diligent approach in safeguarding digital assets within the rapidly evolving cryptocurrency landscape.

KCC sets guidelines for user protection on metaverse platformsThe Korea Communications Commission (KCC) has established its latest guidelines for ensuring the protection and safety of users of metaverse platforms, dubbed the “Basic Principles for the Protection of Metaverse Users”.Photo by GuerrillaBuzz on UnsplashNavigating the metaverse landscapeAlthough metaverse platforms can create new economic and business opportunities by linking reality with the virtual realm and providing users with a realistic and immersive experience, the agency argued that various problems may arise due to the use of anonymous profiles or avatars.In response, the KCC assembled six voluntary principles for metaverse service providers to apply to their operations through discussions with a policy advisory group for metaverse ecosystem user protection. The group is composed of 29 members, including academics, legal experts and domestic and overseas companies. It has been active since last year.Fostering ethical metaverse environmentsThe principles cover topics like ensuring free yet respectful communication between users; granting users a platform for voicing their opinions on issues related to their rights and interests; and ensuring that transactions involving digital products and services are conducted on proper terms. They also urge companies to give users the right to use and manage their own data along with that of the metaverse.On a less technical level, the last principle mentions that companies should make efforts to study the long-term impact of the metaverse on users’ physical and mental health, and on society, culture, environment and economy.The agency has also proposed to draft a code of practice outlining more specific measures to protect users, such as prohibiting sexual harassment and stalking, reporting and punishing cyberbullying and transferring the right to purchase NFTs.Responsible governanceMajor metaverse platform operators like Naver, SKT and Meta, who are members of the agency, agreed to apply the guidelines and include them in their relevant terms and conditions documents and service operation regulations. The KCC stated that it plans to monitor whether or not these commitments are met.Although not mandatory, the guidelines are recommended as measures to resolve user inconvenience, enhance service reliability and provide standards for user protection. User protection includes that of children, adolescents and personal privacy.