Bakkt targets business expansion in Asia

Zodia Custody to Commence Yield Offering on StablecoinsIn a play that’s designed to entice institutional investors, Zodia Custody, a portfolio company of Japanese financial services conglomerate SBI, is gearing up to offer a yield on digital assets.Photo by CoinWire Japan on UnsplashIntroducing “Zodia Custody Yield”The crypto startup has introduced “Zodia Custody Yield,” a crypto staking option designed to reward holders of crypto assets stored within its platform. The initiative has been launched in partnership with Singapore-based DeFi platform OpenEden. It promises returns on stablecoins although full details on the offering remain undisclosed.Jeremy Ng, Co-Founder of OpenEden, expressed his belief in the potential of cryptocurrencies to generate substantial passive income for their holders. Ng stated:“There are billions of dollars worth of stablecoins sitting on the sidelines when they could easily be generating yields for investors.”TradFi embracing digital assetsZodia’s move aligns with a growing trend in the financial industry. Yesterday, a leading US bank, Citi, disclosed its collaboration with Maersk to facilitate services that convert funds into digital assets. The primary goal is to enable the bank’s customers to execute nearly instantaneous payments, unrestricted by traditional business hours.Simultaneously, several prominent asset management firms are awaiting a pivotal decision from the Securities and Exchange Commission (SEC) regarding their applications to launch a spot Bitcoin exchange-traded fund (ETF). This list includes major players such as BlackRock, Invesco, WisdomTree, ARK Invest, Valkyrie, and Franklin Templeton. BlackRock, the frontrunner in the efforts being expended towards ETF approval, submitted its application for a spot Bitcoin ETF on June 16.In a recent interview, Bloomberg analyst Eric Balchunas said that he expects $150 billion in capital to flow into the Bitcoin market within two years of a spot Bitcoin ETF approval in the US.The financial strategies of these entities now prominently feature blockchain and crypto-based products, once considered niche but now integral to their operations. Nonetheless, even with widespread anticipation of the approval of BlackRock’s ETF, the firm faces substantial obstacles. US regulators have subjected BlackRock to intense scrutiny due to concerns regarding its ties to China. Additionally, political figures have criticized the asset manager for prioritizing environmental, social, and governance (ESG) criteria over investor returns.Zodia was spun out of British multinational banking firm Standard Chartered. The bank has a positive outlook relative to crypto. In a bold prediction made in June, the UK-based bank forecasted that the value of Bitcoin could potentially surge to $50,000 by the end of the year, with an even more optimistic projection of $120,000 for 2024.In 2021 Standard Chartered, in collaboration with Northern Trust, a leading asset servicing firm, founded Zodia Custody. Since its inception, the venture has garnered a respectable level of success. It successfully secured $36 million in investments and solidified a partnership with SBI Digital Asset Holdings, enabling its expansion into the Japanese market.In May, the firm launched its crypto custodian service in Dubai, having signed a memorandum of understanding (MOU) with the Dubai International Financial Center (DIFC). In June, Zodia partnered with blockchain infrastructure provider Blockdaemon, in an effort to further its crypto staking offering. Earlier this month, the company announced its arrival in Singapore, with a view towards expanding its digital asset custody service there.

Crypto.com Complies with UK FCA’s New Digital Asset RulesWhile some Asian crypto platforms are struggling to comply with the United Kingdom’s Financial Conduct Authority (FCA) regarding new marketing-related rules that took effect on October 8, Singapore’s Crypto.com has confirmed its successful compliance. The firm is registered as FORIS DAX UK LIMITED on the FCA website.Photo by Paul Fiedler on UnsplashContinuing support for UK customersAs a result, UK customers can continue to access Crypto.com’s products and services without disruption. The company emphasized its commitment to strengthening its platform and presence in the UK market. Crypto.com stated that it fully supports measures aimed at enhancing consumer safety and security in the cryptocurrency industry. The company also expressed its ongoing cooperation with UK and international regulators to foster consumer confidence in the crypto sector.Effective from October 8, the FCA’s updated guidelines mandate that all crypto firms marketing their services to UK consumers must register with the FCA and adhere to relevant standards concerning risk disclosures and marketing practices.Regulatory compliance challengesWhile Crypto.com has managed to remain compliant, that’s not the case for all large and well-known crypto platforms. The FCA recently expanded its scrutiny of digital currency exchanges by adding Huobi and KuCoin to its list of unapproved and unregistered firms.The FCA alerted clients to the fact that these service providers were offering various crypto services in the UK without obtaining regulatory approval. This development follows a recent warning from the FCA, which highlighted several other crypto-focused companies.Binance’s compliance difficulties2023 has seen global crypto platform Binance struggle with regulatory compliance in various markets worldwide. In some jurisdictions where it has either decided to withdraw from the market or been asked to leave, the firm has taken the approach of still maintaining exposure to that market by establishing a partnership with a locally registered firm.In the UK, Binance has partnered with Rebuildingsociety.com, a peer-to-peer lending platform. However, its local partner has fallen foul of the UK's FCA. On Tuesday, the UK regulator issued a notice clarifying that Rebuildingsociety.com was not authorized to “approve the content of any financial promotion for a Qualifying Cryptoasset for communication by an unauthorized person.”Dubai-headquartered crypto exchange Bybit is another crypto business that has struggled with the FCA's new regulatory requirements. Last month the exchange denied reports that it was preparing to leave the UK market due to the new strict marketing rules. The following week the exchange confirmed that it would be leaving the UK market, ahead of the introduction of the new crypto marketing regulations.Crypto.com had received registration approval from the FCA in August 2022. At the time, CEO Kris Marsazalek stated:“We are committed to the UK market and we look forward to developing our platform and presence in the UK further by expanding our offering to customers, while continuing to work with regulators.”In June, the firm acquired a Major Payment Institution (MPI) license in its home market of Singapore from the Monetary Authority of Singapore (MAS). Around the same timeframe, the firm received a minimum viable product (MVP) license from the Virtual Assets Regulatory Authority (VARA) in Dubai.

In a contrasting move to the recent approval of several spot bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC), regulators in both Singapore and Thailand have turned down permission to list spot bitcoin ETFs.Photo by Dmytro Demidko on UnsplashBitcoin not a qualified assetAccording to local news media on Wednesday, Singapore's Monetary Authority (MAS) has announced its decision not to permit the listing of spot ETFs in the country. The MAS argues that cryptocurrencies, including bitcoin, do not meet the criteria for qualified assets within the context of ETFs. This regulatory divergence means that retail investors in Singapore won't see the introduction of spot bitcoin ETFs domestically. However, they still have an avenue to trade such ETFs as they can turn to local brokerages for access to overseas markets. Despite this allowance, the MAS emphasizes the need for these retail investors to exercise caution due to the inherent high volatility and speculative nature of cryptocurrency trading. A spokesperson from the regulatory authority clarified that while collected investment schemes (CIS), falling under the Securities and Futures Act regulation, include ETFs, they do not encompass bitcoin or any other cryptocurrency. Future potentialWhile MAS may be turning down spot bitcoin ETFs at this point, there’s potential for a change of heart in the future. The FIMA Bill is currently working its way through the city-state’s legislative process. If enacted, it would give broader regulatory oversight of crypto to MAS. Lasanka Perera, CEO of Independent Reserve Singapore, recently suggested that the bill could make an ETF more likely. Thailand says noMeanwhile, Thailand’s Securities and Exchange Commission (SEC) has stated that it currently does not plan to allow asset management firms to launch spot bitcoin ETFs in the country. Thai securities brokerage firms have been encouraging investors to consider investing directly in U.S. spot bitcoin ETFs. The Thai SEC clarified that while it closely monitors these developments, there is no immediate policy to allow spot bitcoin ETFs in Thailand. The regulator emphasizes that Thai investors can still engage in digital asset investments through domestic exchanges licensed by the SEC under the Digital Assets Decree. India, too, doesn’t appear to have been looking favorably on the potential for such products. The governor of the Reserve Bank of India (RBI) said last week that “the way we look at crypto remains unchanged, irrespective of who does what.” Asian optimismIn the wake of ETF approval in the U.S., many industry commentators had suggested that Asia would respond positively. Australian venture capitalist Mark Carnegie has suggested that the developing bull market would be “an Asian story.” Yat Siu, co-founder of Hong Kong’s Animoca Brands, expressed the view that U.S. ETF approval would have a substantially positive impact within the Asian region. Hong Kong appears to be the most positive in the region in its outlook with regard to embracing spot bitcoin ETFs. Immediately following approval in the U.S., a Hong Kong legislator spoke out to encourage a proactive response relative to launch of similar products within the Chinese autonomous territory. Meanwhile, recent news reports indicate that spot bitcoin ETFs experienced substantial trading volume, accumulating $10 billion just three days after their approval in the U.S.