Iran acts to regulate crypto to counter sanctions

The launch of Hong Kong's inaugural spot crypto exchange-traded funds (ETFs) is expected to occur by mid-2024, according to one of Hong Kong’s leading crypto executives. Gary Tiu, the executive director and head of regulatory affairs at OSL, a licensed cryptocurrency exchange based in Hong Kong, made that assertion in discussion with The Hong Kong Economic Journal. Tiu provided the publication with insights into the accelerating pace of negotiations between cryptocurrency exchanges and fund companies in the region.Photo by Stella P on UnsplashUp to ten firms contemplating ETF launchOSL is actively engaged in discussions with multiple fund companies, with five to ten firms contemplating the introduction of spot crypto ETFs. Tiu revealed that certain firms have made notable progress, raising the possibility of the debut of these ETFs in Hong Kong by the middle of the year. Additionally, the OSL executive emphasized the significance of maintaining reasonable fees in collaborations between OSL and fund companies, given the limited presence of licensed crypto exchanges in the city – a total of two at present. This suggestion from Tiu aligns with similar recent soundings emanating from HashKey, another licensed crypto exchange in Hong Kong, which recently disclosed its ongoing discussions with asset managers exploring the potential launch of spot crypto ETFs. Livio Weng, the CEO of HashKey, indicated that approximately ten fund companies are considering the introduction of such ETFs in the city. VSFG’s ETF plansAligned with Tiu’s thoughts on the matter, according to a Bloomberg report last week, Venture Smart Financial Holdings Ltd (VSFG), a Hong Kong-based financial services firm, expressed plans to potentially launch a spot bitcoin ETF within the first quarter of this year. Bloomberg reported the company's goal of growing the ETF's assets under management to $500 million by the end of 2024. The regulatory landscape in Hong Kong is actively adapting to accommodate spot crypto ETFs, with the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) announcing in December that they have reviewed their existing policies. Two circulars were published, outlining the requirements for spot crypto ETFs, with the SFC stressing that transactions should be conducted through SFC-licensed crypto platforms or authorized financial institutions. Currently, Hong Kong has listed several futures-based crypto ETFs, including the Samsung Bitcoin Futures Active ETF, CSOP Bitcoin Futures ETF and CSOP Ether Futures ETF. Hong Kong venue for Bitcoin conferenceIn a related development, local lawmaker Johnny Ng revealed on social media on Monday that Hong Kong will host The Bitcoin Conference this year. Earlier this month Ng urged the local administration in Hong Kong to swiftly follow the United States' approval of spot bitcoin ETFs and position the city as a leading hub in the cryptocurrency space. With Hong Kong and Singapore vying for hub status in the Asian region relative to the digital assets space, the launch of ETF products would give the Chinese autonomous territory a competitive head start given that Singapore doesn’t appear to be close to accommodating crypto ETFs for the time being.

Korea to Ban Virtual Asset Deposit Services from Next JulyDuring a recent criminal law seminar held at the Supreme Prosecutors’ Office, Park Min-woo, Director of the Capital Markets Bureau at the South Korean Financial Services Commission (FSC), underscored that starting next year, virtual asset service providers (VASPs) will no longer be permitted to offer deposit and management services for virtual assets. That’s according to a report by local crypto news outlet Digital Asset.This is seen as a response to the suspension of virtual asset deposits and withdrawals carried out by virtual asset yield platforms Haru Invest and Delio a few months ago.Photo by Mathew Schwartz on UnsplashLegal backgroundDirector Park referred to Article 7, Paragraph 2 of the Virtual Asset User Protection Act, clarifying that the intention behind this provision is to ensure that VASPs have the ability to fulfill asset withdrawal requests, even in the scenario where all their customers make such requests. This Act is scheduled to go into effect in July of next year, and Article 7 prohibits VASPs from entrusting customer assets to third parties.Deposit service providers receive cryptocurrency deposits and then distribute the resulting yields to their customers. In a bull market, these entities can manage yields on their own. However, in a flat or bear market, these asset managers may face challenges in paying yields unless they can generate profits by handing over customer assets to external custodians.Signs of giving upIn fact, centralized finance (CeFi) company HeyBit made an announcement last month, stating that it will discontinue its virtual asset deposit service starting from October 2. They cited this specific provision as the reason for their decision.Fraud chargesBoth Haru and Delio have been indicted by the Seoul Southern District Prosecutors’ Office on fraud charges.As an unregistered VASP, Haru suspended its deposit and withdrawal services on multiple occasions in June, causing substantial financial losses to numerous investors. This suspension was triggered by significant losses incurred at B&S Holdings, another unregistered entity to which Haru had entrusted virtual assets.Similarly, Delio, although registered, entrusted a considerable amount of virtual assets to Haru and Traum Info Tech but was unable to recover them.

Bank of Korea and Samsung Team Up for Offline CBDC ResearchIn a move aimed at advancing central bank digital currency (CBDC) technology, the Bank of Korea (BOK) signed a memorandum of understanding (MoU) with Samsung Electronics on Monday, according to a press release. The agreement was sealed during a signing ceremony attended by Lee Seung-heon, BOK’s Senior Deputy Governor, and Choi Won-joon, Executive Vice President and Head of Development in the Mobile Experience (MX) Division at Samsung Electronics.Under the terms of the MoU, both parties have committed to ongoing research on CBDC issued by the Bank of Korea, with a specific focus on collaboration in the offline payment sector. Samsung Electronics had previously participated in the second phase of the CBDC simulation study conducted by the BOK last year.Photo by Aleksandar Pasaric on PexelsCBDC without InternetThe company’s efforts have led to the development of an offline CBDC technology that facilitates transfers and payments via near-field communication (NFC) between devices without requiring an internet connection. These transactions are conducted within the embedded secure element (eSE) chip of Samsung Electronics’ mobile devices, which holds one of the highest levels of security certification, CC EAL 6+.The Evaluation Assurance Level (EAL) is a numeric grading system that measures the security level of tech products and systems according to the Common Criteria (CC) security standard. It ranges from EAL0 to EAL7, with EAL7 representing the highest level of security.Leveraging this technology, the BOK and Samsung will continue their joint research to enhance security in offline payments using Samsung Galaxy smartphones and watches. Additionally, they aim to provide support for stable payments in situations where network connectivity is disrupted, such as during disasters.Growing interest in CBDCsGiven the global interest in CBDCs, with central banks worldwide exploring their potential, the research collaboration between the BOK and Samsung assumes great significance. The results of this partnership will guide further cooperative efforts to develop the international CBDC ecosystem.BOK Senior Deputy Governor Lee Seung-heon emphasized the significance of the joint achievement, expressing optimism that the partnership would keep Korea at the forefront of offline CBDC technology.Samsung’s Executive Vice President Choi Won-joon underscored that the company’s collaboration with the Korean central bank allowed Samsung to utilize its advanced security technology in digital currency. He expected their combined efforts would considerably contribute to the global development of CBDC technology.