Hong Kong regulator underscores crypto rules in Davos, industry flags shortcomings

About three years ago, in March 2021, the South Korean financial regulators implemented the Specific Financial Transaction Information Act to ensure that local cryptocurrency exchanges provide safe and sound crypto trading services to investors. It was also a move to prevent exchanges and investors from engaging in illicit money laundering practices.  However, the law has come across as a hassle to many crypto exchanges, as they were required to undergo verification processes to prove their reliability and to receive real-name accounts from banks. These accounts enable their users to trade crypto against the Korean won, helping exchanges stand out in the fiercely competitive crypto market amid surging Bitcoin prices. At the moment, only five crypto exchanges in Korea are qualified to provide such services. Bithumb, one of these few qualified fiat-to-crypto exchanges, has renewed its real-name account contract with NH Nonghyup Bank (NH Bank) for six more months, according to local news media Yonhap News Agency. Photo by Robin Jonathan Deutsch on UnsplashVarious factors in play for relatively short renewalCrypto insiders say that extending the contract for only six months appears to be quite a conservative move, as Bithumb has been making a year-long contract with NH Bank every year since 2018. Experts suggest various factors may have influenced Bithumb's decision, including the volatile crypto market, the Virtual Asset User Protection Act becoming effective in July and the exchange's planned initial public offering (IPO).  Some say the relatively short renewal of the contract comes after a flurry of complaints from Bithumb users about the unfavorable user experience, including the cumbersome process they must go through to increase the deposit limit of their real-name accounts linked to Bithumb. This appeared to have prompted Bithumb to feel reluctant about the 6-year-long collaboration and seek a partnership with another bank such as KB Kookmin Bank or the online-only Kakao Bank, according to local media Bizwatch. One bank official said that the relatively short renewal reflects Bithumb and NH Bank's commitment to addressing the inefficiencies of crypto transaction services, as the two companies plan to enhance their investor experience and marketing efforts over the next six months.  Crypto boom drives partnership between exchanges and banks NH Bank appears to be persuading Bithumb to maintain their partnership, one bank official said, because providing real-name accounts to crypto exchanges not only benefits exchanges but also banks. Having young crypto investors – mostly in their 20s to 40s – open real-name accounts at banks is seen as a significant opportunity to expand their customer base. One crypto insider said the ability to issue real-name accounts usually puts banks in a superior position when entering a partnership with crypto exchanges, but that doesn't seem to be the case in times like this when the crypto market is bullish more than ever.  

The People’s Bank of China (PBOC) plans to roll out a new structure for its central bank digital currency (CBDC) operations, moving the digital yuan into a deposit-based role within the commercial banking system beginning Jan. 1, 2026. Lu Lei, a deputy governor of the PBOC, announced the update, marking a new direction after nearly a decade of pilot programs. According to a report by FTChinese, the move fits into Beijing’s broader economic planning, as authorities seek to reinforce China’s role in global finance while containing risks tied to loosely regulated digital activity. The deputy governor said China will continue to run the digital yuan under a two-tier system, with the central bank responsible for rules and infrastructure, while commercial banks manage wallets, payments, and compliance. He added that the arrangement is designed to prevent banks from being sidelined and to limit shadow banking risks associated with digital payment platforms outside the regulated system.Photo by Eric Prouzet on UnsplashDigital yuan transactions top $2.3TThe announcement comes as use of the digital yuan, known as the e-CNY, continues to rise. By late November 2025, the system had handled 3.48 billion transactions with a total value of 16.7 trillion yuan ($2.3 trillion). There are about 230 million personal wallets and 18.84 million corporate wallets. Beyond domestic use, the e-CNY is being positioned for international trade. Lu pointed to progress on mBridge, a cross-border payments project involving multiple central banks. The platform has processed 4,047 transactions worth the equivalent of 387.2 billion yuan ($55.3 billion), with the digital yuan accounting for about 95.3% of the settlement value. The deputy governor also sounded a note of caution on private-sector innovation, saying the rapid growth of digital assets and stablecoins could complicate the conduct of monetary policy. He said central banks need to ensure that new payment tools do not undermine macroeconomic stability or allow money to circulate beyond regulated channels. Hong Kong to license crypto dealers, custodiansAs Beijing moves to strengthen its state-backed currency framework, Hong Kong is also tightening oversight of the crypto market. On Dec. 24, the city’s Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC) released their conclusions on proposed legislation to regulate virtual asset dealing and custodial services. Following the implementation of the Stablecoins Ordinance in August, regulators are now moving to require firms offering crypto dealing or custody services in Hong Kong to obtain licenses and operate under regulatory supervision. They also began seeking feedback on whether to extend oversight to virtual asset advisory and management providers, with the proposed framework modeled on existing securities market rules. In a separate development underscoring the contrast between state-backed and decentralized digital currencies in the region, reports this month pointed to a sharp drop in Bitcoin network activity linked to mainland China. BTC hashrate drop seen amid China mining changesKong Jianping, CEO of Nasdaq-listed Web3 infrastructure firm Nano Labs, said on the social media platform X that the global Bitcoin network’s hashrate fell by about 100 exahashes per second, or roughly 8%, around Dec. 15. He attributed the decline to the shutdown of an estimated 400,000 mining rigs, mainly in Xinjiang. A lower hashrate means less computing power is securing the network, reducing competition among miners that validate transactions. China has maintained a broad ban on crypto trading and mining since 2021. Industry outlet Wu Blockchain said the reasons for the latest shutdowns were unclear. 

GroundX releases membership NFT for JND Studios’ character figures on Klip DropsGroundX, the blockchain subsidiary of South Korean conglomerate Kakao, has teamed up with JND Studios — the only hyper-realistic figure maker in South Korea — to drop a membership non-fungible token (NFT) collection on Klip Drops, its digital art curation gallery and NFT platform, according to an official announcement on Monday (local time).Photo by Choong Deng Xiang on UnsplashExclusive accessJND Studios’ figures are known for being hard to acquire, as they are often made in small batches that sell out quickly. Owners of the membership NFT will get the exclusive opportunity to be the first to purchase products from the company’s K-Star Figures lineup, which features figures of popular characters from South Korean movies and dramas. This will allow the NFT owners to secure the items before their official release without the risk of them selling out prematurely.The first character from the lineup — actor Choi Min-sik as Oh Dae-su from the critically acclaimed film “Oldboy” — will be gifted to customers who purchase the NFT. The product is valued at KRW 3 million (approximately $2,300), according to JND Studios. A figure of actress Kim Hye-soo as the iconic Madam Jung from the movie “Tazza” will also be unveiled early next year.The sales period for the NFT drop will run until Jan. 3 with a limited quantity available for purchase. Buyers can link their Klip wallet on the JND Studios website, verify the NFTs they own, and then purchase the K-Stars membership NFT to get their hands on the upcoming K-Star Figures.Spearheading NFT integrationGroundX is leveraging Klip Drops to promote the widespread adoption of NFTs by implementing them in diverse sectors, such as art, retail and culture, where they can be used as membership vouchers, tickets or even coupons.