South Korea weighs crypto’s role in law, debt relief, and payments

In an interview with local media, Hong Kong legislator Johnny Ng called for the Chinese autonomous territory to implement a national Bitcoin reserve. Ng made the comments in a discussion with Hong Kong-based state-owned Chinese language media outlet, Wenweipo. The legislator believes that there is an opportunity for Hong Kong to take advantage of China’s “one country, two systems” approach to governance, which gives it the freedom to implement such a reserve despite mainland China remaining much less enthusiastic where Bitcoin and cryptocurrencies are concerned.Photo by Kanchanara on UnsplashSpot Bitcoin ETF impactThe Hong Kong Legislative Council member suggested that as a first step, Hong Kong needs to assess the impact that spot Bitcoin exchange-traded funds (ETFs) in the United States have had. Spot Bitcoin ETFs were launched in the U.S. in January. The leading spot Bitcoin ETF, IBIT, provided by asset manager BlackRock, has achieved a growth rate five times faster than any other ETF launched in the past. El Salvador and the Kingdom of Bhutan are examples of nations that have made Bitcoin a significant component within their national reserves. A recent report suggests that El Salvador currently holds 6,000 Bitcoin which it purchased at an average price of $45,465. In November, Arkham Intelligence reported that Bhutan was holding Bitcoin with a dollar value which had exceeded $1 billion at that time. Ng also referred to a move by individual states in the U.S. towards holding Bitcoin as a reserve asset. In August, the state of Wisconsin increased its holdings of shares in BlackRock’s spot Bitcoin ETF, IBIT. Last month, the state of Pennsylvania introduced a bill to make Bitcoin a strategic asset. Ohio has proposed similar legislation while Alabama’s State Auditor, Andrew Sorrell, has suggested that his state should establish a Bitcoin reserve. Reducing price volatilityNg believes that furthering the Chinese autonomous territory’s dealings relative to Bitcoin could prove beneficial, given that Bitcoin has the potential to play a role in attracting more talent and investment to Hong Kong. Additionally, he feels that the development of Bitcoin reserves at state level could help in reducing the price volatility of the asset as it goes through the process of global adoption. The Hong Kong lawmaker also believes that there is an opportunity for the Chinese antonymous territory to benefit from first mover advantage, stating that “the value of Bitcoin will be more stable, causing more and more other countries to follow suit and reduce their holdings of traditional assets.” Ng's latest interview follows a similar comment he made on X in July, where he suggested that Bitcoin is worth considering as an official financial reserve for a country. David Bailey, CEO of Bitcoin Magazine, took to X stating: “Hong Kong making moves, SBR here we go. President Trump must make the Strategic Bitcoin Reserve his top priority the day he enters the White House.”In recent days, soundings from Japan and Russia suggested that neither of these countries was prepared to establish Bitcoin reserves. However, just like with the advent of the Bitcoin ETF in the U.S., following Trump’s expression of interest in the establishment of a strategic Bitcoin reserve, the level of consideration of the matter has increased considerably among governments around the world.

Japan’s Financial Services Agency (FSA) is moving to close gaps in crypto regulation and support a new bank-led stablecoin pilot, as markets watch for a potential Bank of Japan rate hike. Tougher oversight of crypto lending and IEOsAccording to a CoinPost report, at the fifth meeting of its Digital Asset Working Group held last week, the FSA discussed introducing new requirements to bring crypto lending clearly within the regulatory framework. While firms managing or staking crypto must register as exchanges, some operators have avoided registration by structuring services as borrowing schemes, which are not legally treated as asset management.Photo by Possessed Photography on UnsplashThe FSA flagged that users face both credit and volatility risks, yet operators are not required to segregate customer assets or use cold wallets. Some services offer returns around 10% or tie up funds for several years, with weak risk management and exposure to re-lending defaults and staking slashing. Under the new policy direction, operators will need stronger risk management for re-lending and staking, tighter custody controls, and clearer risk disclosures and advertising. Institutional-only borrowing not offered to the public will remain exempt. Some members questioned whether the new requirements would be practical to implement for off-chain operators, noting that staking is fundamentally on-chain. The group also examined initial exchange offerings (IEOs) lacking financial audits, particularly those aimed at retail investors. Members discussed limits similar to equity crowdfunding: investments over 500,000 yen ($3,000) capped at 5% of annual income or net assets, up to 2 million yen ($13,000). Most past domestic IEOs were under 500,000 yen ($3,200). Some warned such caps could be bypassed through secondary trading, where tokens are immediately tradable. Major banks pilot stablecoinAlongside stricter rules, the FSA will support a stablecoin pilot led by MUFG Bank, Sumitomo Mitsui Banking Corporation, and Mizuho Bank. CoinDesk Japan noted the project, the first under the Payment Innovation Project, will include three additional participants. Mitsubishi Corporation will oversee operations, while Progmat and Mitsubishi UFJ Trust and Banking will handle issuance and custody. The pilot, launching this month with implementation targeted within the year, will test whether a joint stablecoin by major banks can navigate regulatory and operational challenges. Rate hike speculation mountsJapan’s calibrated digital asset push comes as speculation grows over a possible Bank of Japan (BOJ) rate hike next month. Minutes from the BOJ’s October meeting, cited by South Korean outlet Edaily, show one board member saying most conditions for a hike have been met and that financial conditions would stay easy even after an increase. The BOJ kept its rate at 0.5% at that meeting. A rate hike was described as likely if firms are seen committing to wage increases ahead of next spring’s labor talks and if no major global shocks emerge. Markets, however, remain cautious, citing uncertainty over U.S. tariff effects and whether newly elected Prime Minister Sanae Takaichi will endorse such a hawkish stance. 

Korean Investment Firm Partners with Open Asset to Build Security Token SystemKorea Investment and Securities (KITC), one of the major securities firms in the nation, announced today that it signed a memorandum of understanding (MOU) last week with Seoul-based blockchain developer Open Asset to construct a distributed ledger system for a security token alliance led by KITC. That’s according to a report by local news outlet Dailian.Photo by Growtika on UnsplashSecurity token groupIn March, KITC initiated a security token group called “Korea Investment ST Friends” in collaboration with online banks Kakao Bank and Toss Bank, as well as Kakao Enterprise, an artificial intelligence (AI) solution provider. The primary objective of this alliance is to establish the necessary infrastructure for issuing products suitable for security tokens.Tech expertiseOpen Asset, led by its CEO Kim Kyung-up, boasts a team of tech talents. The company played a key role in the Bank of Korea’s central bank digital currency (CBDC) project and participated in the development of Kakao-backed initiatives such as the blockchain platform Klaytn and the digital wallet Klip.Future system integrationThe partnership with Open Asset aims to integrate the forthcoming distributed ledger system into KITC’s existing securities trading platform, creating synergies for its business. Additionally, the two entities are exploring the possibility of connecting the new platform with the systems of other participants in the group in the future.Choi Seo-ryong, the head of the platform division at KITC, emphasized the investment firm’s objective of establishing market standards for security tokens that offer numerous possibilities. He added that KITC will work with Open Asset to develop an innovative and efficient system.