Korean banks to bolster AML measures for cryptocurrency exchanges

OSL Group, a publicly-listed digital asset and blockchain platform company headquartered in Hong Kong, is set to acquire Indonesia’s Evergreen Crest Holdings.Photo by Kelly Sikkema on UnsplashAs the proposed acquisition of Evergreen Crest, a business that includes a virtual assets exchange platform, will involve a share transaction, OSL filed details of the acquisition with the Hong Kong Stock Exchange on June 2. OSL will take a 90% stake in Evergreen Crest in return for $15 million worth of consideration shares, which will be issued by OSL to the seller. This share issuance will account for 1.48% of the total issued shares in the company. Once the acquisition goes through, Evergreen Crest will become a subsidiary of OSL Group, with Evergreen’s financial results consolidated into the overall financial statements of OSL going forward.  ‘Strategic benefits’The filing suggests that OSL management believe that the acquisition “will bring substantial strategic benefits to the Group,” as it opens up access for the company to the Indonesian digital asset market. The company is optimistic about the outlook for the Indonesian crypto market. It stated: “Indonesia possesses key attributes conducive to growth in this sector, including a substantial and youthful demographic, robust economic growth fundamentals, and a rapidly increasing rate of cryptocurrency adoption.” Acquiring licensesOne interesting aspect of the acquisition is that Evergreen Crest has acquired the requisite licensing to operate within the Indonesian market. Those cryptocurrency and futures trading licenses are likely to be of significant value to OSL as it means that through the acquisition, OSL can now enter the Indonesian market in a fully compliant manner. Using the existing compliant platform, OSL intends to expand the range of services offered within the Indonesian market. It indicated that it would do so in respect of payment finance (PayFi) and tokenized real-world asset (RWA)-related products and services, subject to acquiring the necessary licensing. OSL is encouraged by the opportunity that exists within Indonesia as far as tokenized RWAs are concerned. It claimed that the country has already demonstrated significant tokenized RWA-related activity. PT Multikripto Exchange Indonesia (also known as Koinsayang), the exchange business owned by Evergreen Crest, was awarded a virtual asset trading license by the Indonesian regulator, the Financial Services Authority (OJK), in March. At the time, the exchange outlined that it intended to expand its service reach, while creating a better trading experience for users located within Indonesia and overseas. In September 2024, the exchange was awarded a license to offer crypto asset perpetual futures contracts by Indonesia’s Commodity Futures Trading Supervisory Agency (Bappebti).  OSL expanding its reachOSL appears to be making a concerted effort to expand beyond its Hong Kong base. In February it acquired CoinBest, a Japanese crypto exchange, rebranding the business as OSL Japan. At the time it was reported that the company was also looking at opportunities to expand in European markets. OSL was amongst the first digital asset exchange platforms to be licensed in Hong Kong, receiving Type 1 and Type 7 licenses from the Securities and Futures Commission (SFC) in December 2020.

Official Says Hong Kong Should Invest in Web3 EconomyAccording to Hong Kong’s financial secretary, Paul Chan, this is the perfect time for Hong Kong to promote the development of Web3, the next-generation version of the World Wide Web that is decentralized and distributed through the use of blockchain and similar technologies.©Pexels/Tara WinsteadLearning from the dot com boomDespite the recent instability of the virtual assets market and the collapse of some digital asset exchanges, Chan has pointed out that the quality of the real economy has improved since the dotcom bubble burst in 2000, and surviving market players have focused on technological innovation, applications and value creation.In remarks made via a blog post published on Sunday, Chan argues that the development of Web3 is going through the same process. He suggested that the next stage of development would be to focus on developing blockchain technology more deeply to find wider application for it, which would improve existing business models, ultimately benefiting users and improving the quality of the real economy.To accelerate the development of Web3, Chan allocated HK$50 million (US$6.4 million) to the Cyberport business park to organize major international conferences and youth workshops in his latest budget released in February.VASP licensingChan also announced that authorities would introduce a licensing regime for virtual asset service providers (VASPs) in June to ensure appropriate supervision and minimize risks in the innovation and development of Web3. Furthermore, the government is looking into regulating stablecoins or cryptocurrencies with their value pegged to another currency or commodity.According to some local experts, Hong Kong should not delay in pushing Web3 development, and the government should work out clear policies to attract overseas investors and Web3 developers to set up offices in Hong Kong.Working towards a Web3 hubFrancis Fong Po-kiu, honorary president of the Hong Kong Information Technology Federation, told the South China Morning Post that the government could help by building up infrastructure such as data and supercomputing centers to help small and medium-sized enterprises to adopt more advanced technology.Although IT sector veteran Joseph Leung Wai-fung agreed that Hong Kong was lagging Singapore in terms of Web3 development, he suggested that the government should step up efforts to attract overseas investors and Web3 developers by working out clear policies to support them in setting up offices in Hong Kong. He also pointed out that Web3 covers key areas such as artificial intelligence, the Internet of Things, blockchain technology, and metaverse augmented reality, and that every international smart city should explore this area.The recent fluctuations in virtual asset markets and the collapse of some online trading platforms have cast doubts on the future of Web3, but Chan believes that competent market players who survive a “burst bubble” can focus on innovation and make significant strides.The government’s efforts to accelerate the development of Web3 through the allocation of HK$50 million to the Cyberport business park, the introduction of a licensing regime for virtual asset service providers, and the regulation of stablecoins, are steps in the right direction. However, more needs to be done to attract overseas investors and Web3 developers to set up offices in Hong Kong and to build up infrastructure such as data and supercomputing centers to help small and medium-sized enterprises to adopt more advanced technology.

LG CNS Chooses Six Startups to Foster Innovation in Digital TransformationLG CNS, the information technology (IT) arm of South Korean conglomerate LG Group, said Tuesday that it has chosen six startups to nurture under its sixth annual Startup Monster program — a program dedicated to supporting technology startups that are capable of pioneering consumer values in the realm of digital transformation (DX). By directly contributing to their growth as startups, LG CNS also aims to secure them as future business partners.Photo by Milad Fakurian on UnsplashAmong those startups is Zkrypto, a company specializing in zero-knowledge proof technology — a method of providing the validity of a statement without revealing the statement itself. Zkrypto will work with LG CNS on security solutions and privacy protection services necessary for operating digital finance services such as digital wallets and security tokens. The two companies already established their relationship earlier last month when they signed a memorandum of understanding (MOU) to jointly develop blockchain-powered business models.Investing in startup growthUnder the program, the companies will undergo a six-month technology assessment as well as receive KRW 100 million (approximately $75,000) in funding to demonstrate the feasibility of technology integration into their businesses. LG CNS said that it would carry out the assessment by leveraging its extensive business references and technical resources along with assistance from other IT experts.“Through the Startup Monster program, we will continue to discover and nurture promising startups with innovative technologies and create an ecosystem where we can grow together,” said Jeon Eun-kyung, Executive Director of LG CNS’ Convergence Technology Research Institute.Participants from diverse industriesThis year’s recruitment attracted over 240 applicants, resulting in a highly competitive selection ratio of 40:1. Other selected startups besides Zkrypto include GradeHealthChain, Quantum Universe, Delivery Lab, mAy-I, and Circle Platform, which specialize in emerging DX technologies, such as big data analysis, artificial intelligence (AI) modeling, and extended reality (XR).GradeHealthChain is known for its health management app LOG, which analyzes health checkup results and medical information to allocate an overall health score. Users can provide these scores and other medical information to insurance companies partnered with GradeHealthChain to receive premium discounts on insurance. In turn, the insurance companies can use this data to accurately assess the customer’s health status and recommend optimal insurance products. LG CNS plans to work with GradeHealthChain to create services for insurance product recommendations.On the other hand, Quantum Universe specializes in the planning, production, and distribution of XR content. With LG CNS, the company will jointly develop digital twin technology that replicates physical objects in a digital environment for applications in smart factories and manufacturing. They are also pursuing marketing projects using metaverse technology.mAy-I and Circle Platform were chosen for the program for their impressive technical capabilities in data collection and AI modeling. Meanwhile, Delivery Lab operates a food distribution platform in the smart logistics field.LG CNS has been actively nurturing startups and working with them through the Startup Monster program since 2018. Up until last year, a total of 22 startups participated in the program.SelectStar, one of last year’s participants, is currently collaborating with LG CNS as a data construction partner for AI businesses. The two companies have notably created KorQuAD 2.0, a Korean language machine reading comprehension dataset.In addition, Lovo, an AI text-to-speech solutions startup from the third Startup Monster program, worked with LG CNS on developing an AI contact center. According to industry sources, Lovo’s corporate value has increased more than 20 times from the time it participated in the program, reaching KRW 100 billion.