Japan to classify crypto as financial instruments, seeks 20% tax rate

Venture Smart Financial Holdings Ltd. (VSFG), a Hong Kong-based financial services firm, is strategically positioning itself to enter the growing cryptocurrency exchange-traded fund (ETF) market, with its latest reveal being an interest in launching a spot ETH ETF in Q2.Photo by Michael Förtsch on UnsplashIn a recent interview with The Block, VSFG Chairman Lawrence Chu revealed the company's plans to apply for a spot ether ETF in Hong Kong. Executing on that plan is contingent upon the successful launch and approval of its spot bitcoin ETF. Q1 launch for bitcoin ETFLast month, the firm disclosed that it is gearing up for a spot bitcoin ETF launch within the first quarter of this year. VSFG was the first to reveal such an intention within the ETF space in Hong Kong. However, competition is already starting to bubble, as subsequently, Chinese asset manager Harvest Fund announced that it has gone one better and actually filed an application for a spot bitcoin ETF product in the Chinese autonomous territory. Chu shared insights into the firm's current status, mentioning that VSFG is in the final phase of preparing its application for a spot bitcoin ETF to be submitted to the Hong Kong Securities and Futures Commission. He emphasized the rigorous regulatory discussions that precede such submissions in Hong Kong, characterizing the imminent application as being in the advanced stages, stating, “Submission [for application] is almost like when you're 95% there.” Chu acknowledged the importance of ongoing conversations with regulators, expressing readiness by stating, “but that really depends on the conversation we have with the regulator. We will be ready.” Competitive spotlight on ETF feesHighlighting the evolving landscape in Hong Kong, Chu noted that nearly 10 fund companies are exploring the launch of potential spot crypto ETFs in the city. That call echoes similar comments made recently by Livio Weng, CEO of digital assets firm HashKey. The prospect of a potential fee war among asset managers was also discussed, drawing parallels with developments observed in the U.S. bitcoin ETF market. That seems likely, given that downward pressure on spot bitcoin ETF fees in the United States has also spread to Europe where Invesco and WisdomTree have cut fees by 60% on similar products. Global ether ETPsWhile commentators such as Standard Chartered Bank speculate on the likely approval of spot ether ETF products in the U.S. by May and VSFG indicates a potential Q2 launch in Hong Kong, there are already a number of similar products out in the wild around the world. According to data compiled by crypto data aggregator platform CoinGecko, the top 10 ether funds account for $5.5 billion in value. Among them is the XBT Provider ether exchange-traded product (ETP), the world’s first Ethereum-based security made available on a regulated exchange, namely Nasdaq Stockholm in Sweden, by crypto ETP specialist CoinShares. While the race is on in Hong Kong to launch crypto ETFs, on an international basis, competition is heating up as various global fintech hubs look to kindle what is likely to make up a significant part of the ETF sector pie in the years to come.

Bithumb’s No-Trading-Fee Policy Proves Effective in Boosting User EngagementSince the recent introduction of a no-trading-fee policy for select cryptocurrencies, Bithumb, one of the leading cryptocurrency exchanges in South Korea, has experienced extended customer engagement on its platform.Increased user engagement and installationsOver the past week, the Bithumb app has witnessed growth in user engagement and installations. Both the average total time spent on the app and the average time spent per individual user have risen by nearly 20%. Additionally, there has been a 10% rise in the number of new app installs compared to the previous week.Photo by Mike Hindle on UnsplashTen new fee-free tokensIn this positive announcement today, the crypto exchange also revealed the addition of ten new virtual assets to its list of fee-free trading options. These newly added assets are SAND, AXS, BSV, QTUM, TFUEL, ANKR, T, KNC, STPT, and ONG. This brings the total number of fee-free trading assets on the exchange to 20.Customer engagement and trading volumeBithumb has demonstrated its commitment to making customers stay longer on its platform through various initiatives. Notably, the exchange, in late June, introduced Insight, a service that provides crypto investors with metrics to help them make informed decisions. The company believes that bolstering customer engagement will drive growth in the exchange’s trading volume.Bithumb, recognizing the positive impact of its zero trading fee policy on customer retention, internally saw this achievement as a successful step towards delivering tangible benefits to its users through an optimized trading environment.Since the beginning of the month, the exchange has been unveiling a weekly lineup of fee-free tokens, accompanied by a no-fee BTC market. These fee-free tokens are easily identifiable with a blue badge and can be conveniently sorted by clicking the “fee-free” tab at the top of the chart.Moon Sun-il, the Head of Services at Bithumb, emphasized the company’s commitment to noticeable user experience enhancement. Moon highlighted the recent implementation of the no-trading fee policy and the introduction of the trading data service, Insight, as key initiatives driving towards this goal.

Singapore’s UniPass Plays Role in ERC-4337 Vulnerability FixSmart contract wallet provider UniPass and crypto infrastructure firm Fireblocks have successfully addressed a significant vulnerability in the Ethereum ecosystem.Photo by Nenad Novaković on UnsplashAccount abstraction vulnerabilityThis vulnerability, identified as the ERC-4337 account abstraction vulnerability, posed a critical security risk to hundreds of mainnet wallets. The joint effort between Fireblocks and UniPass was detailed in a blog post published to the Fireblocks website on Thursday.This vulnerability, if exploited, could have enabled a malicious actor to execute a complete takeover of the UniPass Wallet by manipulating Ethereum’s account abstraction process. The vulnerability represented a substantial threat to the security of smart contract wallets, as it could lead to unauthorized access and fund drainage.Improving user experienceAccount abstraction, as dealt with via ERC-4337, is a mechanism that introduces a novel way of processing transactions and interacting with smart contracts on the Ethereum blockchain. It allows for a more flexible and efficient handling of transactions, transcending the traditional distinction between externally owned accounts (EOAs) and contract accounts.EOAs are controlled by private keys and can initiate transactions, while contract accounts are governed by the code of a smart contract. When an EOA initiates a transaction with a contract account, it triggers the execution of the contract’s code. Account abstraction introduces the notion of abstracted accounts, which are not tied to a specific private key and can initiate transactions and interact with smart contracts, similar to EOAs.In the context of ERC-4337, an account executing an action relies on the EntryPoint contract to ensure that only signed transactions are executed. Typically, these accounts trust a single audited EntryPoint contract to validate user operations before executing commands. However, the vulnerability resided in the fact that a malicious or buggy EntryPoint contract could potentially skip the validation step and directly call the execution function, bypassing essential security measures.This vulnerability, identified by the two firms, had allowed attackers to seize control of UniPass wallets by replacing the trusted EntryPoint of the wallet. Once this takeover was completed, the attacker could access the wallet and drain its funds.It’s worth noting that the vulnerability posed a threat to several hundred users who had activated the ERC-4337 module in their wallets, making them susceptible to exploitation by any actor on the blockchain. Fortunately, the wallets affected by this vulnerability contained only small amounts of funds, and swift mitigation efforts were successful in preventing further harm.Company mergerEarlier this year, Singapore’s UniPass merged with Chinese wallet provider Keystone to form Account Labs, a company which has been incorporated in Singapore. At the time, Keystone founder Liu Lixin outlined that further developing account abstraction-derived products was the objective of the creation of Account Labs. He stated:“We are on the cusp of a Web3 Account Abstraction revolution. Together, we’ll drive rapid transformation, making the transition from Web2 to Web3 effortless for users. Our goal is to ensure everyone can securely and smoothly manage a decentralized account. We welcome partners to join us in advancing the Web3 account domain.”In furthering that objective, Account Labs announced on Thursday that it had raised $7.7 million in a funding round led by Amber Group, MixMarvel DAO Ventures, and Qiming Ventures.