DWF Labs switches headquarters from Singapore to Abu Dhabi

The recent 19b-4 approval of spot Ethereum exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) is putting pressure on South Korean financial regulators to revisit their policies on digital assets. The SEC's decision to allow ETFs for Ethereum, the world's second-largest cryptocurrency, on May 24, 2024, follows its earlier endorsement of Bitcoin ETFs in January 2024. This move is seen as a significant step in merging traditional finance with the digital asset sector.Photo by DrawKit Illustrations on UnsplashKorean regulatory cautionIn contrast to the progressive stance in the U.S., the Korean Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have maintained a cautious approach regarding the integration of crypto assets into traditional securities markets. According to current regulations under the Capital Markets Act, ETFs in Korea are limited to traditional underlying assets such as financial instruments, securities, international currencies and commodities. These foundations are crucial for the creation of financial derivatives, leaving little room for digital assets under current laws. Calls for regulatory reforms and market implicationsThe decision by the SEC is expected to influence the Korean regulators to update their views on digital assets, according to local media and industry experts. Jung Eui-jung, the head of the Korean Stockholders’ Alliance, has advocated for Korea to emulate the U.S. by approving Bitcoin and Ethereum ETFs. He expressed concerns that continued regulatory hesitance could lead to investor funds migrating to more progressive markets like the U.S., potentially positioning the U.S. to broaden its crypto market further. Xangle, a digital currency data provider in Seoul, has also criticized the current regulations as outdated, emphasizing the need for revisions to accommodate the increasing relevance of digital assets in global finance. 

Chinese Fentanyl Producers Taking Payment in CryptoA report produced by blockchain analytics and crypto compliance solutions firm Elliptic has found that most Chinese suppliers of fentanyl precursors are accepting payments for the illicit material in cryptocurrency.In a blog post published on its website on Tuesday, Elliptic claimed that 90 percent of the 90 China-based firms, from which its researchers received offers of fentanyl precursors, accepted cryptocurrency as a form of payment. The majority of fentanyl which is trafficked into the United States is manufactured using imported fentanyl precursors like the material that the Elliptic researchers were offered.Seventeen of the suppliers even offered to provide fentanyl itself. Others still offered to supply synthetic opioids, equally or more potent than fentanyl, which are currently legal to both produce and supply within China.Photo by Hal Gatewood on UnsplashTracking blockchain transactionsIn tracing back transactions relative to these illicit suppliers, the Elliptic researchers’ analysis demonstrated that the digital asset wallets used by the rogue suppliers have received thousands of payments. The research team has estimated the net worth of those transactions to total $27 million.It appears that a move towards crypto payments is trending with this group of suppliers as there has been a 450% increase year-on-year when it comes to payments for fentanyl precursor using crypto.The study highlighted activity related to Dutch national Alex Peijnenburg. An alleged fentanyl supplier, Peijnenburg, made an $85,000 payment in crypto to one of the ninety fentanyl precursor suppliers identified by Elliptic researchers. In November of last year, the Dutchman was sanctioned by US authorities relative to his activities.Global trade and distributionThe report stated: “During our correspondence, the suppliers showed no concerns about how the chemical would be used, with some explaining that it was their best-selling product and could be used to produce fentanyl.”It went on to state that “others pointedly mentioned that they had sold it to customers in Mexico.” Mexico is a significant location in the global drugs trade, given the activity of drug cartels within the country. One supplier offered an insight to researchers as to the preferences of their nefarious Mexican clients, stating: “They always use USDT or Bitcoin to pay. It is no problem.”While it looks like these nefarious Chinese companies are able to trade into and out of crypto assets, that should be a difficulty for them as China banned the offering of crypto trading services going back a number of years already. Furthermore, foreign digital asset exchanges are prohibited from servicing the needs of Chinese clients where crypto is concerned.Elliptic’s research team uncovered that the majority of the illicit drugs trade suppliers have been using workarounds in order to gain access to overseas digital asset exchanges. The suppliers have used intermediaries in order to convert crypto into Chinese yuan.The report concludes that this part of the international fentanyl trade can be dealt with and “disrupted by the services that act as gateways into and out of crypto assets.” On arriving at that conclusion, Elliptic has acted by notifying the digital asset exchanges that these suppliers are using. “[We] have flagged hundreds of crypto addresses in our tools as being linked to this activity,” the report states.Crypto had infamously been associated with illicit activity on the dark web in its earliest years. It has moved well beyond that although due to its decentralized nature, it’s difficult, if not impossible, to control who utilizes decentralized digital currency.

Japan and China are moving in different directions on digital finance. In Japan, senior officials are signaling a push to bring cryptocurrencies further into the mainstream financial system. In China, regulators are doubling down on limits for private-sector tokenization even as the central bank expands a state-led digital currency model.Photo by Nat on UnsplashTraditional exchanges to anchor crypto pushSpeaking at the Tokyo Stock Exchange on Jan. 5, Japanese Finance Minister Satsuki Katayama framed 2026 as “the inaugural year of digital” in her New Year’s address, according to local outlet CoinPost. She said she expects cryptocurrency adoption to broaden as commodity and stock exchanges take on a larger role, arguing that established market infrastructure will be key to realizing the benefits of blockchain-based assets. Pointing to the U.S., she noted that exchange-traded funds are commonly used as an inflation hedge, and suggested Japan could move in a similar direction. Katayama also struck an upbeat tone on the wider economy, saying she expects Japanese stocks to hit new record highs this year. She cast 2026 as a potential turning point as Japan seeks to move beyond a long stretch of deflation, and called for responsible but proactive fiscal policy alongside targeted investment in growth sectors. Her comments come as Tokyo considers a major overhaul of how crypto gains are taxed. Under a government proposal, profits from cryptocurrencies would be taxed at a flat 20%, aligning them more closely with levies on stocks and foreign-exchange trading. The framework would also cover crypto-linked ETFs and derivatives. Currently, crypto gains are treated as miscellaneous income, leaving investors subject to progressive rates that can climb to roughly 55% once local taxes are included. The proposed reforms would bring crypto assets under the Financial Instruments and Exchange Act. While the package is slated for discussion during the upcoming ordinary Diet session, which is scheduled to begin on Jan. 23, officials do not expect it to take effect before 2028, given the scope of the required legal and regulatory changes. Industry groups flag RWA tokenization risksChina, by contrast, continues to take a restrictive stance toward private digital-asset activity. Seven major financial industry associations—including the National Internet Finance Association of China, the Banking Association, and the Securities Association—issued a joint statement warning that the tokenization of real-world assets (RWAs) is illegal and amounts to a “risky business model,” according to Wu Blockchain, citing a WeChat post published last month. The associations argued that RWA tokenization still functions as a form of unauthorized fundraising barred under existing securities laws. They also warned of risks tied to both the projects and their underlying assets, including fraud, operational failures, and speculative hype, adding that even when the assets themselves are legitimate, token structures remain unreliable and could pose spillover risks to other parts of the financial system. The statement added that such activities have not received regulatory approval. The warning fits with Beijing’s broader, state-led approach to digital finance. Last month, Lu Lei, a deputy governor of the People’s Bank of China (PBOC), warned that unchecked private-sector innovation could pose challenges for monetary policy, arguing that the rapid growth of digital assets and stablecoins risks weakening central banks’ control over money flows. Against that backdrop, Lu said the PBOC has rolled out a new operational framework for its central bank digital currency that took effect on Jan. 1. The move places the digital yuan in a deposit-like role within the commercial banking system under a two-tier structure, with the central bank overseeing rules and infrastructure and commercial banks handling wallets, payments, and compliance. By late November 2025, the digital yuan network had processed 3.48 billion transactions totaling 16.7 trillion yuan ($2.3 trillion), underscoring how China is channeling digital finance through a centrally controlled system. The system includes about 230 million personal wallets and 18.84 million corporate wallets.