KISA Seeks Partners for Regional Blockchain Innovation Support Center Project

Following the recent bitcoin boom, transactions in cryptocurrencies among Korean investors have surged, significantly benefiting local banks that have made contracts with Korean crypto exchanges to offer real-name accounts for crypto investors. As the price of bitcoin soared to as high as KRW 90 million ($67.6 million) in Korea on Thursday, online-only bank Kbank saw an uptick in trading fee revenue, according to local media outlet The Seoul Economic Daily. Kbank is a partner with crypto exchange Upbit, which accounts for 70% of the Korean crypto market.  Under the current law, Korean crypto exchanges offering trading against Korean won must secure real-name accounts from a bank. These banks typically earn fees of KRW 300 to KRW 1,000 per transaction. Currently, other than Kbank, NongHyup Bank offers real-name accounts to Bithumb, Kakaobank to Coinone, Shinhan Bank to Korbit and Jeonbuk Bank to Gopax.Photo by Kanchanara on UnsplashCrypto trading volume up 68.2% in a monthAccording to Xangle, a crypto data intelligence platform, the total crypto trading volume in Korea rose by 68.2% between the last week of January and the last week of February, rising from KRW 2.39 trillion to KRW 40.2 trillion. During the same period, the daily average trading volume also grew from around KRW 4 trillion to KRW 5.7 trillion.   In particular, the bitcoin trading volume on Upbit surged to 19,254 BTC on Feb. 28, reaching the second-highest level since Nov. 10, 2022, when the asset’s trading volume stood at 20,710 BTC. After signing the real-name account contract with Upbit in 2020, Kbank raked in KRW 29.2 billion in fees during the last bull market of 2021, which was equivalent to 14% of its annual interest income of KRW 198 billion and exceeded its net income for the year, which stood at KRW 22.5 billion. Increased bank deposits from exchange usersKbank also saw a substantial rise in its balance sheet, with Upbit users depositing around KRW 2.94 trillion into their real-name accounts. The sum is six times greater than the deposits made into NongHyup Bank by Bithumb users, which stood at KRW 547.1 billion.  Experts see that the surge in Kbank’s user base, which recently surpassed 10 million users, is largely attributed to growing excitement surrounding bitcoin. One crypto insider said that crypto trading fees, which have been on the decline for the past 2 years, could take a turn this year, signaling further gains for the affiliated banks.  

Dubai-headquartered global crypto exchange Bybit has integrated the Avalon Finance protocol within its platform to offer users greater opportunities to earn yield on Bitcoin. Avalon Finance is a decentralized lending protocol that offers a range of financial services on the Merlin Chain, a Bitcoin layer-2 network. It facilitates users to borrow stablecoins using their Bitcoin as collateral, while also providing opportunities to earn yield by contributing to digital asset liquidity pools.Photo by Kanchanara on UnsplashCeFi to DeFi bridgeAvalon Labs, the driving force behind the Avalon Finance protocol, took to X on April 14 to outline that the protocol had gone live on Bybit. It stated:”By integrating with Bybit Earn, Avalon unlocks new yield opportunities for Bitcoin holders by arbitraging our fixed-rate institutional borrowing layer — delivering predictable, enhanced returns through a seamless CeFi-to-DeFi bridge.” Avalon claims to offer a mechanism which brings Bitcoin into DeFi. It accepts FBTC, an omnichain digital asset with $1.25 billion in total value locked (TVL), pegged 1:1 with Bitcoin, as collateral, while lending it out at fixed interest rates. USDT stablecoin borrowed on the strength of that Bitcoin can then be deployed by platform users to execute high-yielding DeFi strategies via the Ethena Labs synthetic dollar protocol, implicating the use of Ethena USD (USDe) and Ethena Staked USD (sUSDE). In this way, the Avalon Finance protocol is providing a conduit between centralized finance and decentralized finance. Avalon Labs claims that the offering turns Bitcoin into a productive asset. It stated: “Returns are stable, secure, and passed back to Bybit Earn users—making Bitcoin a productive asset while maintaining simplicity and risk control.” More exchange collaborations plannedIt’s understood that Avalon plans to collaborate similarly with other crypto exchanges in the future. Towards the end of 2024, the firm raised $10 million in Series A funding, with the funding round having been led by Framework Ventures, with participation from UXTO Management, Presto Labs and Kenetic Capital. At the time, Avalon Labs asserted that the funding would be used to expand its Bitcoin-centric ecosystem.  BTC-backed public debt fundTaking to X in February, the project outlined that after years of research, it was working towards the launch of a Bitcoin-backed public debt fund that would fall within the parameters of the U.S. Securities and Exchange Commission’s (SEC) regulatory framework. The firm stated:”By exploring regulated investment structures, we aim to bridge the gap between traditional finance and crypto, opening new opportunities for Bitcoin-backed financial products.” Regulation A is an exemption offered by the SEC enabling a company to sell securities to the investing public without full registration. Should it eventually take this path forward, the project would pioneer this approach to launching a public debt fund as little progress has been made by others in taking such a Bitcoin-related product forward to date. Towards the end of last month, Avalon Labs announced that it has added support for BlackRock’s “BUIDL” fund, a tokenized fund created by the world’s largest asset manager, which invests in short-term U.S. Treasury bills.

Korean regulator monitors non-listed token amidst peer-to-peer trading surgeThe South Korean financial regulator is closely monitoring BTCMobick, a non-listed token issued by crypto influencer Oh Tae-min, who is known for authoring books like “The Great Bitcoin” and “Bitcoin and the Geopolitics of the Dollar.” The Financial Services Commission (FSC) is cautioning local crypto exchanges regarding the potential for price manipulation should the token be listed.Photo by Daniel Bernard on UnsplashBTCMobick TokenThe BTCMobick token is reportedly being traded peer-to-peer at around KRW 300,000, which is approximately equivalent to $230, in chat rooms of messaging apps like KakaoTalk outside of cryptocurrency exchanges. The token has gained enough traction to spur the emergence of dedicated apps that facilitate these peer-to-peer trades, charging fees for their services. Based on the size of the chat rooms and apps involved, it is estimated that approximately 3,000 participants are trading the token, according to a report by local news website Etoday.As per another coverage by the same outlet, the Virtual Asset Inspection Division of the Financial Intelligence Unit (FIU), which operates under the FSC, has inquired with local crypto exchanges on two occasions — once in September and again this week — about whether they have listed or are planning to list the BTCMobick token. It’s rare for the financial authority to specifically target a particular token when making inquiries with crypto trading platforms.Potential price manipulationAn FIU official explained the rationale behind the agency’s inquiry into crypto exchanges. The official stated that the probe aimed to caution the exchanges about potential price manipulation of the BTCMobick token. The concern is that many crypto users might suffer losses if such a token, which has been experiencing a continual rise in price outside of trading platforms, were to be listed. Currently, legal penalties for cryptocurrency price manipulation fall under the Virtual Asset User Protection Act, which will not be enforced until July 2024. This indicates a regulatory gap in the immediate term.Hwang Suk-jin, a professor at Dongguk University’s Graduate School of International Affairs and Information Security, pointed out that while giving out privately generated tokens to friends or acquaintances doesn’t raise any legal issues, the situation changes once these tokens are listed for trading on exchanges and distributed more broadly in the market. In such scenarios, these tokens can become a source of legal disputes, he explained.Amidst these developments, there are circulating rumors suggesting that BTCMobick is on the verge of being listed on exchanges. An industry insider has mentioned that there are brokers actively spreading these rumors, indicating that the token might soon become publicly tradable.Oh Tae-min’s denial of rumorsMeanwhile, Oh Tae-min, the creator of BTCMobick who has been distributing his token for free, states that the token is part of an experiment intended to mimic the early stages of Bitcoin. However, critics are concerned that the personally issued token has no practical utility. Addressing the circulating rumors about the token’s potential listing on exchanges, Oh asserts that these rumors are baseless and false. He further warns that any brokers spreading such rumors are likely engaging in fraudulent activities.