South Korea intensifies scrutiny on cryptocurrency exchanges

Hong Kong's debut of Bitcoin and Ether exchange-traded funds (ETFs) faced a tough start on their first day of trading, with volumes falling far below the record-breaking figures seen in the United States earlier in January 2024. Tough act to followThe launch of six spot Bitcoin and Ether ETFs, managed by prominent firms including China Asset Management, Harvest Global, Bosera and HashKey, marked a significant milestone for Hong Kong's cryptocurrency market. However, initial trading volumes indicated a notable contrast with the groundbreaking volumes witnessed during the debut of spot Bitcoin ETFs in the United States. On their inaugural day, the total trading volume of the six new crypto ETFs in Hong Kong amounted to 87.58 million Hong Kong dollars ($12 million). This figure, while significant, paled in comparison to the $4.6 billion trading volume recorded for U.S. spot Bitcoin ETFs on their first day, making the U.S. investment funds a tough act to follow. Despite the disparity, industry experts like Justin d'Anethan, head of APAC business development at crypto market maker Keyrock, viewed the Hong Kong ETFs' performance positively within the local market context.Photo by Simon Zhu on UnsplashAbsence of stakingD'Anethan told The Block that while the trading volume in Hong Kong didn't match the U.S. debut, it reflected a noteworthy level of investor interest, particularly considering the market dynamics in Hong Kong, which lacks access to mainland China investors. Bloomberg ETF Analyst Eric Balchunas suggested on X that people expected too much and that in reality, it was a good first day’s trading. In an interview with Bloomberg, China Asset Management CEO Yimei Li stated that the products open the door “for a lot of RMB holders.” They didn’t show up on day one as d’Anethan pointed out, and he further noted that the absence of staking rewards for Hong Kong's spot Ether ETFs was a notable factor affecting investor decisions. Data from the Hong Kong Stock Exchange (HKEX) cited by Cointelegraph illustrated the relatively subdued performance of the newly launched ETFs. Among them, the Bosera HashKey Bitcoin ETF and Ether ETF recorded modest trading volumes, while the China Asset Management (CAM) Bitcoin ETF demonstrated stronger traction, attracting significant trading volume by the closing bell. Prior to trading, CAM's subscription size for its spot Bitcoin and Ether ETFs drew substantial interest, totaling $140 million during the initial offering period. This heightened anticipation was further fueled by the success of HKEX's cryptocurrency futures ETFs, which garnered $529 million in net inflows in the first quarter of 2024. Fee exemptionsIn an effort to stimulate investor participation, local fund managers and brokerages in Hong Kong offered fee exemptions for the new crypto ETFs. Harvest waived its management fee for six months, while Bosera extended a fee waiver period of four months. Despite the optimism surrounding the launch, potential access to the ETFs by mainland Chinese investors remains uncertain, subject to Know Your Customer (KYC) policies. Meanwhile, the Securities and Exchange Commission's (SEC) stance on Ether ETFs in the U.S. complicates the prospects of listing such products in the near future. While Hong Kong's debut of Bitcoin and Ether ETFs faced challenges in matching the fervor witnessed in the U.S., it nevertheless represents a significant step forward for the region's cryptocurrency market, signaling growing interest and participation in digital asset investments.

Hashed, a blockchain-focused investment firm with bases in Seoul and San Francisco, announced on Tuesday (KST) that it has invested a total of KRW 36.8 billion ($28.4 million) in 29 distinct projects over the course of this year, as reported by Korean news outlet Etoday.Photo by Mathieu Stern on UnsplashInfrastructure, gaming and financeThe Web3 investor has distributed its funds across various sectors, allocating 21% each to infrastructure, gaming and finance. Geographically, their investments were also diverse: South Korea has received 38% of the funds, North America 21% and Europe 7%. Other Asian countries, including Singapore, accounted for 34%. Of the 29 investments Hashed undertook, 20 were new additions. The company participated in seed funding rounds for a variety of ventures: Radius, a shared sequencing layer; Decentralised Gaming Ventures, a builder of Web3 games; AnotherBall, the company behind the VTuber platform Izumo; and Delabs Games, a studio focused on Web3 gaming.The remaining nine were follow-up investments. Among these projects were Archway, a Cosmos-based layer 1 blockchain; Payhere, a provider of mobile point-of-sale (POS) systems; and Dfns, an API-first key management solution. Hashed Ventures, the company’s investment arm, oversees two funds: one with a capital of KRW 120 billion and the other with KRW 240 billion. Through these funds, Hashed has invested in a total of 86 portfolio companies. This year, some of their notable investments include public chain project Aptos, Web3 startup Story Protocol and decentralized exchange dYdX. It’s also noteworthy that 55% of the larger fund has been allocated to Korean companies. Blockchain community and talent developmentHashed’s impact in the blockchain sector extends beyond just financial investments. The Web3 company has supported the organization of approximately 80 meet-ups, including university hackathons and academic blockchain conferences. A notable example of their initiatives is Korea Blockchain Week, co-hosted annually with Web3 ecosystem builder Factblock since 2018. This event has become one of Asia’s largest blockchain gatherings, drawing over 10,000 visitors. In addition to these events, Hashed has been keen on nurturing talent in the blockchain space. Their Protocol Camp, a boot camp aimed at developing Web3 builders, has successfully produced 59 developers across five sessions. Furthermore, Hashed Open Research, the firm’s research division, is actively involved in shaping the blockchain landscape. They engage in research, organize seminars, and publish findings, all with the goal of offering policy recommendations and advancing understanding in the field. Hashed has reinforced its management system for portfolio companies, focusing on supporting early-stage startups. Their efforts include building a community dedicated to startup support, aiding in recruitment and business development strategies, providing data analysis services and engaging in promotional activities. Reflecting on the past year, Simon Seojoon Kim, CEO of Hashed, acknowledged that 2023 posed challenges for startups. However, he pointed out that the relatively calm market conditions provided Hashed with opportunities to uncover a range of innovative ideas. These ideas, according to Kim, have the potential to make significant contributions to the development of blockchain infrastructure and its applications in real-world scenarios. Looking forward, Kim expressed optimism about the growth prospects of their portfolio companies in the coming year. This optimism is partly based on the potential approval of spot bitcoin ETFs, which he believes could usher in robust participation from institutional investors. Additionally, Kim anticipates further growth driven by the expected launch of wallets by major global platforms, indicating a promising and dynamic future for the blockchain industry and Hashed’s investments.

Digital asset exchange business Bullish has filed confidentially for an initial public offering (IPO) in the United States. The Financial Times reported on June 11 that the IPO had been filed with the Securities and Exchange Commission (SEC) in recent weeks. Choosing to file the IPO confidentially will have enabled the firm to delay public disclosure, allowing it to progress with its preparation for the IPO and reveal financials closer to the point at which it goes public. Back in February, Bloomberg reported that the company was looking at the possibility of executing an IPO, with investment banking and financial services firm Jefferies understood to have been advising the firm. This latest report confirms that Jefferies will work as the lead underwriter in relation to the IPO deal.Photo by Markus Winkler on PexelsHong Kong tiesBullish is a subsidiary company of Block.one, a blockchain software company founded by Brendan Blumer and Dan Larimer, best known for having established the EOS.IO blockchain network. Both companies have strong ties with Hong Kong.  The Bullish exchange is licensed by the Hong Kong Securities and Futures Commission (SFC). It has also obtained licensing from the Gibraltar Financial Services Commission (GFSC) and the German Federal Financial Supervisory Authority (BaFin).  The exchange business is jointly operated by corporate entities registered in Hong Kong and Gibraltar. The company maintains offices in Hong Kong, Gibraltar, Singapore, New York, London, Frankfurt and the Cayman Islands.  The business is also being backed by Hong Kong billionaire Richard Li and American entrepreneur Peter Thiel, co-founder of PayPal, Palantir Technologies and Founders Fund. Blumer, who is based in Hong Kong, founded Bullish in 2021 and currently serves as Bullish chairman. The company is understood to have in the region of 275 employees with Tom Farley leading it as CEO. Farley previously fulfilled the role of president at Intercontinental Exchange’s NYSE group. Positive climate for crypto IPOsAmid a more positive crypto climate in the United States, crypto-related IPOs appear to be back in favor. Leading stablecoin issuer Circle executed an IPO earlier this month with the offering being 25x oversubscribed. Following the success of the Circle IPO, BitMEX co-founder Arthur Hayes asserted on X that it would lead to a plethora of crypto-related IPOs over the next few years. He likened that anticipated wave of IPOs to the flurry of initial coin offerings (ICOs) that occurred back in 2017. Earlier this month American crypto exchange platform Gemini confidentially filed for an IPO in the U.S. A Bloomberg report published in March suggested that rival exchange business Kraken is planning an IPO for Q1 2026.  There has been some speculation that Ripple, the American technology company that developed and supports XRP and the XRP Ledger (XRPL), may be a prime candidate for an IPO. Taking to the X social media platform, “Pentoshi,” a pseudonymous crypto market analyst with over 860,000 followers on X, said that a Ripple IPO “feels only logical.” The analyst added that if the company executed an IPO, it would likely weigh in at “some insanely stupid valuation.”