Circle and SBI Holdings join forces to propel USDC growth in Japan

A couple of days have passed since the 22nd general election took place in South Korea, whose results have disappointed President Yoon Seok-yeol and the country's ruling People Power Party (PPP). The main opposition Democratic Party of Korea (DPK) won the election in a landslide, securing a total of 175 seats out of 300 in the National Assembly.   Now, with the DPK set to continue exerting control over the National Assembly, financial industry insiders are focusing on whether the liberal party will stick to its campaign pledges to ease regulations on cryptocurrencies and related products – most notably, approving investment and trading of spot Bitcoin exchange-traded funds (ETFs) within the country, according to media outlet Yonhap Infomax. Ever since the U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs in January, interest surrounding such products has intensified among Korean investors. Photo by Alesia Kozik on PexelHowever, the Korean Financial Services Commission (FSC) has been reluctant to approve such spot ETFs, citing the potential risk of such approval violating the Financial Investment Services and Capital Markets Act. Various pledges to ease crypto regulations The DPK, in response, has introduced several campaign pledges aimed at easing crypto regulations, both to win votes from younger Koreans – especially those in their 20s and 30s who make up a significant portion of crypto investors in the country – and to bolster the local crypto market. Among these pledges was to include virtual asset ETFs in Individual Savings Account (ISA), which would enhance tax breaks for crypto gains. Another notable pledge was to deduct taxes on crypto gains worth up to KRW 50 million (approximately $36,560). Under the current law, only crypto gains within the limit of KRW 2.5 million qualify for the tax deduction. One local crypto insider commented on the outcome of the general election, saying that the industry will need to keep an eye on how the situation surrounding crypto regulations develops, as easing such regulations was one of the key promises the DPK made during the election campaign period.   Still, long way ahead for Korea to approve spot Bitcoin ETFsMeanwhile, CryptoQuant CEO Ki Young Ju left a comment yesterday on the X (formerly Twitter) post written by crypto analyst MartyParty, which reads, "South Korea has approved spot Bitcoin ETFs."  Ju pointed out that South Korea still has "a long way to go" when it comes to approving spot Bitcoin ETFs, noting that just because "the Bitcoin-friendly Democratic Party," or the DPK, won the general election doesn't mean that financial regulators have approved such products.  

Incheon Partners with Daehong to Implement Web3-Driven Urban Marketing StrategyIncheon Metropolitan City, renowned for its international airport in South Korea, has partnered with Daehong Communications, a marketing solutions subsidiary of the country’s retail giant Lotte Group, to leverage Web3 technology for the purpose of promoting the city.Daehong has established an extensive global network within the blockchain industry. Among its notable partners are layer 1 blockchain Aptos, Metaverse company Animoca Brands, and decentralized social protocol CyberConnect. One of Daehong’s primary initiatives is the NFT project associated with Bellygom, a pink bear character of Lotte Homeshopping, a media commerce affiliate of Lotte Group.Photo by Daesun Kim on UnsplashHarnessing blockchain for city promotionThrough this collaborative effort, Incheon aims to harness blockchain technology to explore innovative ways of promoting the city and building stronger connections with its residents.Incheon has recently been very dedicated to Web3 initiatives in promoting the city. Last month, it worked with The Sandbox, the virtual gaming platform of Animoca Brands, to create a metaverse representation of the Incheon Landing Operation to commemorate the 70th anniversary of the Korean War Armistice Agreement. More recently, the city unveiled its NFT membership program named “Incheon Heroes,” demonstrating its commitment to pioneering its unique path in the era of Web3.Daehong’s role in Web3 adoptionIn the private sector, Daehong has been working towards the widespread adoption of Web3. The marketing firm introduced business models that integrate NFTs into areas that have significant public engagement, such as ticketing, memberships, and brand characters. Daehong has been actively working to facilitate many brands’ entry into the Web3 space.Lee Se-woong, Brand Manager of Incheon City, anticipates that the collaboration with Daehong will serve as a fresh catalyst for Incheon, expressing excitement about the potential synergies between Incheon’s public infrastructure and Daehong’s industrial expertise.Incheon is set to initiate a range of projects by leveraging the Incheon Heroes NFT membership program and the Incheon Universe, a virtual space that allows visitors to immerse themselves in various facets of the city. Furthermore, the city is in the process of establishing collaborations with enterprises, brands, and artists who share a common interest in promoting the sustainability of both the planet Earth and the city itself.

Dunamu, the operator of South Korea’s largest crypto exchange, Upbit, secured approval to renew its registration as a virtual asset service provider (VASP), ending 16 months of regulatory limbo that had clouded the domestic market.Photo by Daniel Bernard on UnsplashAccording to Newsis, the Financial Intelligence Unit (FIU) under the Financial Services Commission (FSC) granted the approval on Dec. 23. Industry participants view the decision as a stabilizing signal for the sector amid the country’s evolving crypto regulations. Under South Korean law, VASPs must renew their licenses every three years. Dunamu submitted its application by the statutory deadline of Aug. 21, 2024, but the review faced prolonged delays due to FIU staffing shortages and overlapping sanctions proceedings. Regulators had flagged Dunamu for alleged violations regarding customer due diligence and transaction restrictions, resulting in a 35.2 billion won ($24.4 million) fine. Prior to the fine, the FIU issued a disciplinary warning to Dunamu’s chief executive and ordered a three-month partial suspension of operations. Dunamu is currently contesting the suspension and warnings in court, with a fourth hearing scheduled for February 2026. Despite the ongoing litigation, the company stated it has addressed all regulatory issues and implemented measures to prevent recurrence. Market clarity fuels expansion, IPO ambitionsWith uncertainty surrounding the market leader resolved, observers expect other exchanges to feel emboldened to pursue expansion, including new business launches and potential initial public offerings (IPOs). Bithumb, the country’s second-largest exchange, is weighing a public listing as early as next year. Securing license renewal would bolster market confidence and expand the company’s strategic flexibility. Other major platforms, including Coinone, Korbit, and Gopax, filed renewal applications late last year. Each faces sanctions proceedings for alleged legal violations, leaving the market closely watching for FIU rulings. Exchanges recruit ex-regulatorsWith regulatory scrutiny remaining a constant challenge, South Korean exchanges are increasingly recruiting former senior financial regulators to navigate the legal landscape. Citing data from the FSC and the Financial Supervisory Service (FSS), Segye Ilbo reported that the flow of senior officials into the crypto sector has accelerated. Between January and November, eight former FSS officials at Grade 4 or above moved to crypto firms—well above the historical norm of one or two annually. Over the past two years, 16 former FSS officials have moved into the crypto industry, with nine joining Dunamu and seven moving to Bithumb. Industry insiders link the trend to the enforcement of the Virtual Asset User Protection Act in July 2024, which brought the sector under a formal regulatory framework. Exchanges are seeking the expertise of retired regulators to manage legal risk and strengthen government relations, particularly ahead of planned phase-two legislation focused on stablecoins. TradFi enters as systemic risks watchedAs digital assets move within official regulatory boundaries, traditional financial institutions are accelerating their entry into the sector. On Dec. 26, Korea Investment & Securities signed a memorandum of understanding (MOU) with Bithumb to collaborate on asset management services, Yonhap News reported. The partnership aims to combine the brokerage's equities expertise with the exchange's digital asset capabilities to offer tailored products. However, the deepening ties between crypto and traditional finance have drawn the central bank's attention. In a Financial Stability Report released Dec. 23, the Bank of Korea (BOK) noted that the correlation between Bitcoin and the S&P 500 has increased since 2020. The BOK attributed this to the introduction of crypto-related financial products, such as ETFs, and increased participation by institutional investors and publicly listed companies holding crypto. Spillover risks in South Korea remain contained given the limited level of corporate participation, despite the government’s move earlier this year to gradually permit corporate crypto holdings. However, the central bank warned that greater institutional participation enabled by regulatory easing could intensify risk transmission. The report underscored the need for safeguards to insulate Korean equities from crypto-market shocks.