South Korea maintains single-bank policy for crypto exchanges

Japanese Banking Giant Joins Tech Firms to Build Cross-Chain Stablecoin InfrastructureA major Japanese banking group has initiated a collaboration with technology companies to develop cross-chain infrastructure, according to a press release. The purpose of establishing a cross-chain system is to facilitate the trading of stablecoins across various public blockchains.Photo by Takashi Miyazaki on UnsplashThree companies team upIn this collaborative partnership, the Mitsubishi UFJ Financial Group (MUFG), the key developer of the stablecoin issuance management platform Progmat Coin, will join forces with Datachain, a cross-chain technology firm, and TOKI FZCO, which has global plans for providing cross-chain bridges. Together, they will work towards constructing infrastructure that enables cross-chain transactions involving stablecoins on different blockchain networks.Japan’s new regulatory boostWith the implementation of the revised Payment Services Act in Japan this year, companies completing the license registration process will gain the ability to issue and distribute various stablecoins on Progmat Coin. Furthermore, it is expected that stablecoins will be issued across different blockchains, including Ethereum.TOKI is currently in the process of developing a cross-chain bridge with the aim of introducing it this year. The cross-chain bridge developed by TOKI leverages blockchain intercommunication technologies such as the Inter-Blockchain Communication Protocol (IBC) or Datachain’s Light Client Proxy (LCP). These technologies ensure a high level of security and scalability for cross-chain transactions. Additionally, TOKI’s bridge boasts a highly efficient liquidity mechanism.The three companies strive to cooperate on this infrastructure project with an aim to launch it in the second quarter of next year.Government supportA couple of days ago, the Tokyo Metropolitan Government took a proactive step to support security token businesses based in Tokyo by offering subsidies. Given that both MUFG and Datachain are Tokyo-based companies, it appears that the Japanese government’s initiatives are beginning to yield positive results.

In a recent report, Circle Internet Financial, the issuer of the USDC stablecoin, emphasized the growing adaptability of the Asian population towards digital currencies. This trend indicates a substantial potential for increased stablecoin usage in the Asia Pacific region. On Monday, the firm published "The State of the USDC Economy 2024 Report," providing a trove of relevant and timely data. Since its launch in 2018, the USDC stablecoin has facilitated over $12 trillion in blockchain transactions. The focus of the report is on the surge in remittances flowing into Asia, highlighting its growing presence. Remittances of $130 billion into AsiaAccording to a World Bank press release, remittances to Asia reached $130 billion in 2022, with the average cost of transferring $200 standing at 5.7% in the last quarter of the year. Meanwhile, the region accounted for 29% of all global digital asset value received, surpassing North America's 19% and Western Europe's 22%. Against this backdrop, the report sheds light on Circle's strategic partnership with Coins.ph, a crypto exchange in the Philippines, which aims to tap into the country's personal remittance demand, estimated at around $36 billion annually.  In another blog post, the company also dispels the notion that stablecoins are primarily used for speculative trading, citing a 90% decline in such activities over the past five years. This shift in usage patterns highlights the growing acceptance and adoption of stablecoins for practical applications like remittances and trade finance.Photo by Marjan Blan on UnsplashIncreasingly important role in trade financeImportantly, Circle asserts that USDC can play a role in closing the region's $510 billion trade finance gap. This gap represents the lack of liquidity available to companies for cross-border remittances and credit, particularly affecting emerging markets with capital outflow restrictions. The report underlines how businesses in these markets often struggle to secure funding for international trade, and USDC is emerging as a solution. One notable case study is Taipei-based XREX, which utilizes USDC to build financial pipelines between countries, leveraging the deep dollar liquidity in Taiwan to address the dollar scarcity in other Southeast Asian economies. This exemplifies how stablecoins like USDC are contributing to bridging financial gaps and facilitating international trade in regions with limited access to traditional banking services. Stablecoin-specific regulationThe regulatory landscape in the Asia-Pacific region is also evolving to accommodate stablecoins. Countries like Singapore, Hong Kong and Japan have implemented or proposed frameworks for stablecoin regulation, aligning with the growing importance of digital assets in the financial ecosystem. Circle has become increasingly active within the APAC region. In November, the firm joined forces with Japanese financial services conglomerate SBI Holdings to increase the circulation of USDC within Japan. Having been awarded a Major Payments Institution (MPI) license in Singapore in June, Circle followed that up later in the year by launching a zero-fee USDC minting facility within the city-state. Considering these developments, the Asia-Pacific region, with its large unbanked population and significant digital wallet usage, is predicted to witness quick adoption of stablecoins for cross-border payments.

Bank of Korea and Samsung Team Up for Offline CBDC ResearchIn a move aimed at advancing central bank digital currency (CBDC) technology, the Bank of Korea (BOK) signed a memorandum of understanding (MoU) with Samsung Electronics on Monday, according to a press release. The agreement was sealed during a signing ceremony attended by Lee Seung-heon, BOK’s Senior Deputy Governor, and Choi Won-joon, Executive Vice President and Head of Development in the Mobile Experience (MX) Division at Samsung Electronics.Under the terms of the MoU, both parties have committed to ongoing research on CBDC issued by the Bank of Korea, with a specific focus on collaboration in the offline payment sector. Samsung Electronics had previously participated in the second phase of the CBDC simulation study conducted by the BOK last year.Photo by Aleksandar Pasaric on PexelsCBDC without InternetThe company’s efforts have led to the development of an offline CBDC technology that facilitates transfers and payments via near-field communication (NFC) between devices without requiring an internet connection. These transactions are conducted within the embedded secure element (eSE) chip of Samsung Electronics’ mobile devices, which holds one of the highest levels of security certification, CC EAL 6+.The Evaluation Assurance Level (EAL) is a numeric grading system that measures the security level of tech products and systems according to the Common Criteria (CC) security standard. It ranges from EAL0 to EAL7, with EAL7 representing the highest level of security.Leveraging this technology, the BOK and Samsung will continue their joint research to enhance security in offline payments using Samsung Galaxy smartphones and watches. Additionally, they aim to provide support for stable payments in situations where network connectivity is disrupted, such as during disasters.Growing interest in CBDCsGiven the global interest in CBDCs, with central banks worldwide exploring their potential, the research collaboration between the BOK and Samsung assumes great significance. The results of this partnership will guide further cooperative efforts to develop the international CBDC ecosystem.BOK Senior Deputy Governor Lee Seung-heon emphasized the significance of the joint achievement, expressing optimism that the partnership would keep Korea at the forefront of offline CBDC technology.Samsung’s Executive Vice President Choi Won-joon underscored that the company’s collaboration with the Korean central bank allowed Samsung to utilize its advanced security technology in digital currency. He expected their combined efforts would considerably contribute to the global development of CBDC technology.