Security token interest gains momentum in Korea ahead of election

Beijing-headquartered crypto mining equipment manufacturer Canaan recently revealed its financial results for the fourth quarter of 2023, demonstrating that it continues to struggle with profitability despite positive numbers relative to revenues and growth.Photo by Sasun Bughdaryan on UnsplashIncreased revenues and salesAccording to the company’s filing, during the last quarter of 2023 Canaan reported a surge of 45.7% in total computing power sold compared to the preceding quarter, reaching 5.5 million Thash/s. This ascent, which reflects a 191.9% increase from the same period in 2022, signifies not just a recovery but a robust resurgence in demand and operational ability. The company's dispatch of 19.6 million Thash/s throughout the year, marking a 29.6% leap from 2022, aligns with the rebound in bitcoin prices observed in Q4 2023, a pivotal factor shaping Canaan's operational revitalization. 47% growth on previous quarterA closer examination of the financials reveals not only surpassing total revenues but also a notable 47.3% quarter-over-quarter growth. Canaan's foray into international markets, bolstered by securing substantial orders from esteemed public company clients, underscores a buoyant sales performance and a positive outlook for the computing sector. Despite the buoyant sales and revenue figures particularly in the mining machine market, the sector has faced ongoing regulatory uncertainties and market fluctuations. Nonetheless, the company's strategic initiatives, alongside the positive market effects of the approval and listing of spot bitcoin exchange-traded funds (ETFs), have been positive. Moreover, Canaan's investments in wafer supply capabilities and strategic financial maneuvers garnered approximately US$136 million through at-the-market (ATM) programs and preferred shares. Recording a lossYet, the company’s journey in 2023 was not without its hurdles. Q4 2023 witnessed a significant increase in product revenues from the previous quarter but a decline from Q4 2022, attributed to dwindling sales prices as the halving event loomed, underscoring the volatility inherent in the cryptocurrency market. Results published last year are indicative of the company’s difficulty. In Q2 2023, revenues were strong, yet the company wasn’t turning a profit.With Q4 results, it’s now clear that the firm lost $421 million in 2023. In Q4, Canaan recorded a net loss of $139 million. That compares with a loss of $91 million in Q4, 2022. The company also expects tough market conditions in 2024. In its forward-looking outlook, it stated:”For the first quarter of 2024, and the second quarter of 2024, the Company expects total revenues to be approximately US$33 million and US$70 million, respectively, considering the challenging market conditions across the industry. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change.” The crypto mining sector remains a very challenging market. With the upcoming Bitcoin halving event set to occur in April, it’s expected that as much as 20% of mining capacity could be forced offline, as some equipment would simply fail to mine on a profitable basis. Indicative of the challenges within the sector, crypto miner Core Scientific was forced into bankruptcy due to market difficulties in December 2022. It has only recently exited that bankruptcy process and now expects to generate revenues of $600 million in 2024. Another Bitcoin miner, Riot Platforms, has warned that profitability may be difficult to achieve in 2024 due to chip shortages.   

Incheon Unveils Ambitious Four-Year Plan to Become a Leading Blockchain HubIncheon Metropolitan City, home to the largest international airport in South Korea, revealed on October 16 that it has successfully formulated a four-year comprehensive plan that aims to position Incheon as a blockchain hub and spearhead the digital economy sector. This ambitious strategy is slated from 2024 to 2027. The formulation of this plan was entrusted by Incheon to a third-party entity back in April.Shaping Incheon as a blockchain hub has been one of Mayor Yoo Jeong-bok’s policy objectives. Under his leadership, Incheon is dedicated to fostering an industrial ecosystem that supports the digital economy, with a special emphasis on blockchain technology — an essential component in the Web3 era.Photo by Shubham Dhage on UnsplashStrategic roadmapIncheon has crafted an action plan for the upcoming four years, with the primary aim of transforming itself into a city that promotes public involvement, fosters sustainable development, encourages cutting-edge innovation, provides a favorable environment for businesses, and advances technology.Mainnet launchAs the first step, Incheon will establish a blockchain mainnet in 2024. This infrastructure will serve as the foundation for the development of associated services and will offer citizens firsthand experiences of convenience.Through the construction of blockchain infrastructure, encompassing mainnets and testnets, Incheon strives to simplify the process for companies in need of blockchain technology. Even those without their own technological resources or substantial capital will find it more accessible to develop services utilizing blockchain within the city.Blockchain-based public servicesThe city has also discovered various blockchain-based public services for Incheon residents. One of them is constructing digital wallets that leverage resident identification cards through decentralized identifiers (DIDs). These digital wallets are designed to offer a streamlined, one-stop solution, allowing citizens to conveniently access a wide array of public services. For instance, Incheon residents will have the capability to gain entry to public facilities, access various discounts, make online reservations, and accumulate loyalty points, all through the straightforward authentication provided by these digital wallets.Furthermore, the city is looking to implement blockchain technology in the following public services. The “eco platform” will serve as an integrated system aimed at incentivizing citizens who actively engage in environment-friendly activities. The “volunteer platform” will simplify volunteer work processes, including certification and recognition. The “safety management platform” will ensure transparent and safe operations on construction sites.Incheon also plans to create a cluster for the blockchain industry in the Incheon Free Economic Zone (IFEZ). The plan is to attract a blockchain technology innovation support center in the Songdo area of Incheon to create synergies with local businesses.Support for blockchain startupsThe city seeks to create a support system for blockchain startups, assisting them from their inception to growth and global expansion. Additionally, efforts will be made to build a global cooperation network and attract foreign investment funds to further bolster the blockchain ecosystem.The four-year plan also delves into more specific objectives. Among them are the establishment of a system to nurture blockchain talent, creating a conducive environment for refining governance and policies, and initiating a branding campaign to bolster Incheon’s competitive edge in the global arena.Son Hye-young, who leads the Data Industry Division in Incheon City, emphasized that the four-year plan represents Incheon’s ambitious vision to establish itself as a blockchain technology hub. She also expressed the city’s commitment to actively support the growth of businesses in this sector and to create tangible and beneficial services.The detailed implementation strategy for the master plan will be disclosed at the Global Blockchain Incheon Conference (GBIC) 2023, a two-day event set to commence on October 30 at the Songdo Convensia.

Growing Concerns about Single Crypto Exchange Listings in KoreaAccording to Yonhap Infomax, there is increasing concern about single crypto exchange listings in the Korean market, following the recent arrest of two former Coinone employees.©Pexels/RODNAE ProductionsCrypto listing briberyThe individuals were detained by the Seoul prosecution for allegedly accepting about 3 billion KRW (equivalent to over $2.2 million) in bribes to list a certain cryptocurrency on the exchange.Prosecutors are investigating if these suspects were also involved in the listing of the Puriever token, which is reportedly connected to the kidnapping and murder of a woman in her forties in Gangnam, Seoul.Single exchange-listed cryptosA recent report by the Financial Services Commission (FSC) revealed that 389 cryptocurrencies were listed on a single Korean exchange in the second half of last year, a decrease from the previous year’s 403. Despite the decrease, the trend of single exchange listings continued. Exchanges often exclusively list specific cryptocurrencies to gain a competitive edge, as investors typically prefer larger exchanges with greater liquidity.However, these cryptocurrencies may lack proper review and management and are often highly volatile. The FSC report showed that 34% of cryptocurrencies listed on a single exchange had a market cap of less than 100 million KRW (~$76,000). The Financial Intelligence Unit also warned investors about price fluctuations and liquidity shortages.High volatile cryptocurrencies are attractive to exchanges, as they can lead to increased transaction fee profits.Transparent listingTo address this issue, experts advocate for a transparent listing process.One lawyer in the crypto industry noted that there is a global trend of regulating cryptocurrencies as securities, and if relevant bills pass in Korea, their issuance and disclosure will be regulated. Clear guidelines on disclosures could resolve the issues of single crypto exchange listings, the legal advisor added.Another industry insider has called for investor caution, stressing the need to consider the potential delisting of these crypto assets.