Short-Term Crypto Investment Prevails Among Hong Kong’s Retail Investors

Korea to Tighten Scrutiny of Crypto Exchange Shareholders Amid Rising ConcernsSouth Korea’s financial regulator is stepping up efforts to evaluate the qualifications of majority shareholders of cryptocurrency exchanges, according to a report by local news outlet Newsis. This initiative follows instances where majority shareholders of local exchanges, including Bithumb, found themselves embroiled in criminal proceedings. Drawing parallels with the banking sector, the regulator is scrutinizing the credentials of majority shareholders to ensure compliance and integrity within the cryptocurrency exchange landscape.Photo by Terrence Low on UnsplashRevamping reporting requirementsThe Financial Intelligence Unit (FIU) under the Financial Services Commission recently set up a task force to revamp the reporting requirements for crypto exchanges.The upcoming requirements are anticipated to be integrated into the reporting forms that cryptocurrency exchanges must complete, starting in October of next year. Essentially, these stipulations will determine whether existing exchanges, such as Upbit, Bithumb, and Coinone, can sustain their operations in the future.Periodic evaluationAccording to the Enforcement Decree of the Financial Transaction Reports Act, all virtual asset service providers (VASPs), including exchanges, are mandated to submit a renewal report every three years. Upbit, having been the first to submit its initial report in October 2021, will join other crypto exchanges in updating their reports in October 2024.A majority shareholder qualification assessment is a process in which the government periodically checks whether majority shareholders have the necessary qualifications to operate a financial company. Through this process, the FIU aims to curb potential illicit activities by majority shareholders, who hold significant sway over cryptocurrency exchange operations, thereby mitigating any potential harm to the users.Regulatory grey areaThis measure emerged from concerns that majority shareholders of exchanges have existed in a regulatory grey area. In fact, under the Financial Transaction Reports Act, only exchange representatives and registered officers are required to report and undergo examination when declaring VASPs. This leaves the actual owners and controllers — the majority shareholders — unidentified and unexamined.The current circumstances involving VASPs are markedly different and more concerning compared to other financial sectors. In the banking sector, restrictions are placed on share ownership and voting rights if majority shareholders have breached financial laws or if they are capital entities forbidden from owning a bank. Similarly, online peer-to-peer lenders and large lenders are also under obligation to have their majority shareholders scrutinized, as they fall under analogous regulations.Fraud and manipulation allegationsThe heightened scrutiny is also thought to have been sparked by recent allegations of fraud and market manipulation involving some majority shareholders of Korean exchanges. For instance, Mr. Kang Jong-hyun, a majority shareholder of Bithumb, is currently facing a criminal trial for allegations of fraudulent and unfair trade activities under the Capital Markets Act. Additionally, Song Chi-hyung, the majority shareholder of Upbit and chairman of Dunamu, is facing a Supreme Court trial over alleged price manipulation through wash trading.Moves to amend legislationMeanwhile, efforts are underway in the National Assembly to amend the existing legislation. Yun Chang-hyun, a lawmaker from the ruling People Power Party and a member of the National Policy Committee, has recently proposed a bill to revise the Financial Transaction Reports Act. The amendment seeks to implement a majority shareholder screening system for VASPs.The proposed amendments would obligate VASPs, including crypto exchanges, to disclose information about their majority shareholders in their reports, thereby enabling the FIU to scrutinize any past financial crimes or economic offenses committed by these majority shareholders.

Animoca Brands Holding $3.4B in Cash and ReservesDigital entertainment, blockchain and gamification firm Animoca Brands provided an update on its financial position on Thursday, disclosing $3.4 billion in cash and assets as held on its balance sheet and in tokenized reserves as of April 30.Photo by regularguy.eth on UnsplashA financial breakdownThe Hong Kong-based Web3 firm published the interim financial report to its website. Breaking that down further, the company is holding $194 million in cash and stablecoin reserves. Additionally, $566 million is being held in liquid digital assets. This includes reserves of $SAND, the native token of the Ethereum-based Sandbox virtual metaverse.Beyond this, Animoca holds $2.7 billion in a varied portfolio of digital asset reserves, linked to its majority owned Web3 subsidiaries and portfolio companies. The firm outlined that it intends to release additional financial updates in the near future. That will include an audited financial statement for 2020. Furthermore, a summary statement of business activity for 2022 will be released, together with similar business highlights pertaining to Q1, 2023.Adjusting to changing market conditionsIt’s likely that Animoca took the decision to release this data at this point to bolster confidence in the company, off the back of a number of announcements that may have led some in the industry to question the overall financial health of the company.According to a report published in March by Reuters, Animoca Brands cut its target for its metaverse fund by 20% to $800 million. The scaling back was understood by many crypto sector commentators to be a reaction by the company due to changing market conditions within the crypto space. It was the second such adjustment the company made. In November 2022, the firm was working on the new fund, initially proposing a target of $2 billion. Once January came around, Animoca took the decision to scale that target back by half to $1 billion.Subsequent to reports of the fund scale-back being published, Animoca Brands CEO Yat Siu reacted, telling one crypto media outlet that “the claim that the Animoca Capital fund target was ‘cut’ from $2 billion to $1 billion is not correct, because $1 billion has always been within the range declared.”Playing down the news further, the company added: “There’s no doubt that the FTX and banking crises have had a serious impact on available venture capital, but fundraising for the Animoca Capital fund is in progress. When the raise is concluded, we will inform the market with the appropriate details, including the final size of this fund.”Siu stated that as the source of that report was an unnamed source, it was difficult to figure out the agenda of that person in broadcasting that claim.Animoca is perceived in the industry as a key player, particularly so when it comes to NFTs, blockchain-based gaming and the metaverse. The firm is classed as a Crypto Top 40 company by Forbes, while being a winner of Deloitte’s Technology Fast 50 award. Deloitte’s Technology Fast 50 program ranks fast growing companies based upon their percentage revenue growth over the course of three years.

Wemade Signs Contracts with Game Developers to Expand WEMIX PLAY’s LineupSouth Korean gaming company Wemade has signed contracts with global game developers to bring three new games to its blockchain gaming platform, WEMIX PLAY.Photo by Riho Kroll on UnsplashThree gamesOne of these developers is Cfire Network, based in Singapore, which is working on a strategic card game called Magic Card Duel. In this game, players collect heroes and build decks of cards to challenge each other in battle.Dubai’s Project SEED is also part of the initiative, preparing to release a fantasy action role-playing game (RPG) called Outland Odyssey in the third quarter of this year.Korean company SpaceProbe is contributing to the lineup with Raid of Legends, a mobile action RPG where players can develop characters to explore dungeons, join raids, and engage in combat against each other.WEMIX PLAY’s expansive reachWEMIX PLAY boasts a user base of 9 million and has already added more than 100 blockchain games to its platform, spanning various genres like massively multiplayer online role-playing games (MMORPGs), shooters, and social network games. The platform’s standout feature is its inter-game economy, allowing players to transfer currencies between different games seamlessly.Wemade’s upcoming showcase of its blockchain gaming vision and WEMIX PLAY’s ecosystem will take place at G-STAR 2023, a global game exhibition happening from November 16 to 19 in Busan, Korea.