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Japanese Survey Finds One-Third Familiar with Web3bitbank, a Japanese cryptocurrency exchange, has released the findings of a survey conducted between June 2 and 8, targeting 547 Internet users to explore their awareness and understanding of Web3. Approximately one-third of the participants reported being familiar with the term Web3.Photo by Bastian Riccardi on UnsplashLevels of knowledgeThe remaining portion of the survey pertained to individuals acquainted with the term. Within this group, 21.6% claimed to possess adequate knowledge of Web3, while 47.9% possessed a general understanding.Familiar conceptsWhen asked about the word “Web3,” 42.1% associated it with the concept of the “metaverse,” followed by cryptocurrency (26.8%) and non-fungible tokens (26.8%). The concepts of decentralized finance (DeFi) and decentralized autonomous organizations (DAOs) were less familiar, with 15.3% and 12.6% of respondents selecting them, respectively.Web3 experienceConcerning initial steps for utilizing Web3 services, 23.7% identified creating an account at a cryptocurrency exchange as the first requirement, while 21.6% believed purchasing a non-fungible token (NFT) was necessary. Additionally, 28.4% stated they had invested in cryptocurrencies. The most popular Web3 service after cryptocurrencies was the metaverse, favored by 27.4% of respondents. Roughly 30% of participants hoped that the Japanese government’s Web3 initiatives include support for startups, followed by expectations of crypto tax revisions (27.3%) and blockchain and metaverse development (25.8%).Notably, among those possessing sufficient or general knowledge of Web3, over 80% expressed positive sentiments towards the Japanese government’s Web3 initiatives.

The Legal Future of South Korea’s Crypto Industry: Necessary Legislation and SystemsA recent National Assembly symposium organized by South Korea’s Digital Asset Policy Forum brought experts together to discuss the challenges and prospects of the implementation of the Virtual Asset User Protection Act at the National Assembly Members’ Office Building in Seoul on Tuesday.Photo by Tingey Injury Law Firm on UnsplashInternational modelsReferences were made to global examples, such as the Markets in Crypto-Assets Regulation (MiCA) — the world’s first standalone virtual asset legislation enacted in the EU — which ensures transparency, disclosure, authorization, and supervision of crypto-asset transactions. However, unlike the capital market, MiCA does not impose regular disclosure reporting requirements or corrections on them. Firms in Japan, on the other hand, are asked to provide disclosure under autonomous regulation through the Japan Virtual and Crypto Assets Exchange Association (JVCEA).Notably, in its recent Policy Recommendations for Crypto and Digital Asset Markets Consultation Report, the International Organization of Securities Commissions (IOSCO) states that it is “seeking to encourage optimal consistency in the way crypto-asset markets and securities markets are regulated within individual IOSCO jurisdictions, in accordance with the principle of ‘same activities, same risks, same regulatory outcomes’.” This principle refers to the concept that any crypto-asset activity that has a similar function and poses similar risks to those in the traditional financial system — such as operating a trading platform or providing custody services — is subject to regulation that ensures equivalent outcomes, as defined by the UK Parliament.The IOSCO report also suggests that crypto-asset service providers (CASPs) should disclose information regarding ownership and control of crypto-assets, issuer and business-related information, issuer management teams, transaction history and operational description of crypto-assets, token ownership concentration, transfer protocols, and a given CASP’s treatment of the client crypto-assets and their respective rights and entitlements during events like hard forks and airdrops.Hurdles to overcomeExperts at the forum reflected these considerations in their sentiments. Han Suh-hee, a lawyer at Barun Law Firm, emphasized that it is important to determine what kind of information should be disclosed. She argued that it is necessary to discuss to what extent information about virtual asset issuers should be disclosed and whether mandating firms to disclose their financial and business conditions is efficient.In particular, Han underlined the need to consider the differences between virtual assets and stocks when establishing a framework for the disclosure of virtual assets holdings. Unlike stocks, virtual assets possess distinctive characteristics like their borderless and decentralized nature, unclear issuer backgrounds, and the ability to conduct peer-to-peer (P2P) transactions.Lee Han-jin, a lawyer at Kim & Chang Law Firm, added that the enactment of Korea’s Virtual Asset User Protection Act was aimed at establishing a system directly targeted at regulating virtual assets and virtual asset service operators (VASPs) — a significant development from the Financial Transaction Reporting Act, which had until now been the only legal framework responsible for regulating VASPs along with other entities like casino business operators. Virtual assets are now subject to a more systematized regulatory approach.However, he said that the Virtual Asset User Protection Act still has its setbacks because it is undergoing a two-stage legislative process. Lee criticized the fact that the same definition of VASPs outlined in the Financial Transaction Reporting Act had been brought over, which limits their identity to transaction intermediaries, wallet operators, and custodians while overlooking their other roles like crypto management, crypto deposits, and crypto collective investments.Lee also pointed out another weakness: the scope of prohibition on using undisclosed information and market manipulation is broader in the Virtual Asset User Protection Act than in the Capital Markets Act. He argued that enforcement decrees should stipulate the definition of insiders and exceptional cases when deliberating on the prohibition of insider virtual asset trading.Lee thus emphasized the need for a clear definition of virtual assets in the Virtual Asset User Protection Act, as it is yet unclear whether they are objects or assets. All things considered, he believes there must be a law that can encompass blockchain-based decentralization, outline the similarities and differences between digital assets and financial products, and accommodate new services that utilize smart contracts.“We are in the process of creating a regulatory system similar to those being adopted in other countries based on their respective markets,” said Lee Seok-ran, head of the Financial Innovation Bureau at the Financial Services Commission (FSC). “Unlike the stock market, which is equipped with regulations to prevent fraudulent transactions and misconduct, virtual assets are traded on multiple exchanges, so we are considering how to interpret unfair trading activities and conduct market surveillance.”She explained that the commission is prioritizing user protection measures and subordinate regulations. “I believe we will be able to create a system for subordinate regulations on disclosure once an overall global trajectory is established. But before that happens, we are working on guidelines for defining unfair trading activities with regulators and the Digital Asset eXchange Alliance (DAXA).” Unfair trading activities associated with virtual assets include not only those conducted on exchanges but also under other circumstances.The FSC officer said that the financial authority is set to establish legal criteria to distinguish cases such as false statements in white papers of crypto projects. She added that enforcement decrees will define both the conditions for restricting deposits and withdrawals on crypto exchanges and the corresponding limits.

Upbit D Conference participants share insights on Web3 and blockchainBlockchain specialists from 29 countries gathered on Monday (local time) at Upbit D Conference (UDC) 2023 in Seoul to explore capital markets in the forthcoming Web3 era. This era is characterized by user-controlled, communal data management, a notable shift from the Web2 space where major tech corporations held dominant control over data.Organized by Dunamu, the operator of South Korea’s Upbit cryptocurrency exchange, the conference featured 39 experts, focusing on the transformative potential of blockchain technology in this new internet phase.Photo by Shubham Dhage on UnsplashAsset tokenization and investment opportunitiesAccording to a report by the Asia Business Daily, one of the key speakers at the conference, Wally Yu, a Solutions Architect at San Francisco-based Chainlink Labs, delved into how cross-chain solutions and asset tokenization could add to the financial industry. He explained that Chainlink’s Cross-Chain Interoperability Protocol (CCIP), designed to connect various blockchains, is only beginning to reveal its capabilities in integrating with traditional financial markets. Yu pointed out the growing interest from banks in tokenizing their conventional assets and transferring them to the blockchain. This move, he suggested, could lead to increased liquidity and open up new investment opportunities.Yu also compared the current DeFi market to traditional sectors like stock, real estate, and derivatives, noting DeFi’s relatively smaller scale. However, he underlined blockchain’s transparency as a key advantage over traditional markets, where transparency is often lacking. According to Yu, the adoption of blockchain by traditional financial firms could address longstanding issues more effectively.Looking ahead to the Web3 era, Yu envisioned a scenario where different tokens are interconnected, potentially bringing an estimated $900 trillion worth of assets onto the blockchain. This, he believes, would significantly enhance liquidity in the financial markets.From Web2 to Web3During the conference, Korean mobile network provider SK Telecom’s (SKT) Vice President, Oh Se-hyun, outlined the company’s forward-looking strategy to transition its 30 million subscribers from Web2 to Web3. She highlighted SKT’s search for high-value markets to expand its business scope, underscoring the company’s active efforts in constructing Web3 infrastructure. This strategic pivot aligns with their vision for the upcoming Web3 era.SKT, which established its Web3 division in 2017, initially engaged in developing a private mainnet. However, the company has since shifted its focus towards services aimed at boosting customer engagement, such as custody, web and app services. Oh emphasized the need for Web3 wallets to support a diverse range of assets and decentralized applications (dApps), but she stressed that ease of use is paramount. She views that these wallets will serve as gateways for customers entering the blockchain space.SKT has developed and is improving its own Web3 wallet, dubbed Wallet T. Oh shared her belief that the future of financial business models will pivot from traditional and big-tech banks to those based on public chains. In preparation for this shift, SKT is contemplating strategies to embrace blockchain-based Web3 services.Crypto regulationThe conference also touched on the potential integration of virtual assets within regulatory frameworks. There’s growing anticipation in the market for the approval of spot bitcoin exchange-traded funds (ETFs) by the United States Securities and Exchange Commission, especially following the inclusion of asset manager BlackRock’s proposed spot bitcoin ETF in the Depository Trust and Clearing Corporation’s (DTCC) clearing-house eligibility file.Emily Parker, Executive Director at CoinDesk, mentioned that a spot bitcoin ETF is on the horizon in the U.S. She anticipated that such a development would not only boost cryptocurrency prices but also positively impact the market for non-fungible tokens (NFTs). Echoing this sentiment, Oh Se-hyun from SKT predicted that the approval of a spot bitcoin ETF could unlock access to a $30 trillion market.SKT’s Oh also addressed the complexities surrounding the regulatory landscape for cryptocurrencies. She acknowledged the challenge facing authorities in developing these regulations all at once, highlighting the gradual progress in this area. She cited the outcome of Ripple’s lawsuit in the U.S., which resulted in Ripple’s XRP tokens being classified differently for different investors: as a security for institutional investors but not for retail investors. Additionally, Oh pointed to the upcoming Markets in Crypto-Assets Regulation (MiCA) in the European Union, slated for implementation in December 2024. She emphasized that the establishment of such regulatory guidelines brings clarity and reduces uncertainty, which can be reassuring for businesses operating in the crypto space.Providing further insights into this matter, Kim Gap-rae, a senior researcher at the Korea Capital Market Institute (KCMI), spoke about the importance of regulatory clarity in the cryptocurrency sector. He pointed out that it’s more crucial for governments to have clear regulations rather than focusing on the extent of regulation. Understanding new regulatory or legislative trends is essential for governments as they look to develop new infrastructures.According to Kim, a potential spot bitcoin ETF approval in the U.S. could prompt South Korea to consider a similar approval. However, he noted that Korea currently lacks a regulatory framework for Bitcoin custody, which could lead to a competitive environment among crypto companies in the country. Kim believes that a deeper understanding of custodian regulations will enable better adaptation to new types of ETFs and foster their growth in Korea.