Celebrating a Decade of Crypto in South Korea: Experts Convene to Chart the Future

Regulatory Caution Among Asian Nations Amid Reports of Illicit FinancingWith a plethora of reports of crypto-related terrorist financing having been published in recent weeks, it’s understood that Asian nations may be looking to exercise caution when it comes to the current ongoing process of establishing regulatory guidelines for crypto.That’s according to a report published by the South China Morning Post (SCMP) on Thursday. The use of cryptocurrency by Hamas to fund its attack on Israel is being seen as the catalyst that may drive authorities in various Asian nations to take a more cautious approach to regulating digital currencies, according to analysts cited by the publication.Raj Kapoor, the founder of India Blockchain Alliance (IBA), commented on these recent developments, stating:”It is a kick on the backside for most governments. All regulatory bodies will take a closer look at crypto regulation. Governments will need to start implementing new rules and regulations.”At the recent G20 summit held in New Delhi, a joint declaration called for the regulation, supervision, and oversight of crypto assets, among other measures. The declaration emphasized the importance of supporting “a coordinated and comprehensive policy and regulatory framework.”Kapoor stressed the importance of revisiting the declaration and developing solutions to implement its objectives.Photo by Adolfo Félix on UnsplashRenewed scrutinyEvents in Palestine in recent weeks have led to renewed scrutiny when it comes to monitoring illicit financing activity via cryptocurrency. Only days following the recent Hamas attack, Israeli authorities moved to freeze specified crypto accounts.That scrutiny has continued in recent days, with more accounts having been frozen on crypto platforms such as Binance, while more still have been identified as suspicious, with requests for further information having been submitted in respect of over 200 additional accounts.On Wednesday it emerged that the United States Treasury’s Office of Foreign Assets Control (OFAC) had sanctioned a Gaza-based crypto platform.Potential over-reactionWhile crypto-related terrorist financing has been widely publicized, blockchain analytics firm Chainalysis warned on Wednesday that crypto’s role in this illicit activity has likely been overstated. In its blog post on the subject, the firm stated:“Although terrorism financing is a very small portion of the already very small portion of cryptocurrency transaction volume that is illicit, some terrorist organizations raise, store, and transfer funds using cryptocurrency.”Additionally, Chainalysis stated that it had seen “overstated metrics and flawed analyses of these terrorist groups’ use of cryptocurrency.” Peter Van Valkenburgh, Director of Research at non-profit crypto advocacy group Coin Center, also believes that reporting on the matter is not balanced. Taking to X, he stated:“Sensational early reporting on the scale of Hamas crypto fundraising significantly misstated the amounts involved.”Coin Center’s Director of Communications, Neeraj Agrawal, highlighted an article which claimed that crypto “fueled Hamas’ terror attack on Israel” in its title, only to reveal within the body of the article that “cryptocurrency is still far from the largest funding source for terrorism.”Anndy Lian, a Singapore-based author and inter-governmental blockchain adviser, noted that while some countries may consider banning cryptocurrencies as a solution, this could merely drive illicit financing underground and make it more challenging to trace and halt. Lian argued that cryptocurrencies are traceable and trackable, unlike traditional fiat currencies like US dollars.

Gate.HK, cryptocurrency exchange Gate.io’s Hong Kong entity, is discontinuing its operations and has retracted its application for a crypto trading platform license with the local regulator. The company announced on Wednesday a planned "major overhaul" of its platform and has ceased new user registrations and deposits immediately. In compliance with local regulations, Gate.HK will delist all tokens—including major ones like Bitcoin, Ether and USDT—on May 28, urging users to withdraw their assets by August 28. The trading platform, which launched officially in May 2023, aims to re-enter the Hong Kong market in the future after securing the necessary approvals and contributing to the virtual asset ecosystem.Photo by Kelly Sikkema on UnsplashRegulatory environment and industry responseThe withdrawal of the license application, initially submitted in February 2023, was noted on the website of the Hong Kong Securities and Futures Commission (SFC) on May 22, without a disclosed reason for the withdrawal. The SFC mandates that crypto trading platforms without a submitted license application by Feb. 29 must shut down by May 31 or within three months upon receiving further notice. This regulation has impacted several platforms, including HKVAEX and Huobi HK, both of which have recently withdrawn their license applications and ceased operations or faced operational uncertainties in the region. Currently, the SFC is reviewing applications from 20 crypto firms, indicating significant interest among global exchanges in securing retail trading licenses in Hong Kong. 

Busan Blockchain Special Zone Gears Up with Expert-Led Operations CommitteeGovernment officials and various executives from financial enterprises have been appointed as members of the operations committee of the Busan Blockchain Regulation Free Special Zone project, according to local news outlet Etoday on Tuesday. This project is geared towards growing the city as a blockchain hub and nurturing blockchain-related businesses in the special zone that are exempt from regulatory oversight. The operations committee will be responsible for overseeing the designated area, fostering new businesses and facilitating the development of Busan’s blockchain industry.Photo by Maicon Fonseca Zanco on PixabayDiverse lineup of expertsA total of 25 members have been appointed to the committee, including two ex-officio members — Lee Sung-kwon, Deputy Mayor of Busan for Economic Affairs, and Son Sung-eun, Policy Advisor for Financial Startups in Busan. Other members include Kim Sang-min, the leader of Busan’s initiative to establish its own digital asset exchange; Lee Keun-ju, President of the Korea Fintech Industry Association; and Jin Hyeong-gu, Vice President of KakaoPay, along with other relevant personnel and academic experts. Notably, the only representative affiliated with a cryptocurrency exchange is Seo Byung-yoon, Director of Bithumb’s Economic Research Institute.The participation of Jin Hyeong-gu, Vice President of KakaoPay, is also noteworthy given the fact that KakaoPay is under the internet juggernaut Kakao Group along with GroundX and Klaytn Foundation — two entities that served as the main driving force of blockchain projects at Kakao. However, KakaoPay clarified that its involvement in the operations committee is unrelated to any plans for blockchain and virtual asset-related businesses, instead attributing it to Jin’s experience and expertise in anti-money laundering (AML) procedures. Prior to joining KakaoPay, he had been an AML expert at prominent financial institutions like the Financial Services Commission (FSC) and Kookmin Bank.In addition, Kiwoom Securities and Hanwha Asset Management are both members of the Busan Blockchain Industry Association. Kiwoom Securities explained that it was asked to join the committee to serve as a representative of the association.Key milestones and plansThe committee’s first meeting is scheduled for Nov. 9, the first day of this year’s Blockchain Week in Busan (BWB) event, during which it will discuss matters such as the appointment of a chairman and detailed plans for setting the special zone in motion.The promotion committee of the city’s plan for a digital asset exchange, which has been active until now, is also being dissolved as the term for the members serving in the committee has ended. Subsequently, the new operations committee will become a priority.The committee’s detailed blueprint and action plan will be unveiled during BWB. Touting the theme “Target 2026 Blockchain Busan,” the event is set to host local and overseas experts in the field of blockchain and Web3 to jointly discuss the prospects and potential of Busan to become an urban blockchain hub by 2026.