Ripple supports Japanese Web3 initiative & crypto research within APAC

Hong Kong is gearing up for the potential approval and implementation of both bitcoin exchange-traded funds (ETFs) and stablecoin regulations in 2024, with further progress achieved through the first filing of a spot bitcoin ETF in the Chinese autonomous territory.Photo by André François McKenzie on UnsplashHarvest Fund filesHarvest Fund (HFM), a major asset manager based in China, has taken the lead by filing for a spot bitcoin ETF with the Hong Kong Securities and Futures Commission (SFA), as reported by Tencent News. While details on the Harvest Fund bitcoin ETF remain limited, the company is hoping for its debut on or after the Lunar New Year holiday, which lands on Feb. 10. Reports suggest that Hong Kong's regulatory body may follow a path similar to the U.S. SEC, approving multiple spot bitcoin ETF applications to ensure fair market access. Although Harvest Fund was the first to apply, other regional financial institutions have expressed interest in launching similar products within the year. Livio Weng, Chief Operating Officer of crypto exchange HashKey, revealed that approximately ten asset management firms are developing spot crypto ETFs for Hong Kong, with applications already submitted to the Hong Kong Securities Regulatory Commission. Earlier this month, Venture Smart Financial Holdings (VSFG) announced its plan to launch a spot bitcoin ETF within the first quarter of this year, contributing to the growing momentum. Stablecoin interestIn tandem with the push for spot crypto ETFs, there is a rising interest in stablecoins. Multiple Hong Kong companies, including Harvest Global Investments, RD Technologies and VSFG, are reportedly engaging in discussions with the Hong Kong Monetary Authority (HKMA) about potential stablecoin trials. These trials aim to explore use cases ahead of anticipated stablecoin regulations in Hong Kong. The HKMA's December consultation paper outlined licensing requirements for fiat-pegged stablecoins, positioning them as a bridge between traditional finance and crypto markets. Sean Lee, senior advisor and head of stablecoin at VSFG, told The Block that it is committed to applying for sandbox inclusion, along with consortium partners, to showcase the potential of programmable digital money while meeting prudential requirements. An HKMA spokesperson confirmed ongoing preparations for the imminent launch of the stablecoin sandbox arrangement. The key criterion for applicants is a demonstrated commitment to a reasonable plan for issuing fiat-reference stablecoins (FRS) in Hong Kong. FRS refers to fiat-reference stablecoins pegged to the value of a fiat currency and backed by a government-issued currency, aligning with the most common stablecoin model. Eddie Yue, CEO of the HKMA, highlighted the potential of stablecoins, stating they could serve as the interface between traditional finance and the virtual asset market. The parallel development of spot crypto ETFs and stablecoin regulations underscores Hong Kong's commitment to fostering digital assets while ensuring investor protection through effective market oversight. Crypto ETFs offer expanded access, while stablecoin trials enable controlled experimentation, establishing gateways between traditional finance and the emerging crypto sectors.  

Fueled by a crypto rally and higher overseas stock balances, South Korea’s National Tax Service (NTS) reported a sharp jump in disclosures of offshore accounts. On Aug. 26, the agency said 6,858 taxpayers declared overseas financial accounts this year, with a combined balance of 94.5 trillion won ($67.6 billion), up 38.3% in filers and 45.6% (29.6 trillion won or $21.2 billion) in value from last year.Photo by Piotr Łaskawski on UnsplashCrypto gains drive offshore filingsWithin that, reports of overseas bank deposits and cryptocurrency accounts rose to 46.4 trillion won ($33.2 billion) this year, more than 12% above 2024. That figure excludes stock accounts, which alone totaled 48.1 trillion won ($34.4 billion). Tax officials attributed the increase largely to the surge in crypto prices and higher balances in overseas stock holdings. The trend is underscored by CoinMarketCap data: the crypto market cap now stands roughly at $3.87 trillion, up 86% from $2.08 trillion a year ago. By asset type, the largest share of filers reported overseas bank deposits (3,197 people), followed by cryptocurrency (2,320) and stocks (1,992). By value, stock accounts dominated with 48.1 trillion won ($34.4 billion), compared with 23.5 trillion won ($16.8 billion) in bank deposits and 11.1 trillion won ($7.94 billion) in cryptocurrencies. Korean law requires residents and domestic corporations to disclose foreign financial accounts if their combined balance exceeds 500 million won ($358,000) on any month-end date during the year. Reports must be filed with the local tax office by June of the following year. The NTS said it will step up enforcement against suspected non-filers, using cross-border information-exchange data to verify offshore holdings. Penalties will include administrative fines, penalty notices, criminal referrals, public naming of violators and the collection of back taxes. The agency added that it is preparing to share crypto transaction data under the OECD’s Crypto-Asset Reporting Framework (CARF) and urged anyone subject to the rules to promptly file amended or late reports for overseas crypto accounts. The recent bullish sentiment in crypto, which fueled the uptick in foreign financial disclosures, has also been driving public interest in digital assets and boosting expectations for altcoins. A survey by CoinNess and Kratos conducted between Aug. 18 and 22 with 2,000 respondents found that 38.5% expect a limited bull run in a handful of altcoins, either with strong real-world use cases or serving as the underlying assets of launched ETFs. Another 28.5% predicted gains would remain centered on Bitcoin and Ethereum, while 20.7% anticipated a broader altcoin season reminiscent of past cycles. The remaining 12.3% forecast the end of the rally and the start of a downturn. Won stablecoins: policy and risksPolicy momentum around stablecoins is also picking up in South Korea. The Financial Services Commission (FSC) plans to introduce a bill in October governing won-pegged stablecoins as part of the second phase of the Virtual Asset User Protection Act. The legislation is expected to set rules for issuance, collateral management and internal controls. Amid these changes, companies are showing growing interest in launching won-based stablecoins. Kaia, an EVM-compatible, layer-1 blockchain, recently signed a memorandum of understanding (MOU) with blockchain solutions provider Open Asset to collaborate on projects tied to Korean won–backed stablecoins. The partnership will focus on issuance, distribution, service launches and developing practical use cases. Circle President Heath Tarbert has recently joined calls for a won-backed stablecoin. In an interview with The Korea Economic Daily, he underscored South Korea’s world-class payments infrastructure and said a digital won could help the country play a leading role in blockchain finance. Blockchain transactions, he noted, operate differently from traditional payment rails, making some form of digital currency, whether a stablecoin or a central bank digital currency (CBDC), a necessity. Meanwhile, at a recent meeting with top executives from the country’s four major financial groups, Tarbert ruled out collaborations on won-denominated stablecoins. Instead, he promoted Circle’s dollar-pegged stablecoins and suggested exploring joint initiatives centered around them. Not everyone sees stablecoins as a net positive. NICE Investors Service, a local credit rating agency, warned in a recent report that if banks issue won-based stablecoins, their interest income could suffer. The agency said adoption would likely weigh on banks, benefit securities firms and leave credit card companies largely unaffected. It added that a large shift of funds into stablecoins could shrink banks’ deposit base and weaken their intermediary role. Still, banks that issue stablecoins directly could soften the blow by tapping new fee-based revenue streams. 

Unprecedented surge in trading volumes on HashKey exchangeHong Kong-based cryptocurrency exchange HashKey has experienced an unprecedented surge in daily trading volumes over the course of the past week, reaching approximately $4.5 billion, a notable increase from its usual levels.Photo by Jungwoo Hong on UnsplashToken rewards programThe surge, highlighted in a report published by The Block on Monday, occurred on Friday, and is being attributed to the company’s token rewards program, according to a spokesperson from HashKey Group.A HashKey Group spokesperson clarified that the surge in volumes was a result of the company’s recent HSK rewards campaigns, which involve the distribution of HSK tokens or EcoPoints. Introduced in April, these incentives were designed to encourage trading activity on the platform. The spokesperson emphasized the company’s commitment to operating within the regulatory framework, stating:“At HashKey, we operate strictly within the regulatory framework, and any actions of misconduct are not tolerated.”Last Thursday, HashKey issued a post on X (formerly known as Twitter), detailing one of its incentive campaigns. The post announced the introduction of a DOT/USD trading pair and encouraged users to explore additional ways to earn through ongoing campaigns. Despite receiving only 15 likes, the post aimed to attract users with the promise of HSK rewards for logging in, trading and participating in the platform’s campaigns.Licensing approval in AugustHashKey had obtained the first license to offer retail crypto trading in Hong Kong in August under the new regulatory regime, with an upgrade of its type 1 and type 7 licenses. Officially opening to traders on November 1, it quickly garnered attention in the crypto community. In the same month, it also launched an app, offering full mobile trading capabilities.While daily trading volumes on Sunday dropped to $275 million, still higher than the usual levels but closer to the volumes recorded in its initial month, the significant spike on Dec. 1 was particularly noteworthy. Comparatively, Binance, the world’s largest crypto exchange, recorded $11.3 billion in volume over the past 24 hours.Wash trading ruled outSpeculation arose on X regarding the possibility of wash trading contributing to the sudden surge in volumes. Wash trading involves intentionally matching a large number of orders to create artificial trading activity. However, HashKey’s spokesperson dismissed these claims, stating that no misconduct has been detected.Justin d’Anethan, Head of Business Development in Asia for Keyrock, a crypto market-making firm, commented on the situation, stating:“Many people in the crypto space assumed wash trading was taking place… But it’s almost unbelievable.”He noted that if one wanted to appear more active, it would be done gradually, rather than in a single surge.Market sentiment and trading volume trendOver the course of the past 24 hours, the Bitcoin unit price has surged from $39,500 to almost $42,000, with Asian trading believed to have contributed significantly to that trading momentum. The overall crypto market capitalization has reached $1.5 trillion for the first time since early 2022. Bitcoin trading volume over the past 24 hours hit $39 billion, with a bitcoin market dominance rate of 51%.