Xangle and CertiK Team Up to Promote Mass Adoption of Web3

Korean Financial Authorities to Provide Support for Security Token MarketAmid growing calls for accelerating the growth of the emerging security token (ST) market, the South Korean government is preparing to introduce supportive measures. The security token market is powered by blockchain technology which allows fractional investment in real world assets (RWAs) such as real estate and artwork.Security tokens are digital assets that represent securities generated through a process called security token offering (STO). These tokens, backed by RWAs, can be traded similarly to traditional securities. Investors can use these tokens to obtain shares, voting rights, interest, or profits.Photo by Philip Jang on UnsplashSupport measures for security token IndustryNext month, the Financial Services Commission (FSC) will draw up support measures and policy improvement plans to bolster the nascent security token industry. An FSC representative mentioned that the agency intends to work with the National Assembly to finalize the legislation of security token-related bills by November. Furthermore, the government official said the FSC will actively seek input from industry stakeholders to formulate strategies for enhancing policies designed to promote the growth of the security token market.To align with the national objective titled “The Establishment of Digital Asset Infrastructure and Regulatory Framework,” the FSC revealed regulatory guidelines for security token issuance and distribution in February. These new guidelines are centered around the establishment of institutions responsible for account management and entities engaged in over-the-counter (OTC) trading. Subsequently, in July, lawmaker Yun Chang-hyun, a member of the National Assembly’s National Policy Committee, proposed a bill to amend the Electronic Securities Act and the Capital Markets Act with the aim of ensuring that these Acts are consistent with the new regulatory guidelines.Security token market’s growth potentialWith growing anticipation that the security token market could rival the size of the exchange-traded fund (ETF) stock market, securities firms, banks, and blockchain companies have been eager to carve out a niche for themselves since the start of the year. However, their progress has been hindered by a potentially extended period of higher interest rates in the US and the slow advancement of security token-related legislation. While these organizations tried to explore opportunities through the financial regulatory sandbox, their endeavors proved more or less fruitless. An official from a securities firm voiced concerns over the escalating costs of setting up security token infrastructure, especially with legislative delays.On this matter, the Korea Financial Investment Association (KOFIA) has emphasized the urgent need to pass security token legislation to clear up regulatory ambiguities. They’ve also called for measures to stimulate market growth, such as relaxing regulations related to token issuance and distribution and increasing investment caps.At a seminar hosted by the Korea Capital Market Institute, Ahn Hyuk, Head of the Platform Division at Korea Investment and Securities, highlighted that the rigorous review of security registration applications by the Financial Supervisory Service (FSS) might impede the security token market’s growth. Responding to this, Jang Young-shim, Head of the Corporate Disclosure Department at FSS, said that both the FSC and FSS will carefully listen to industry feedback, addressing a range of topics from regulatory relaxation to investor protection.

South Korea’s FIU Faces Staffing Cuts Amid Crypto ChallengesThe Financial Intelligence Unit (FIU), a department operating under the South Korean Financial Services Commission (FSC), is downsizing its Virtual Asset Inspection Division, reducing its members from nine to seven, as reported by the local news outlet Etoday. The FIU has faced chronic understaffing for several years, and with the cryptocurrency market expanding and issues accumulating, there is growing concern within the industry about the possibility of a regulatory and supervisory gap.Photo by JEONGUK — on UnsplashTemporary division’s tenure extensionMeanwhile, the FIU seeks to extend the tenure of the temporary virtual asset inspection division, currently scheduled to operate from September 16, 2023, until June 30, 2024. Presently, this division comprises one rank 4 officer, four rank 5 officers, three rank 6 officers, and one rank 7 officer. However, the upcoming organizational changes will involve the removal of one rank 5 officer and one rank 6 officer. Moreover, the two temporary employees (one rank 5 and one rank 6), assigned specifically to examine and analyze financial transactions related to virtual assets, will be reduced to a single rank 5 officer.Understaffing and budget issuesAfter several years of grappling with staffing shortages, it appears that a decision has been made to actually reduce the overall number of FIU personnel. Last year, when the NPC of the National Assembly reviewed the budget of the FSC, it pointed out the shortage of FIU personnel. According to the NPC’s report on the FSC, as of 2022, the FIU’s capacity was 83 staff members. However, the current number stands at only 68, which includes 34 individuals who have been seconded from other agencies. Additionally, there are an additional 13 personnel whose positions are not represented in the organizational chart.The FIU’s spending on labor costs has consistently been lower than that of the FSC’s headquarters each year. Between 2017 and July 2022, the FIU used, on average, 83.71% of its allocated budget for labor costs. In contrast, the FSC had a higher average utilization rate at 89.2%. The NPC pointed out that this discrepancy is largely due to staffing imbalances between the two organizations, suggesting that a reevaluation of staffing levels may be necessary.The FIU has long been considered a less popular unit within the FSC. In recent years, the situation has become particularly challenging for the Virtual Asset Inspection Division, which has been swamped with various problems. This has led to a general reluctance among FSC staff to join this particular division.A person familiar with the matter told Etoday that departments within the FSC focusing on financial policy areas like insurance, banking, and capital markets have traditionally been the go-to choices for those aiming for promotions. However, the source added that there’s been a recent shift: more officers are now showing interest in joining the FIU, often with an eye toward transitioning into related industries after retirement.MOIS hesitant on permanent staffingMeanwhile, the Ministry of the Interior and Safety (MOIS) has been reluctant to make the FSC’s Financial Innovation Bureau and the FIU’s Virtual Asset Inspection Division permanent fixtures. While the FSC argues that solidifying these divisions would necessitate a larger staff and budget, the MOIS is holding back. According to another source, the staffing issue isn’t exclusive to the FIU; the FSC as a whole is understaffed. Despite the FSC’s desire to expand its workforce, the MOIS remains unwilling to approve the additional resources.Crypto professionals are worried that financial regulators are cutting back on staff even as challenges within the sector continue to mount. An official from a virtual asset exchange voiced frustration, pointing to the contrasting approach in neighboring Japan. The official noted that Japan is actively pushing to advance its Web3 sector by not only establishing a dedicated virtual asset department within its Financial Services Agency, but also by forming specialized task forces to address specific challenges. The official finds it baffling that Korea, on the other hand, is downsizing departments that tackle these important issues.

Beleaguered Indian crypto exchange WazirX took to social media on April 21 to clarify to the company’s creditors that it is moving closer towards restarting the platform. While the company hasn’t gone into bankruptcy following a $230 million platform hack which occurred in July of last year, it is going through a restructuring process via the Singapore High Court. Posting on the X social media platform, the company addressed concerns surrounding the restarting of operations.  It said that it understood that users were keen to see the platform restart, while reminding stakeholders that from the outset of the process, it had forecasted a first distribution of user funds and a restart of the platform within the April to May 2025 timeframe. Photo by matthew6910 on UnsplashMay court hearingThe firm outlined that its parent company, Zettai PTE Limited, has accomplished all steps to date, in order to bring about the re-emergence of the platform. It has put forward a scheme of arrangement to the court to distribute assets available to it to creditors and bring the trading platform back online.  It identified a May 13 court date as being pivotal to these plans, when the Singapore High Court will hold a sanction hearing and determine whether it confirms the company’s restructuring plan. WazirX added: “While we’ve worked to stay aligned with the previously shared timelines, court proceedings operate independently, and we respect that process. After the Scheme is sanctioned, the First Distribution and restart will follow within 10 business days from the Effective Scheme Date, as outlined earlier.” 85% payoutEarlier this month, 93% of WazirX creditors, accounting for 94.6% of the overall funds owed, voted in favor of the company’s restructuring plan. As part of the plan, users would be compensated with a payout over several distributions of 85% of the overall funds they held on the platform as of July 18, 2024. The company also plans to issue creditors with a recovery token, in an effort to provide them with further value over time. This communication from the company followed the announcement of a court judgement last week by India’s Supreme Court dismissing a lawsuit filed by 54 WazirX users who have lost funds due to the 2024 hack. While the action was dismissed, one of the plaintiffs pointed out on X that the Supreme Court hadn’t indicated that their action lacked merit. He added:”Our criminal writ petition against #WazirX & Nischal Shetty & others was dismissed on jurisdictional grounds.” On that basis, it would appear that the company may still have to deal with such a complaint if brought via a different forum. Over the course of the past 12 months, the WazirX hack stands out alongside an almost $1.5 billion hack at Bybit. In both cases, fingers have been pointed at notorious North Korean hacking group, Lazarus. According to a report published by Chainalysis last December, $2.2 billion had been stolen from crypto platforms in 2024.