DBS Bank enables crypto-linked structured note distribution

Binance Behind New Hong Kong Crypto Exchange Pursuing LicenseThe launch of a crypto exchange named HKVAEX in Hong Kong has raised eyebrows as it appears to be closely connected to the global cryptocurrency giant, Binance.Photo by Florian Wehde on UnsplashResource sharingWhile the two entities do not officially acknowledge any affiliation, they share resources and have some commonalities that suggest a deeper connection, according to a report published by the South China Morning Post (SCMP) on Wednesday.HKVAEX was established in Hong Kong as an independent entity under BX Services Limited. Despite the absence of shared names, official affiliations, or public statements, several clues point to a connection. The logos of Binance and HKVAEX bear a resemblance, and Binance’s official accounts, as well as CEO Changpeng Zhao (CZ), are among HKVAEX’s followers on social media platform X (formerly Twitter).Gaining a foothold in Hong KongIt’s worth noting that Binance’s services are not available in Hong Kong, which raises questions about the motivation behind establishing an independent entity within the city. While HKVAEX appears to be actively pursuing a virtual asset license in Hong Kong, Binance has been relatively silent about its own licensing plans within the Chinese autonomous territory. This move could potentially provide Binance with a strategic foothold in a market that is becoming increasingly significant for digital asset entities.Hong Kong has recently introduced a licensing scheme for digital asset entities, and this development has spurred enthusiasm among such entities to establish operations in the region. Alvin Kan, the Head of Asia at Sei Labs, has noted that Asia is poised to become a major expansion zone for the Web3 sector, with regulatory developments in the US creating opportunities for expansion beyond American borders.Stanley Fung, who currently heads up HKVAEX, previously served as the chief of Huobi’s Hong Kong operations until November 2022, according to his LinkedIn profile. His departure from Huobi coincided with the entrance of crypto entrepreneur Justin Sun into Huobi’s management.In a company-managed Telegram group, HKVAEX has emphasized its status as an “independent crypto exchange” in Hong Kong, separate from Binance. However, it also revealed that it sources liquidity from Binance. Despite asserting its independence and having its own technical team, there have been instances of collaboration between the two entities in Hong Kong, such as a promotional campaign where Binance was referred to as a “partner” in incentivizing the opening of an HKVAEX account.Changing strategyBinance has faced a series of regulatory challenges in recent times. In May, Binance exited the Canadian market due to new regulations related to stablecoins and restrictions on crypto exchanges. In the US, the two leading regulators have filed lawsuits against Binance, CZ, and related entities, leading to the departure of several top officials from the company.The leading global exchange appears to be pursuing a different strategy more recently. It has entered the Japanese and Thai markets through the acquisition of a local entity and a joint venture with a local company. While forced out of the Netherlands, its Dutch customers were moved to rival Coinmerce, which connects to the Binance trading engine and order books.The evolving regulatory landscape is reshaping the cryptocurrency industry, and the relationship between Binance and HKVAEX highlights the complexities and strategies adopted by major players in this evolving space.

GDAC Joins Hands with Bitgo to Fortify Crypto Wallet SecurityCryptocurrency trading platform GDAC, which is operated by South Korean blockchain fintech company Peertec, revealed on October 19 (local time) a partnership with crypto wallet provider Bitgo. This collaboration aims to bolster the security measures for the exchange’s wallets.Bitgo, headquartered in Palo Alto, California, and backed by investment bank Goldman Sachs, is renowned for its secure wallet solutions. As a qualified custodian for digital assets across various jurisdictions such as the United States, Switzerland, and Germany, Bitgo has been serving more than 1,500 institutional clients in over 50 countries since 2013. The company also touts that it processes about 20% of all on-chain Bitcoin transactions by value.Photo by Shubham’s Web3 on UnsplashBitgo’s growing presence in KoreaBitgo’s latest partnership with GDAC isn’t its first venture in the Korean market. Just last month, the company entered into a strategic partnership with Hana Bank, one of Korea’s leading banking institutions. This collaboration aims to drive the development of security solutions, foster technical cooperation, and even explore a potential joint venture in the future.With this collaborative initiative, GDAC is now a partner of two major digital asset custodians: Bitgo and Fireblocks. Through this cooperative network, the Korean exchange seeks to take a leading role in enhancing security as a virtual asset service provider (VASP). In May, GDAC launched a mobile application where users can seamlessly enjoy all of its crypto services, including exchange, custody, and staking.Han Seung-hwan, CEO of GDAC, said that the company places the utmost priority on bolstering its security technology and ensuring the secure storage of customer assets. He added that having solidified its position as an exchange dedicated to institutional clients, GDAC will focus on delivering customer-centric, high-quality services.

Korean Crypto Expert Claims NFTs and Security Tokens Shouldn’t Be a Priority for Investors YetAlthough there has been a lot of speculation recently regarding the prospects of non-fungible tokens (NFTs) and security tokens as lucrative investment opportunities, these topics should not be of concern yet, said Kim Dong-hwan, CEO of Korean crypto consulting firm Wonder Frame, at Tuesday’s 2023 FNTimes Investment Forum hosted in Seoul by the Korean Financial Times.Photo by Markus Winkler on UnsplashFrom a price-to-earnings perspective, these types of investments should not be of priority to the average investor, Kim said, stating that this argument is rooted in historical context. Bitcoin, the kingpin of cryptocurrencies, had its first breakthrough in 2012 when its price was around $13. Since then, its value has skyrocketed nearly 2,000 times. Those who profited from Bitcoin then went on to invest in Ethereum, the second-largest cryptocurrency by market capitalization. Ultimately, the money earned from Bitcoin was constantly circulating in the crypto market.Grappling for liquidityHowever, Bitcoin’s liquidity — the frequency at which assets are bought and sold, which can be deemed the most important aspect of investing in and trading cryptocurrencies — is currently down. Liquidity in the crypto market usually flows in order from Bitcoin first, to altcoins, then to NFTs, Kim explained, because investments in NFTs are made by people who hold cryptocurrencies, not Korean won. Therefore, NFTs, which have now experienced more than a 90% decline from their peak, must depend on Bitcoin’s price recovery for their own resurgence.Securing liquidity for security tokens is also difficult, considering the fact that while these assets share common characteristics with cryptocurrencies, they are subject to strict regulatory oversight by financial authorities such as the Korea Exchange. Therein lies the difficulty in forecasting the prospects for security tokens.Kim thus questioned whether there would be market makers or liquidity providers that would be willing to boldly step into the role of satisfying the market, given the close scrutiny of authorities such as Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS). Although crypto exchanges like Upbit act as market makers by facilitating daily trading worth trillions of won, speculation suggests that securities firms that are responsible for supplying security token liquidity may find it challenging to do the same.Weak investments and negative perceptions of DeFiAnother concern for security tokens is fractional investments, which tend to be concentrated on assets of lower value. “Security tokens are fundamentally about dividing underlying assets and then selling them. However, in many cases, these underlying assets are of lower value or have no choice but to be traded this way,” Kim said.Kim also mentioned the regulatory hurdles hindering decentralized finance (DeFi) in general, despite its reputed appeal. “DeFi is perceived by international organizations like the Financial Stability Board (FSB), the US Federal Reserve System, and the European Union (EU) as a public enemy that causes financial instability in the real world,” he said.Taking all these factors into consideration, Kim recommended against investing in security tokens or NFTs at this time, given the current situation where even Bitcoin’s liquidity is at an all-time low. He suggested that, with market interest rates approaching 5%, unless there is a specific need to invest in virtual assets, it may be better to explore investment options positioned for higher interest rates.Kim is an industry expert who has previously written articles for crypto news site CoinDesk Korea for four years and has taken on the role of Chief Business Development Officer (CBDO) at Blitz Labs, a virtual asset research firm. He founded Wonder Frame in 2022, where he currently works as a professional consultant.