Solv raises $11M to bring overall funding to $25M

SK Securities introduces fractional investment service with three partnersSK Securities, a major South Korean securities firm, announced on Friday (local time) that it has launched a service aimed at enabling fractional investments.Photo by Mathieu Stern on UnsplashReal estate, artworks and luxury goodsThis service involves three fractional investment companies: real estate platform Funble, online art auction house Seoul Auction Blue and luxury goods platform Treasurer.This offering represents the first phase of the fractional investment alliance, delivering a wide array of investment insights from these platforms. Funble presents details on housing subscriptions, special housing supplies and key real estate market indicators. Seoul Auction Blue provides analyses of the art market along with information on individual artworks. Additionally, Treasurer offers insights into an assortment of luxury collectibles, including fine wines. Customers of SK Securities can easily access this service through the company’s mobile trading system called Frequency 3.0.Second phase in H1 2024As part of the second phase, SK Securities is developing an API-integrated system designed to link with assets on these fractional investment platforms. This system is slated for launch in the first half of the upcoming year.An SK Securities spokesperson explained that the firm has rolled out this novel service to guide its clients through the emerging arena of fractional investments, while also enriching their investment options. Beginning with this offering, SK Securities aims to broaden its collaborative efforts with fractional investment entities. Furthermore, the firm is committed to advancing the security token ecosystem, which will involve channeling investments into blockchain startups and participating in security token consortiums.On a related note, SK Securities inked a memorandum of understanding (MOU) with Woori Bank and Samsung Securities in September, targeting the development of business models for security tokens within the bounds of regulatory compliance.

BOK Staffers Assess Crypto Market Vulnerabilities and Their ImplicationsOn Thursday, the Bank of Korea’s (BOK) staff members published an assessment of the vulnerabilities in the cryptocurrency market and their potential implications. Here is the summary of the report.Photo by D Tan on Unsplash2022 crypto winterThroughout 2022, the worldwide crypto market faced a series of adverse occurrences, such as significant drops in the prices of major crypto-assets and the collapse of prominent crypto companies. These events shed light on the vulnerabilities that had accumulated during the rapid growth of the market.The first major event occurred in May 2022 when the algorithmic stablecoin TerraUSD experienced a sharp decline, resulting in substantial losses and bankruptcies for numerous retail investors and crypto firms. This incident significantly eroded confidence in the overall crypto market. The subsequent bankruptcies of prominent crypto lender Celsius and hedge fund Three Arrows Capital (3AC) further highlighted the realization of risks commonly associated with traditional financial markets, such as multiple collateral loans and maturity and liquidity mismatches, within the crypto market.In November 2022, the well-known crypto exchange FTX filed for bankruptcy, demonstrating that the activities of a large crypto company can propagate risks through moral hazard and excessive profit-seeking behavior when it operates outside the realm of regulatory oversight.Similarities with TradFiThese negative events that unfolded in the global crypto market in 2022 share similarities with issues previously observed in financial markets, such as unsustainable business models, liquidity risk, leverage, and lack of transparency in financial conditions. These parallels suggest that if the crypto markets were subjected to comparable levels of regulation as traditional financial markets, it is plausible that the triggering of these risks could have been avoided altogether, or at the very least, the resulting damage could have been mitigated to some extent.Implications for the Korean marketAt present, it is deemed unlikely that events akin to those witnessed in overseas crypto markets will transpire in the Korean market. The Korean crypto-asset market has primarily evolved through exchanges, with limited influence from other enterprises such as crypto issuers and decentralized lending platforms. In addition, Korean crypto exchanges are subject to regulation under the Act on Reporting and Using Specified Financial Transaction Information. This mandates the separation of customer deposits from exchange assets and the strict management of custodial crypto-assets through secure wallets. Additionally, Korean exchanges are prohibited from listing their own tokens on their platforms.However, there remains a dearth of information regarding the business structures of crypto companies that offer services similar to those in the traditional financial industry. This lack of information poses challenges in accurately assessing risk and providing adequate investor protection. Meanwhile, there is a potential for a deeper integration between the crypto market and users’ daily lives, particularly through major technology companies, gaming companies, and security tokens.SuggestionsIt is vital to ensure that crypto-assets are regulated based on the principle of “same activity, same risk, same regulation” through the ongoing development of crypto-asset-related legislation. The Financial Stability Board, an international body monitoring the global financial system, explained this principle in a 2022 paper: “Where crypto-assets and intermediaries perform an equivalent economic function to one performed by instruments and intermediaries of the traditional financial sector, they should be subject to equivalent regulation.”Additionally, it is necessary to stay aligned with major countries in terms of the speed and comprehensiveness of regulatory measures to prevent regulatory discrepancies across borders due to the global nature of crypto risks.Enhancing the effectiveness and efficiency of regulation requires the establishment and maintenance of a close cooperation system between authorities. This collaborative effort should encompass various aspects, including monitoring, information gathering, and supervision of the crypto-asset market. Notably, the widespread adoption of stablecoins can affect the stability of the overall financial system, including monetary systems and payment and settlement systems. Hence, it is necessary to strengthen the involvement of central banks in the monitoring and supervision framework for crypto-assets, including stablecoins, as demonstrated by legislative approaches adopted by major economies like the EU. Furthermore, imposing disclosure requirements, external audits, and documentation submission obligations on crypto-asset operators is advisable.

The launch of Hong Kong's inaugural spot crypto exchange-traded funds (ETFs) is expected to occur by mid-2024, according to one of Hong Kong’s leading crypto executives. Gary Tiu, the executive director and head of regulatory affairs at OSL, a licensed cryptocurrency exchange based in Hong Kong, made that assertion in discussion with The Hong Kong Economic Journal. Tiu provided the publication with insights into the accelerating pace of negotiations between cryptocurrency exchanges and fund companies in the region.Photo by Stella P on UnsplashUp to ten firms contemplating ETF launchOSL is actively engaged in discussions with multiple fund companies, with five to ten firms contemplating the introduction of spot crypto ETFs. Tiu revealed that certain firms have made notable progress, raising the possibility of the debut of these ETFs in Hong Kong by the middle of the year. Additionally, the OSL executive emphasized the significance of maintaining reasonable fees in collaborations between OSL and fund companies, given the limited presence of licensed crypto exchanges in the city – a total of two at present. This suggestion from Tiu aligns with similar recent soundings emanating from HashKey, another licensed crypto exchange in Hong Kong, which recently disclosed its ongoing discussions with asset managers exploring the potential launch of spot crypto ETFs. Livio Weng, the CEO of HashKey, indicated that approximately ten fund companies are considering the introduction of such ETFs in the city. VSFG’s ETF plansAligned with Tiu’s thoughts on the matter, according to a Bloomberg report last week, Venture Smart Financial Holdings Ltd (VSFG), a Hong Kong-based financial services firm, expressed plans to potentially launch a spot bitcoin ETF within the first quarter of this year. Bloomberg reported the company's goal of growing the ETF's assets under management to $500 million by the end of 2024. The regulatory landscape in Hong Kong is actively adapting to accommodate spot crypto ETFs, with the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) announcing in December that they have reviewed their existing policies. Two circulars were published, outlining the requirements for spot crypto ETFs, with the SFC stressing that transactions should be conducted through SFC-licensed crypto platforms or authorized financial institutions. Currently, Hong Kong has listed several futures-based crypto ETFs, including the Samsung Bitcoin Futures Active ETF, CSOP Bitcoin Futures ETF and CSOP Ether Futures ETF. Hong Kong venue for Bitcoin conferenceIn a related development, local lawmaker Johnny Ng revealed on social media on Monday that Hong Kong will host The Bitcoin Conference this year. Earlier this month Ng urged the local administration in Hong Kong to swiftly follow the United States' approval of spot bitcoin ETFs and position the city as a leading hub in the cryptocurrency space. With Hong Kong and Singapore vying for hub status in the Asian region relative to the digital assets space, the launch of ETF products would give the Chinese autonomous territory a competitive head start given that Singapore doesn’t appear to be close to accommodating crypto ETFs for the time being.