Kazakhstan plans CryptoCity as pilot project for crypto payments

Korean Crypto Exchanges Struggle Despite Market RecoveryThe results of a recent study by the South Korean Financial Intelligence Unit (FIU) released on Monday revealed that ten domestic cryptocurrency exchanges have reported zero revenue from transaction fees, with half of them struggling to achieve a daily average trading volume of KRW 1 million ($740).Photo by Maxim Hopman on UnsplashTrends of growth and declineThe study looked into data from 35 registered virtual asset service providers (VASPs) for the first half of this year. The findings showed that compared to the second half of last year, the crypto market capitalization and Korean won deposits increased, but exchanges faced growing challenges, illustrated by a widening gap between leading fiat-to-crypto exchanges and smaller crypto-only exchanges.In the first half of this year, the operating profit of won-based exchanges reached KRW 259.8 billion (approximately $193 million), a 46% increase compared to the second half of last year, which recorded KRW 177.9 billion. In contrast, crypto exchanges recorded an operating loss of KRW 32.5 billion. Notably, out of 21 crypto-only exchanges, 10 of them reported no revenue at all from transaction fees, and 18 were in a state of complete capital impairment. Meanwhile, the operating profit of won-based exchanges was concentrated among the country’s top two exchanges, Upbit and Bithumb.But from a broader perspective, as of the end of June, this year’s total capitalization of the crypto market reached KRW 28.4 trillion — a 46% increase compared to the end of the second half of last year. Korean won deposits also increased by KRW 400 billion, or 11%, compared to the previous half. The overall operating profit was KRW 227.3 billion, up 82% from KRW 124.9 billion at the end of the second half of last year.“The first half of this year saw a rise in prices of virtual assets and investor sentiment, leading to an increase in Korean won deposits, overall market capitalization, and operating profits for exchanges, compared to the second half of 2022,” the FIU remarked.The number of new listings and delistings on virtual asset exchanges also surged with 169 new listings and 115 new delistings. These represented a more than double increase and a 47% increase, respectively, compared to the second half of last year. 66% of the delisted crypto assets were coins that had been exclusively listed on a given exchange.Despite the market’s recovery, trading volume and the number of users have slightly decreased. The daily average trading volume in the domestic crypto market for the first half of this year was KRW 2.9 trillion, down 1.3% compared to the second half of 2022. In addition, the number of registered accounts with VASPs also dropped by 19% to 9.5 million compared to the end of last year. This can be attributed to a growing number of dormant accounts and the removal of duplicate accounts.The quantity of verified users has also declined. The number of individuals and corporations that had completed the mandatory Know Your Customer (KYC) procedures needed to engage in trading decreased by 210,000 to 6.06 million (including duplicates) compared to the end of 2022. The majority of users, or those who own less than KRW 1 million in virtual assets, dropped by 7%.On the other hand, the amount of virtual assets leaving the country increased. In the first half of this year, a total of KRW 22.1 trillion was transferred to whitelisted overseas operators or individual wallet addresses, marking a KRW 500 billion increase compared to the second half of last year. This trend could be accredited to futures trading and arbitrage trading influenced by the so-called “kimchi premium” — a term used to describe the difference between trading prices of cryptocurrencies in Korea and in other foreign exchanges.Age demographicsOther findings showed that the age group that traded the most virtual assets is in their 30s, accounting for 30% of all users. Within this group, men make up 70%, with 1.27 million men recorded as engaging in crypto trading. Following closely with 1.2 million, men in their 40s were the second-largest demographic.

China Performs Well as Global Crypto Industry Employment Surpasses 190,000According to new data, the cryptocurrency industry has seen a remarkable surge in employment, with nearly 190,000 individuals currently working in the field as of July 2023, with China fairing particularly well despite its hostile approach to crypto.This figure represents a significant increase compared to pre-2020 employment statistics, marking the onset of the crypto frenzy. The data was produced via a report published by K33 Research, a Norway-based digital assets research and data analysis firm.Photo by Valentin Farkasch on UnsplashIndia leads in AsiaThe data highlights an over-representation of crypto workers in the Western world, with more than 50% based in North America and Europe. Within this figure, the United States alone accounts for 29% of the crypto workforce. In Asia, India emerged as the leading employer in the crypto industry, employing 20% of the regional workforce, primarily in developer-related roles. Surprisingly, despite China’s historically hostile stance on the crypto industry, it stands as the second-largest employer in Asia, employing 15% of the regional workforce.It’s also interesting that China has been found to account for such a sizable chunk of Web3-related employment when recent feedback from recruiters in Hong Kong suggest that the crypto licensing program rolled out in the autonomous Chinese territory has not yet resulted in a surge in employment. Recruiters maintain though, that this employment boost will come in due course.Most employment via exchangesDuring 2021, a period characterized by high prices and soaring company valuations, the crypto industry employed approximately 211,000 individuals, highlighting the industry’s rapid growth. Researchers from K33 found that around one-third of the crypto workforce is engaged in exchanges or brokerages, emphasizing the crucial role these entities play. Additionally, 26% of employees work for companies offering a diverse range of financial services related to cryptocurrencies.Interestingly, the study revealed that NFTs occupy only a small portion of the workforce, with only 6% of individuals involved in this field. On the other hand, 21% contribute their skills to blockchain protocols, analytics, and mining operations. The remaining 13% hold cryptocurrency-related jobs that do not neatly fit into any specific category. The researchers employed various methods, including LinkedIn searches, AI-assisted web searches, and manual mappings, to gather this data.Remote workingA notable trend in the crypto industry is the prevalence of remote work arrangements. Major crypto companies have opted for globally distributed workforces, capitalizing on jurisdictions with favorable regulations and lower tax rates. By establishing headquarters in these locations, but employing individuals remotely or establishing local offices worldwide, companies can reduce costs and eliminate logistical barriers.The significant growth in crypto industry employment reflects the expanding and maturing nature of the sector. As cryptocurrencies and blockchain technology gain wider acceptance, professionals from various backgrounds are entering the industry, contributing their skills to different sectors within the crypto ecosystem. The prevalence of remote work arrangements and the global nature of the industry allow talent to be sourced from around the world, transcending geographical boundaries.This upward trajectory in employment is likely to continue as the crypto industry evolves and continues to shape the future of finance and technology.

Hong Kong Adapts Crypto Regulations to Broaden Market AccessHong Kong’s financial regulator has taken a further regulatory step in its evolving stance on cryptocurrency trading, widening the scope of retail access to digital assets through intermediaries.Photo by Chapman Chow on UnsplashResponding to growing demandThe move follows a surge in interest in spot Bitcoin exchange-traded funds (ETFs) and recent investigations into the unlicensed operations of the JPEX exchange. In a circular published by the Securities and Futures Commission (SFC) on Friday, the regulator explained that the policy shift was prompted by changing market dynamics and growing inquiries from the industry.The new guidelines aim to extend access to a broader clientele and facilitate the direct deposit and withdrawal of virtual assets through intermediaries, all while maintaining stringent safeguards. The circular states:”The policy is updated in light of the latest market developments and enquiries from the industry seeking to further expand retail access through intermediaries and to allow investors to directly deposit and withdraw virtual assets to/from intermediaries with appropriate safeguards.”Cautionary notesDespite this welcome expansion, there are a couple of cautionary notes included within the circular. Hong Kong remains circumspect about overseas virtual asset (VA) products, deeming them “complex” and, as a result, riskier. The circular emphasizes that “VA-related products considered complex should only be offered to professional investors.” For instance, an overseas VA non-derivative ETF is likely to fall into this category.The other condition pertains to potential clients, who will be required to undergo a one-off test to assess their knowledge of investing and ensure they possess the financial wherewithal to manage the risks associated with virtual asset trading. Furthermore, intermediaries must furnish clients with comprehensive risk disclosure statements.The regulator also places an onus on the intermediary to set a limit for each retail client, to ensure that a retail client’s exposure to virtual assets is reasonable. The circular outlines that deposit and withdrawal of client funds should only happen through the use of segregated funding accounts on an SFC-licensed platform.Crypto sector aspirationsThis shift in regulation underscores Hong Kong’s ongoing aspirations to solidify its position as a hub for virtual assets. The territory embarked on a new regulatory regime in June, enabling applications for crypto trading platform licenses. By August, the first batch of licenses was granted, allowing exchanges to cater to retail customers. This marked a notable turnaround from Hong Kong’s prior 18 months of skepticism and hostility toward the cryptocurrency sector.The timing of these regulatory changes coincides with surging interest in spot Bitcoin ETFs, with JPMorgan even suggesting that approval in the US could materialize within months. This shift in regulatory perspective in Hong Kong also follows the investigation and accusations made against the JPEX exchange for conducting unlicensed operations, leading to arrests and the promise to disclose details of licensed applicants. The JPEX scandal has also dampened public confidence in crypto in Hong Kong more recently.Hong Kong is adapting its crypto regulations to be more inclusive while maintaining a cautious approach toward complex overseas virtual asset products. This regulatory shift underscores the region’s determination to foster its status as a leading hub for virtual assets, following a change of heart from its previous stance of skepticism and reluctance towards the crypto industry.