HKMA incentivizes tokenization in Hong Kong

Komainu Secures FCA Approval in Boost For Crypto Custody in the UKKomainu, a digital asset storage firm backed by Tokyo-based global financial services group Nomura, has received approval from the UK’s Financial Conduct Authority (FCA) to operate as a crypto custodian wallet provider.Photo by Robert Tudor on UnsplashPaving the way for broader service offeringThe Jersey-headquartered Nomura portfolio company outlined details of its regulatory success in a blog post published on Friday. This regulatory milestone marks a pivotal moment for Komainu’s expansion within the UK market, allowing the firm to amplify its crypto service offering in the UK.The approval paves the way for the firm to offer collateral management services through its platform, Komainu Connect. Sebastian Widmann, Head of Strategy at Komainu, expressed the company’s intention to furnish institutional custody services, a fundamental aspect of the swiftly advancing cryptocurrency market. He also underscored Komainu Connect’s role as a premier collateral management solution within the UK.Komainu’s CEO, Nicolas Bertrand, spoke to the United Kingdom’s pivotal role in the global financial technology sector. He accentuated the UK’s position as a critical hub for fintech, bridging the realms of traditional finance and decentralized finance. The FCA’s endorsement underscores Komainu’s efforts in attempting to deliver secure and compliant cryptocurrency custody services.“This is a key regulatory milestone as the UK remains one of the most important hubs for financial technology and innovation that will spur the convergence of traditional and decentralized finance,” stated Bertrand.This recent approval is not an isolated achievement for Komainu. The firm has been building up recognition for its adherence to regulatory compliance. In August, it secured a full operating license from Dubai’s Virtual Asset Regulatory Authority, reinforcing its dedication to adhering to global regulatory standards.Additionally, being headquartered in Jersey, Komainu falls under the jurisdiction of the Jersey Financial Services Commission, ensuring that the firm also adheres to those local financial regulations.The company previously unveiled an agreement with local authorities, focusing on secure digital asset storage during investigations. This partnership is demonstrative of efforts made by the firm in fostering transparency and security within the cryptocurrency ecosystem, aligning with the broader regulatory objectives of the UK government.Further ambitionsHowever, Komainu’s presence is expected to reach beyond the shores of the UK and Dubai. Coinshares, one of Komainu’s parent companies, recently introduced its hedge fund division, Coinshares Hedge Fund Solutions, signaling its intent to venture into the US market. This strategic maneuver will provide eligible American investors with access to Coinshares’ array of private investment products, further cementing its global presence in the cryptocurrency sector.In June the firm partnered with Seychelles-based global crypto platform OKX. As part of that deal, the digital assets custodian will store and custody digital assets on behalf of OKX's institutional clients.With a positive track record thus far where regulatory compliance is concerned, Komainu is positioning itself for further growth and innovation relative to a fast-developing crypto sector.

Crypto Exchange Bithumb’s Operator Closing BusinessesBithumb Korea, the operator of a major South Korean cryptocurrency exchange, has been streamlining its businesses in response to its ongoing struggle to generate profits.Photo by Tim Mossholder on PexelsAccording to a report by local news outlet Business Watch, Bithumb Systems, a tech solution subsidiary of Bithumb Korea, has recently ceased operations. Bithumb System was launched in March of last year with the aim of advancing blockchain and exchange technology. However, due to the decline in the crypto industry and challenges in profitability, the company had to undergo liquidation.An official from Bithumb Korea explained that the decision to close its tech solution arm was made in order to prioritize improving the competence of the exchange amidst the changing landscape of domestic and foreign markets.Other affiliates of Bithumb Korea are also facing difficulties. For instance, Bithumb Live, an e-commerce platform jointly established by Bithumb Korea and content production firm Bucket Studio, has been on hiatus since October last year. The platform incurred a net loss of 10 billion KRW ($7.75 million). Bithumb Korea, holding 37.5% of Bithumb Live’s shares, invested 6 billion KRW ($4.65 million) into the platform in 2021. Bithumb Korea recognizes these investment losses using the equity method.Additionally, Bithumb META, despite raising the highest amount of funds among its sister affiliates, has encountered challenges in making much progress since its establishment last year. Its NFT marketplace, Naemo Market, is still without a mobile application, and the introduction of its metaverse platform is still pending. Although Bithumb META managed to attract 9 billion KRW in investments last March from esteemed companies such as LG CNS, CJ OliveNetworks, and SK Square, it incurred a loss of 7 billion KRW ($5.4 million) in 2022.Furthermore, earlier this month, it was reported that the exchange closed its research center due to a decline in trading volume, despite its importance in assisting investors to make better-informed decisions.A representative from Bithumb stated that the company is actively seeking new sources of revenue through its mobile Wallet platform operator, Rotonda, and Bithumb META. However, given the market slowdown, Bithumb is now compelled to prioritize enhancing the competence of the exchange.

The Asia Web3 Alliance Japan, an agency that regards itself as a bridge between the Web3 ecosystem in Asia and Japan’s broader business sector, has reached out to the Securities and Exchange Commission in the United States with a view towards establishing a strategic collaboration.Photo by Clement Souchet on UnsplashFocus on Web3 regulatory innovation & tokenizationThe President of the organization, Hinza Asif, wrote to SEC Crypto Task Force Chairperson and SEC Commissioner, Hester Peirce, on the subject, on March 25. The letter, subsequently published by the SEC, sets out a proposal that centers on a strategic U.S.-Japan partnership relative to Web3 regulatory innovation and tokenization. The Japanese agency, which has set out cross-border synergy as one of its objectives, calls for collaboration between Japan’s Financial Services Agency, the Japanese Ministry of Economy, Trade and Industry and the Bank of Japan with the U.S. regulator. The Alliance proposes that the goal of that partnership would be the establishment of regulatory clarity in respect of the Web3 sector, together with the fostering of interoperability between a developing Web3 ecosystem in the U.S. and the one that’s developing in Japan. Token classification frameworkDelving deeper into proposal specifics, Asif sets out the formation of a harmonized token classification framework as a key objective. The proposal suggests that a distinction needs to be made between tokenized securities, utility tokens and non-security digital assets.  The alliance believes that right now, token classification is unclear, with projects struggling to understand what category their token falls within from a regulatory perspective. There’s a lack of token offering frameworks. While it sees that further work is required, the Asia Web3 Alliance Japan is encouraged by progress made by the SEC’s Crypto Task Force in identifying security categories. With this cross-border collaboration, the Japanese crypto advocacy group believes that there is an opportunity to achieve regulatory interoperability on an international basis. That would facilitate compliant cross-border token issuance. On that basis, the alliance suggests that standards be developed such that regulatory consistency is achieved internationally when it comes to items such as digital asset trading, custody and token issuance. The proposal sets out a need for reciprocal disclosure requirements between the two jurisdictions where cross-border token issuance is concerned. It advocates for mutual recognition of what it terms “compliant tokenized offerings.” Bringing safe harbor to JapanAnother focus area contained within the proposal is the suggestion of a need to implement a safe harbor approach in Japan for early-stage token projects in line with what has been put forward in the U.S. Peirce first put forward a token safe harbor proposal in the U.S. in 2020. It sets out to provide exemptions over a defined initial period for certain token issuances. The idea behind it is to enable these early-stage projects to innovate and mature without getting bogged down in a regulatory quagmire. The establishment of a U.S.-Japan Web3 regulatory roundtable is another strand contained within the proposal. This would provide a mechanism for ongoing dialogue between stakeholders such as regulators, industry leaders and legal experts.