Hong Kong regulators consider opening up crypto ETFs to retail

Korean Prosecutors Say Do Kwon and His Colleagues Knew Terra Was Unviable from the BeginningKorean prosecutors claimed that Terraform Labs founder Do Kwon and the key members behind the Terra-LUNA crash were aware of the project’s unviability from the beginning, according to a file issued by the Seoul Southern District Court.©Terraform LabsTerraform Labs founders misleading Korean investorsTerraform Labs founders Do Kwon and Daniel Shin attracted 280,000 investors in Korea alone, claiming that the Terra stablecoin is a means of transaction, even though the company leaders had been notified by the financial authority that Terra-accepting businesses were impermissible. It is reported that during a search and seizure of the company, Korean prosecutors collected evidence that its employees shared such knowledge on their internal messaging system.Terra’s cross trading on crypto exchangesKnowing their cryptocurrency’s unviability, Terra executives registered its sister token LUNA for listing on major Korean crypto exchanges in May 2019. According to the Korean prosecution, they used a bot to create a trade volume of more than 800 million won in three domestic crypto exchanges by cross trading between 2019 and early last year.Cross trading is illegal in the stock market, as it is considered as an act of price manipulation, but LUNA was traded in crypto exchanges and it hasn’t been determined whether their token is a security or not. Under current Korean law, the court has to accept it as a security to punish those behind the Terra collapse.Shin’s denial of allegationsMeanwhile, Daniel Shin denied the prosecution’s allegations and argued that they had never received such a notice from the financial regulator.

Bakkt Signals Interest in Entering Hong Kong MarketBakkt, the US digital asset platform owned by Intercontinental Exchange, Inc., the owner of the New York Stock Exchange (NYSE), has set its sights on international expansion, with Hong Kong headlining its focus on regions that offer clearer regulatory frameworks for cryptocurrencies.Photo by Jimmy Chan on PexelsGreater regulatory clarity overseasCEO Gavin Michael highlighted Hong Kong as a target market for the company, given that the autonomous Chinese territory is making rapid progress in establishing regulatory clarity, and at a faster pace than in the United States. Alongside Hong Kong, Michael also earmarked the UK and parts of the EU as possible target markets based on similar rationale.Michael made the comments while speaking at the Piper Sandler Global Exchange & FinTech Conference in New York recently. While emphasizing the company’s commitment to the US market, Michael stated that Bakkt is actively seeking markets where it can gain traction and utilize them as a catalyst for growth. The recent acquisition of Apex Crypto, an integrated crypto-trading platform based in the US, further supports Bakkt’s international plans.Leveraging existing partnershipsMichael anticipates leveraging Apex’s existing partnerships with companies such as Webull, M1, Public.com, and Stash to facilitate expansion into international markets. Bakkt aims to accompany these companies as they venture into offering US equities trading, enabling the addition of crypto trading with minimal barriers to entry. However, regulatory concerns have led to the delisting of 25 tokens on the Bakkt platform.Michael highlighted the progress being made in crypto markets outside the US, where regulatory clarity is being achieved more rapidly. He cited the UK’s advancements in clear crypto regulation, Hong Kong’s allowance of trading certain cryptocurrencies, and the EU’s implementation of the MiCA framework for crypto regulation. While supportive of recent regulatory actions in the US, Michael believes that the country needs to provide further clarity, particularly at the federal level.The lack of regulatory clarity in the US has impacted Bakkt’s ability to collaborate with domestic companies. Despite launching with notable partnerships, including Microsoft and Starbucks, Michael revealed that many firms are awaiting clear regulatory guidelines before entering the cryptocurrency space. He noted that trading activity has been slower compared to Bakkt’s custody service, as regulatory clarity plays a significant role in shaping consumer sentiment and providing operational guidelines for trading platforms.Interest in Lightning NetworkIn addition to exploring international expansion, Bakkt is actively considering the use of the Bitcoin Layer 2 Lightning Network for custody and settlement services. Michael explained that this technology has the potential to revolutionize financial services, particularly cross-border payments.Bakkt’s strategic focus on markets with regulatory clarity and its acquisition of Apex Crypto demonstrate the company’s intent to grow beyond the US. By expanding into Hong Kong, the UK, and the EU, Bakkt aims to meet the demand of partners eager to explore these markets.However, the company recognizes the need for the US to provide clearer regulatory guidelines to foster innovation and accelerate adoption within the domestic cryptocurrency industry. With its custody services gaining traction, Bakkt is still optimistic about the potential of trading as regulatory clarity continues to improve. Moreover, Bakkt’s exploration of the Lightning Network showcases its desire to leverage emerging technologies for more efficient financial services.

Taiwan’s Financial Supervisory Commission (FSC), the independent government agency that regulates activity within Taiwan’s securities, virtual assets, banking and insurance sectors, is planning to invite applications from financial institutions to participate in a crypto custody services pilot program, scheduled to commence in Q1 2025. The Central News Agency (CNA), the national news agency of the Republic of China, published a report on Oct. 8, outlining the FSC’s intentions with regard to this crypto custody pilot program. The media outlet confirmed that three Taiwanese banks had expressed an interest in participating in the program.  The Director of the FSC’s Comprehensive Planning Division, Hu Zehua, outlined at a press conference that the regulator is planning to provide further information relative to the pilot program 15 days in advance of inviting applications from prospective participants. Photo by 張 峻嘉 on UnsplashPublic consultationAdditionally, the FSC executive outlined that the regulator intends to collect feedback from the public relative to the proposed pilot program, and fine-tune the process based upon that feedback. Hu stated that he recognizes that based on crypto custody activity carried out overseas, operational security is of paramount importance. Therefore, the FSC is interested in placing emphasis on this aspect of the activity as part of the pilot program.  Illicit funds and money laundering is another area of concern. With that the FSC executive outlined that financial institutions must proactively block virtual assets that are found to originate from illicit sources. In August a Taiwanese couple was indicted for laundering around $50 million in illegal funds through cryptocurrencies. Earlier this month, the FSC revised Taiwan’s regulatory framework relative to anti-money laundering (AML). The update now requires digital assets firms to register with the Taiwanese government by no later than September 2025. Failure to do so may result in these crypto companies being fined up to $156,000 or company executives facing up to two years in prison. Bitcoin, Ethereum and Dogecoin mentionedPilot program applicants will be expected to specify the type of digital assets they intend to custody. Explanatory information released by the FSC gave Bitcoin, Ethereum and Dogecoin as examples. Additionally, applicants are required to outline the type of client they will cater towards in providing a crypto custody service. Among the examples mentioned were virtual asset platforms, professional investors and general investors. The FSC announced at the end of last month that professional investors are now permitted to access foreign virtual asset exchange-traded funds (ETFs) and invest in them through a re-entrustment method. Taiwan has been making progress recently in bringing about regulatory clarity and establishing conditions within which Web3 companies can develop. The FSC had been working towards the production of draft crypto regulations over recent months. This followed a move by Taiwanese legislators in October 2024 to introduce the Virtual Asset Management Bill to parliament, with the objective of strengthening customer protections and establishing industry supervision. In September, the regulator released guidelines, including a measure which bans overseas crypto platforms from operating within the country.