Almost 60K Korean Crypto-Holding Households Owe $389M in Unpaid Social Insurance Premiums

Japanese Exchanges Canvas Regulator to Permit 10x LeverageJapan’s cryptocurrency exchanges are advocating for looser regulations on margin trading, despite the global digital asset market crash experienced last year.According to a report published by Bloomberg on Monday, The Japan Virtual & Crypto Assets Exchange Association has revealed that many industry insiders are seeking leverage limits of four to 10 times for retail investors.Currently, customers are limited to doubling their exposure through borrowing. Genki Oda, the Vice Chairman of the association, believes that relaxing the leverage rule could enhance Japan’s appeal to crypto and blockchain companies, thereby stimulating increased trading activity.Photo by Su San Lee on UnsplashOngoing discussionJapanese digital asset exchanges are currently engaged in discussions to establish a consensus on the recommended leverage limit. They are planning to present their proposal to the Financial Services Agency (FSA) as early as next month.While Japan has made some efforts to ease certain cryptocurrency regulations, such as token listing and taxation, the overall regulatory environment is considered strict. The FSA expects crypto firms to provide solid justifications for loosening margin trading caps, demonstrating how it would contribute to the government’s objective of expanding blockchain-based industries. However, the agency remains open to discussions with digital asset businesses on the matter.Plummeting trade volumesPreviously, Japanese crypto platforms offered leverage up to 25 times, resulting in annual margin trading volumes of approximately $500 billion in 2020 and 2021. However, after the FSA imposed a limit of two times to curb excessive speculation and protect investors from amplified losses, trading volumes plummeted by 75% in 2022.In other parts of the world, digital asset exchanges typically offer spot margin trading with leverage ranging from five to 10 times the initial deposit, depending on local regulations. Some platforms even offer more aggressive lending options, often associated with speculative behavior that can generate waves of greed and fear within the crypto market.Oda argues that digital asset volatility has decreased since 2020 and asserts that Japanese exchanges are well-prepared to assist investors in managing the risks associated with margin trading positions. However, any relaxation of leverage rules is not expected to occur before 2024.Leverage dangersLast year’s global cryptocurrency downturn exposed risky practices and resulted in numerous bankruptcies. Regulators worldwide have responded by implementing new rules and regulations that address the lessons learned. While leverage might be in the interests of the exchange operators, many industry commentators have warned that leverage brings about market weakness.Caitlin Long, Founder and CEO of Custodia Bank, has been one such commentator, warning that massive leverage “built an industry of insolvent intermediaries” on a “foundation of sand”. It’s commonly believed that leverage leads to unsustainable market bubbles rather than iterative organic market growth.In 2022, an index tracking the top 100 cryptocurrencies partially recovered, showing a 33% increase since the beginning of this year. However, the market still faces challenges, as institutional and individual investors have exited, leading to reduced liquidity and lower expectations for price volatility in Bitcoin and other cryptocurrencies.

Uzbekistan’s New Private Bank Joins National Crypto Card InitiativeIn a step towards enhancing its cryptocurrency ecosystem, the Republic of Uzbekistan has given the green light to include another private bank in its ongoing national crypto card project. The development was announced through an official press release earlier this week by the National Agency of Perspective Projects (NAPP), the country’s regulatory authority for digital assets.Photo by engin akyurt on UnsplashBuilding upon a crypto frameworkUnder the provisions outlined by the Uzbekistan Ministry of Justice on December 30 of last year, the Special Regulatory Sandbox Regime was established. This unique framework empowers specific entities within Uzbekistan’s crypto sphere to provide specialized services. JSV Ravnaq Bank has now been registered as a member of this regime, enabling its active participation in the pilot phase of the nation’s crypto card project.Virtual bank cardThis initiative is poised to introduce a virtual bank card named “CRYPTO CARD — UzNEX.” The card’s standout feature is its ability to facilitate automatic fund addition to users’ primary accounts. This is achieved by swiftly converting crypto assets from a digital wallet on a partner crypto exchange platform.A vital aspect of the crypto card’s development lies in its compatibility testing with various financial systems, including the widely used Mastercard payment platform. According to NAPP’s statement, the participant bank within the special regulatory regime will be rigorously testing the integration of the automated banking system, crypto-exchange information system, bank processing center, and the MasterCard international payment system.December launchNotably, the addition of Ravnaq Bank marks the second entrant into the project, with Kapital Bank being the first participant approved in May. While Kapital Bank’s testing phase commenced at the end of June 2023, Ravnaq Bank is set to initiate its test launch by the end of October 2023. Both banks are expected to launch the full project by late December, in accordance with NAPP’s timeline.Beyond these private banks, the Special Regulatory Sandbox Regime also includes UZINFOCOM, a company authorized to develop NFT certificates based on distributed data registry technology.

Korea Exchange sets the stage for security token tradingStarting next year, South Koreans may have the opportunity to trade security tokens, as the Korea Exchange (KRX), the sole securities exchange operator in the country, has officially begun preparations to establish a security token market. The Busan Digital Asset Exchange (BDX), slated for launch next year, is expected to play a pivotal role in spearheading the growth and development of this emerging security token market.Photo by Tierra Mallorca on UnsplashSeeking approval from financial regulatorsAs reported by local news outlet Busan Ilbo, KRX applied to the FSC last month for registration as an innovative financial service under the financial regulatory sandbox scheme. On Nov. 19, the FSC approved the creation of pilot markets for investment contract securities and non-cash trust beneficial certificates. KRX’s recent initiative is a follow-up to this development. The financial regulator is set to make a final decision after holding a main committee meeting to review KRX’s application.Investment contract securities and non-cash trust beneficial certificates represent two distinct types of security tokens. Investment contract securities provide a means for fractional investments in real-world assets (RWAs). This can include a diverse range of assets such as artworks, music copyrights, beef and carbon credits, allowing investors to own a portion of these assets. On the other hand, non-cash trust beneficial certificates function as secondary investment instruments. These certificates enable individuals to invest in financial products that themselves have invested in security tokens, offering an indirect pathway to participate in the security token market.Fractional investments on the horizonVarious industries are poised to benefit from the emerging digital market, especially platforms focused on fractional investment in artworks. Companies like Yeolmae Company, Art Together and Seoul Auction Blue are keen on this opportunity and have applied to the FSS for permission to register security tokens. Upon receiving regulatory approval, these platforms plan to accept subscription requests, enabling investors to participate in the art market in a more accessible way.The development of security token markets is expected to positively impact BDX, which is currently seeking an operator. Initially, when BDX’s operation plan was unveiled in September, it excluded security tokens due to regulatory constraints. However, with KRX now involved, it’s more probable that the Busan exchange will feature security tokens as major trading assets. Experts believe the success of these token exchanges will largely depend on the quality and appeal of the underlying assets.A local securities industry official emphasized the significant role of the security token market in enhancing the stature of Busan as a blockchain hub. The growth of this market is seen as pivotal in boosting the value and utility of BDX. The official noted that BDX’s appeal to investors would increase if it offered a diverse range of underlying assets or unique security tokens. This development could mark a significant turning point for Busan in the blockchain industry.