Further Trials Required Before Determination of eHKD Launch Date

Circle President Heath Tarbert, who oversees the issuer of the USDC stablecoin, arrived in Seoul on Aug. 21 for a series of meetings with South Korean cryptocurrency and blockchain industry leaders, as well as the governor of the country’s central bank. Citing industry sources, local outlet Newsis reported Tarbert visited three major exchanges, Upbit, Bithumb and Coinone, shortly after landing, spending roughly an hour at each. Discussions centered on recent developments in Korea’s digital asset ecosystem.Photo by Daniel Bernard on UnsplashGathering insight from exchangesThe trip underscores Circle’s growing interest in South Korea, one of the world’s largest crypto markets by trading volume despite its heavy tilt toward retail investors. Circle is reportedly seeking on-the-ground insight from local trading platforms. An executive from a research firm said the market offers an attractive foothold for global players looking to deepen networks. Previous reports indicated Circle has also begun informally recruiting in South Korea to support initiatives tailored to the local market, and the company is also weighing a direct investment in a domestic crypto firm. Homing in on stablecoinsStablecoins are expected to dominate the agenda with exchanges. USDC is the world’s second-largest stablecoin by market share, behind Tether’s USDT, and all three exchanges already support USDC trading. Upbit and Bithumb have meanwhile indicated their plans to develop Korean won–pegged tokens, recently filing trademark applications for their projects. Given Circle’s position in the sector, one exchange official said local platforms may look to the U.S.-based company as a benchmark, adding that practical knowledge-sharing could be the most meaningful outcome of Tarbert’s visit. Tarbert also attended a dinner with Simon Seojoon Kim, CEO of crypto venture firm Hashed, whose teams span Seoul, Singapore, Bengaluru, Silicon Valley and Abu Dhabi. Circle and Hashed have been in frequent contact, and the gathering offered another forum to exchange views on recent market developments. Talks with the central bank governorOn the policy front, Tarbert met with Bank of Korea (BOK) Governor Rhee Chang-yong at Circle’s request before the dinner. Rhee has signaled openness to the introduction of won-backed stablecoins, while emphasizing prudential safeguards and noting differences with some lawmakers on potential issuers. The BOK head has previously warned that allowing non-bank entities to issue won-backed stablecoins could pose risks, such as circumventing capital rules. The South Korean central bank is working with other agencies to develop a framework that ensures the stability and utility of stablecoins while preventing their use to bypass foreign exchange controls. The meeting between Tarbert and Governor Rhee likely covered regulatory parameters for cross-border remittances using stablecoins and avenues for public-private collaboration to foster a compliant won-stablecoin market. On the following day, Tarbert is slated to meet executives from four major financial groups: Shinhan Financial Group, Hana Financial Group, KB Financial Group and Woori Bank. Kakao Group, the company behind the KakaoTalk messaging app, is also on the itinerary. Representatives from its mobile payment platform, KakaoPay, are expected to take part in the discussions. The talks come as Kakao recently formed a task force to navigate Korea’s evolving stablecoin rules. Separately, Circle listed on the New York Stock Exchange (NYSE) earlier this year under the ticker “CRCL.” The initial public offering (IPO) priced at $31 a share and opened at $69, raising nearly $1.1 billion. As of Aug. 21, the stock closed at $131.80. 

Hana Bank Teams Up with Content Distributor Danal Ent to Establish Security Token EcosystemHana Bank and Hana Securities, affiliates of South Korea’s renowned Hana Financial Group, have recently entered into a business agreement with content distributor Danal Entertainment as reported by local news outlet Newsis. The purpose of this collaboration is to establish a security token ecosystem centered around content and explore mutually beneficial business prospects.Photo by Shubham Dhage on UnsplashIP-backed security tokensUnder this agreement, their security token ecosystem will leverage Danal Entertainment’s diverse intellectual properties (IPs) associated with music, movies, goods, and concerts. Through the tokenization of copyrights, patents, and trademarks, the collaborative group aims to introduce cutting-edge digital financial services that provide convenient and user-friendly means of purchasing and managing a wide range of tangible and intangible assets.Legislative push in parliamentTheir collaboration aligns with the ongoing efforts within the Korean financial authority and political circles to promote security token legislation. It was reported earlier that proposed amendments to the Electronic Securities Act and the Capital Markets Act, which aim to legalize security tokens, will be submitted to the National Assembly later this month.Choi Won-young, the Managing Director of the Digital Division at Hana Securities, emphasized that this partnership seeks to establish a successful security token business model within the content and entertainment sector. Furthermore, he expressed the company’s commitment to delivering innovative digital financial services that utilize content-based security tokens, thereby creating new experiences and value for customers.Lim Yoo-yup, the CEO of Danal Entertainment, highlighted their aspiration to revolutionize the Korean content industry by streamlining the process of content creation and consumption. The expectation is to introduce a new paradigm in the industry by making it easier for users to engage with content.Danal’s setback and resilienceMeanwhile, Danal Entertainment’s parent company, Danal, reported a net loss in the first quarter of this year, primarily attributed to the decline in the value of Paycoin (PCI). PCI is the native token of PayProtocol, Danal’s crypto payment platform. The loss was largely a result of PCI’s delisting from the member exchanges of the Digital Asset eXchange Alliance (DAXA). DAXA consists of the nation’s five largest crypto trading platforms: Upbit, Bithumb, Coinone, Korbit, and Gopax.Despite this setback, Paycoin (PCI) has managed to secure trading support from cryptocurrency exchanges Huobi, OKX, Bitget, and GDAC. Furthermore, Danal is taking measures to remedy the situation. They are focusing on providing major cryptocurrency payment solutions and wallet services within the Korean market, seeking listings on foreign crypto exchanges, and expanding their presence in global markets.Hana’s blockchain initiativesIn a separate development, the Hana Financial Group has recently been actively promoting businesses utilizing blockchain technology. Earlier this month, Hana Bank joined forces with Korean blockchain firm Trackchain to develop and operate a platform that facilitates art banking services based on Web3 technology. These services involve the exhibition, advertisement, and distribution of artworks.

Temasek Cuts Pay Following FTX AutopsySingaporean state-owned investment firm, Temasek Holdings, has announced a reduction in compensation for executives responsible for the company’s investment in the now-defunct cryptocurrency exchange FTX. Temasek, once the second-largest outside investor in FTX, faced scrutiny after the collapse of the exchange.Photo by Emilio Takas on UnsplashNo misconduct findingOn May 29, Temasek released a statement confirming the completion of its internal review of the $275 million investment loss incurred from FTX. The review determined that there was “no misconduct” within the company. However, both the investment team and senior management took “collective accountability” and experienced a reduction in their compensation.While acknowledging the inherent risks associated with any investment, Temasek emphasized the importance of continuing to invest in new sectors and emerging technologies to understand their potential impact on the business and financial models of existing portfolios. They recognized the need to adapt to an ever-changing world and explore avenues that could drive future value.It’s worth noting that the $275 million loss from the FTX investment constituted only 0.09% of Temasek’s portfolio value, which stood at over $293 billion at the time of the collapse.Temasek maintained that it conducted extensive due diligence before investing in FTX, emphasizing its commitment to a thorough review process. Chairman Lim Boon Heng stated in a May 29 interview with Bloomberg that there was fraudulent conduct intentionally hidden from investors, including Temasek. The negative outcome of the investment has been disappointing for the company and has had a significant impact on its reputation.Reputational damageSingapore Deputy Prime Minister Lawrence Wong echoed similar sentiments, highlighting the financial loss and reputational damage caused by the FTX collapse during a parliamentary meeting in November 2022.During the due diligence process, Temasek reviewed FTX’s financial statements, assessed regulatory risks related to financial service providers in the cryptocurrency market, and sought legal advice. The company also engaged with individuals who had firsthand knowledge of FTX, including employees, investors, and industry participants.In recent news, Temasek addressed and dismissed rumors about a $10 million investment in Array, a developer of algorithmic currency systems based on smart contracts and artificial intelligence. The company clarified that such reports were incorrect, refuting the circulating news articles and tweets.Temasek’s internal review process is certainly a move towards transparency and accountability. It indicates a willingness towards addressing the matter. That said, there are FTX creditor groups who fervently disagree with Temasek’s analysis.Class action lawsuitEarlier this year a number of FTX creditors filed a class action lawsuit against a number of venture capital (VC) firms, including Temasek. The FTX customers maintain that Temasek and others played a role in a conspiracy to defraud them. Venture capital firms have countered with the view that they themselves were victims as a consequence of the FTX collapse, suffering multi-million dollar losses.The fact remains that VCs get much further involved than merely handing over a check. They get involved with marketing, operations, and many other facets of the businesses of their portfolio companies. Meanwhile, other creditors suggest that Temasek has a responsibility to do right by the 1.4 million FTX creditors (a disproportionate number of them being Singapore-based) and to invest in a restructured FTX business, an option that represents the best opportunity for FTX customers to recover their funds.Temasek may have reached certain conclusions by way of their internal report on the matter but this is not likely to be the final analysis relative to its involvement in the fall of FTX.