Pakistan moves towards legalizing & regulating crypto

The U.S. Securities and Exchange Commission (SEC) approved the spot bitcoin exchange-traded fund (ETF) last Tuesday, prompting South Korean investors to flock to cryptocurrency exchanges to make transactions. However, the revenues recorded by these exchanges showed a mixed performance in response to this development due to their differing transaction fee policies, according to local news outlet DealSite on Monday.Photo by Maxim Hopman on UnsplashTrading volumes surge and retreatAccording to crypto analytics platform CoinGecko, as of 9 a.m. on Jan. 12 (KST), Upbit's trading volume on Dec. 11 and 12 was approximately $5.1 billion and $6.1 billion, respectively, for a total of about $11 billion. During the same period, Bithumb recorded $2.6 billion and $2.4 billion, respectively, totaling nearly $5 billion. However, as of this writing at 11 a.m. on Jan. 15, Upbit’s 24-hour trading volume has dropped back down to $2.1 billion and Bithumb to $874 million. "After the SEC's approval, crypto exchanges were simultaneously flooded with transactions," an anonymous industry employee commented. "Bitcoin and Ethereum were mainly traded." Fee divergenceAlthough the ETF approval caused a general uptick in trading volumes, the amount of revenue that the exchanges earned from transaction fees varied. Upbit charges a fee of 0.05% for both buying and selling crypto, meaning the exchange made an estimated KRW 14.8 billion in revenue from the fees from Dec. 11 to 12. Bithumb, on the other hand, hasn't earned any revenue from trading fees since its zero-fee policy was implemented in October last year.  Bithumb had previously charged 0.25% for transactions and 0.04% with coupons. By implementing the former, the exchange lost about KRW 15.8 billion ($12 million) in revenue, and with the latter, it lost about KRW 2.5 billion. For crypto investors, Bithumb's zero-fee policy has made investing more accessible, but the exchange is unlikely to reap its own rewards. Significant investor interestMoreover, with trading for the spot bitcoin ETF beginning on the 11th, the influx of funds is expected to boost trading. "All told there were 700,000 individual trades today in and out of the 11 spot ETFs," Bloomberg ETF analyst Eric Balchunas told X (formerly Twitter). "For context, that is double the number of trades for $QQQ." $QQQ refers to the Invesco QQQ ETF. According to an image that accompanied Balchunas’ post, the total trading volume across all 11 spot ETFs was reportedly $4.3 billion. Grayscale's GBTC had the highest volume at $2.1 billion, followed by BlackRock’s IBIT at $1 billion and Fidelity’s FBTC at $673 million.

Hong Kong securities group proposes ICOs as growth opportunityKey stakeholders in Hong Kong’s financial world are contemplating a transformative shift in the Chinese autonomous territory’s digital asset strategy that concerns furthering initial coin offerings (ICOs).Photo by Qinyi Lian on UnsplashRoom for improvementIn a recent letter signed by Chen Zhihua, President of the Hong Kong Securities and Futures Professionals Association (HKSFPA) and published to the HKSFPA website on Wednesday, the introduction of an ICO mechanism as a potential catalyst for the city’s economic revival has been proposed.The letter, which provided the HKSFPA’s “opinions on the 2024–2025 budget,” included the ICO suggestion as recommendation №10 on a list of various proposals. The suggestion comes amid ongoing efforts to navigate the economic challenges posed by the pandemic. Zhihua acknowledges the developmental approach taken by Hong Kong Chief Executive John Lee where financial sector strategy is concerned, but emphasizes the industry group’s belief in the room for improvement that exists to stimulate Hong Kong’s financial sector further.Formalizing ICOsFormalizing ICOs in Hong Kong could establish a supportive environment for crypto startups and investors seeking regulated and secure opportunities. The proposal aligns with a broader call for government engagement in economic recovery and policy-making, emphasizing a collaborative approach toward the crypto sector. This inclusive stance signals a forward-thinking perspective that could lead to more supportive policies and frameworks, fostering a conducive environment for crypto innovation and growth.Reflecting on the history of ICOs, the letter acknowledges the fundraising method’s evolution since the attention garnered by the Mastercoin ICO in 2013 and Ethereum’s significant milestone in 2014. The ICO boom of 2017 saw projects like EOS and Tezos raising substantial funds, accompanied by both enthusiasm for fundraising ease and concerns about investor protection due to minimal regulation.Fraud concernsWhile the ICO boom faced regulatory scrutiny and witnessed instances of fraud and scams, a progressive approach by financial regions such as Hong Kong could reshape the global perception of ICOs. The letter suggests that, under favorable terms, ICOs could play a pivotal role in revitalizing the digital asset landscape.Zhihua underscores the importance of addressing potential challenges by urgently reviewing and enhancing anti-money laundering (AML) and counter-terrorist financing legislation. This cautious approach aims to ensure that ICOs in Hong Kong adhere to established frameworks, avoiding the pitfalls associated with unregulated fundraising.While that’s the HKSFPA’s position, the initial flurry of ICOs a number of years ago involved many projects proposed by scammers and fraudsters. At the time, the Hong Kong Securities and Futures Commission (SFC) recognized the development as “downright fraud” and put pressure on exchanges to delist many tokens.One other related element that the letter proposes is in integrating environmental, social and governance (ESG) and Islamic finance elements into investment immigration policies. This forward-thinking approach reflects a growing awareness of ethical and sustainable investment practices that could potentially position Hong Kong to set new standards for responsible investment.

According to crypto data research platform Xangle, the crypto market is on the road to recovery this year thanks to positive outlooks on developments like a spot Bitcoin ETF, regulatory changes and diversified services.Photo by CHUTTERSNAP on UnsplashBitcoin’s resilienceSpeaking at a special seminar on virtual assets co-hosted by CrossAngle and accounting firm Samjong KPMG in Seoul last Friday, Kim Jun-woo, Co-Founder and CEO of Xangle, cited Bitcoin’s positive reputation as one of the reasons for the optimism. "There are reports that Bitcoin has a low correlation with risky virtual assets," he said. Public sentiment toward Bitcoin is also expected to improve this year as the global economy is expected to emerge from recession and manage a soft landing. Another major item on the agenda is a possible approval by the U.S. Securities and Exchange Commission (SEC) of a spot Bitcoin ETF this quarter. Web3 revolutionIn terms of innovative services, Kim stated that Web3 is expected to be actively implemented in local corporations after going through conceptual and technical testing stages. "In South Korea’s crypto market, (resources like) app stores and mobile phones exist, but there are no actual apps," Kim said. "I expect that figures from traditional finance and existing Web2 companies will enter the Web3 industry this year."  "Web2 companies will discover new business opportunities in Web3 and play a role in bringing existing content and users to Web3," said Lee Hyun-woo, Co-CEO of Xangle, in his presentation on the importance of Web3 system integration and virtual asset disclosure. "Their participation is important for the stable maturation of the Web3 ecosystem," he added. Regulation and governanceIn regards to policies and regulations, expectations point to a resolution of various uncertainties as cryptocurrencies are slowly becoming more integrated into the sphere of traditional finance. In South Korea, the imposition of basic legal regulations on virtual assets is accelerating, such as the Virtual Asset User Protection Act. The Financial Services Commission (FSC) also released guidelines for accounting and disclosure of virtual assets last month, which was examined in detail at the seminar. "The financial authorities' guidelines are more detailed than before. We expect additional guidelines from them in the future to further resolve shortcomings," Choi Yeon-taek, Managing Director of Samjong KPMG, commented.