Korean financial authority to heighten oversight on token listing with new guidelines

As Excitement for First US Spot Bitcoin ETF Intensifies, South Korea Still Faces Mountain to ClimbThe price of bitcoin has surged significantly as it recorded an 18% increase in the past week, spurred by mounting anticipation surrounding the US’ first spot bitcoin exchange-traded fund (ETF) propelled by asset management juggernauts BlackRock and Fidelity Investments — a threshold that had not been crossed in over a year. According to CoinMarketCap, bitcoin is trading in the upper $33,000 range as of 5 p.m. KST on Wednesday.Photo by André François McKenzie on UnsplashOngoing buildupThe approval of a spot bitcoin ETF — long rejected or delayed due to a plethora of reasons like the volatility of cryptocurrencies and their susceptibility to market manipulation — would in the long run open up the possibility for institutions to earmark bitcoin as a major asset that can be integrated into the sphere of traditional finance. This would make bitcoin easier to handle and increase its exposure to traditional investors. “The mere possibility of this development marks a significant shift in the market landscape,” said an unnamed executive at a Korean asset management company in a news article by South Korean news outlet Maeil Business Newspaper.BlackRock’s spot bitcoin ETF, the iShares Bitcoin Trust, was also listed on the US Depository Trust & Clearing Corporation (DTCC)’s website with the ticker symbol IBTC on Monday before it mysteriously disappeared the following day. It has since been relisted on the website. The listing is “all part of the process of bringing ETF to market”, as explained by Bloomberg’s senior ETF analyst Eric Balchunas via his X (formerly Twitter) account on Tuesday.Is a spot bitcoin ETF on the table for Korea?However, Korean experts believe that there are still numerous hurdles to overcome in order for a spot bitcoin ETF to settle in Korea. In particular, some question whether cryptocurrency platforms that offer custodial services can even be classified as exchanges. There is also the issue of bitcoin’s varying prices across different exchanges. Its current price on Upbit, the country’s largest crypto exchange, is in the KRW 45.9 million range as of 5 p.m. on Wednesday. Local financial authorities have reportedly expressed skepticism about bitcoin ETFs for these reasons, suggesting a murky future for this development becoming a reality in Korea.

The Ministry of Justice Investigation Bureau in Taiwan has referred Nine Chen, a popular Taiwanese singer-songwriter and television program host, to the prosecutors' office in Taipei on suspicion of aggravated fraud and violations of banking laws for his alleged involvement in a fraud scheme linked to the JPEX cryptocurrency exchange. Local media publication the United Daily News reported on June 26 that as an outcome from an investigation into the matter, the authorities have established that Chen acted as a brand ambassador for JPEX in 2023, receiving 320,000 USDT in the process. While Chen has been referred on to the prosecutors’ office in Taipei, they have yet to press charges against him. Photo by Thomas Tucker on UnsplashOngoing sagaThe first public soundings of an issue in Taiwan relative to JPEX emerged in November 2023. At that time, the Taipei District Prosecutors Office (TDPO) requested that Chang Tung-ying be taken into custody amid allegations of fraud. Tung-ying was understood to have been chief partner at JPEX’s Taiwan office.  The previous month, the TDPO had called Chen in as a witness. The singer had informed local media that he was out of pocket for funds he had held in digital assets via JPEX, incurring a 15% loss.  At that time, the authorities in Taiwan arrested dozens of suspects related to what is believed to be a fraud to the value of approximately $205 million. Hong Kong investigationsJPEX garnered the most negative reaction in Hong Kong. In excess of 2,000 complaints were registered with local regulators within the Chinese autonomous territory relative to the cryptocurrency exchange.  Problems were first reported in September 2023 when the platform outlined that it had experienced a liquidity crisis. Losses in Hong Kong relative to the platform were understood to be in the region of $180 million.  In an effort to deal with the matter, JPEX proposed a plan in October 2023 to transition the business to a decentralized autonomous organization (DAO). Multiple arrests were made by the Hong Kong authorities, with a collection of assets being seized in an effort to gather up funds on behalf of platform customers who found themselves out of pocket. While JPEX hit the headlines in 2023 for questionable activity in Asian markets, the business is actually headquartered in Dubai in the United Arab Emirates (UAE). In September of last year, Dubai’s Virtual Assets Regulatory Authority (VARA) outlined that as far as it was concerned, JPEX wasn’t regulated in Dubai and hadn’t registered with the regulator.  Following the same pattern in Taiwan, JPEX had not registered with the Financial Supervisory Commission (FSC) relative to anti-money laundering (AML) regulations, which it requires crypto platforms to comply with. Taiwanese authorities have experienced issues with a number of crypto platforms over the course of the past 18 months. Aside from JPEX, the founder of ACE Exchange, David Pan, was arrested in January 2024. Charges of money laundering and fraud were brought against him. As with JPEX, there was a connection with Dubai in that Pan was also the founder of Dubai-based crypto exchange ZORIXchange. In November 2023, Bitgin, a local crypto exchange, found itself at the center of an investigation into money laundering.

Singapore Regulator Awards CMS License to AsiaNextAsiaNext, a joint venture between Tokyo-based financial services company SBI Digital Asset Holdings and Switzerland’s SIX Group AG, has received regulatory approval for its institutional-grade digital asset exchange in Singapore. The Monetary Authority of Singapore (MAS) granted AsiaNext an in-principle approval for a Capital Markets Services (CMS) license, marking a significant milestone for the company.Photo by Davis Sánchez on PexelsTaking to LinkedIn last week, the firm said that the achievement is a testament to the efforts it has made in terms of rigorous regulatory compliance. With this CMS license, AsiaNext is poised to become a trusted digital asset exchange catering specifically to institutional investors in Asia and globally. The joint venture, which was finalized in September 2021, brings together the expertise and networks of SBI Digital Asset Holdings and SIX Group AG to meet the growing demand for trading public and private digital assets.Singapore-based joint ventureChong Kok Kee, appointed as the CEO of AsiaNext in March 2022, and Neil Thomas, serving as the Chief Commercial Officer, lead the team. Their combined experience in the financial industry positions AsiaNext to deliver a comprehensive suite of services that meet the rigorous standards of institutional investors.The primary goal of AsiaNext is to bridge the gap between traditional finance and the digital asset space. Chong emphasized the importance of a secure, transparent, and compliant platform that instills confidence in market participants during an interview with Hubbis in 2022. The exchange aims to provide integrated listing, trading, and post-trade services for various digital assets, including digital payment tokens.AsiaNext recognizes the increasing demand for trading digital assets among institutional investors. To address this demand, the joint venture will leverage the extensive networks and expertise of SBI Digital Asset Holdings in Asia and SIX Digital Exchange in Switzerland and Europe. Both partners have already demonstrated their leadership in global digital asset markets through investments, issuances, and initiatives.By securing the CMS license, AsiaNext, which is based in Singapore, has taken a crucial step towards becoming a trusted platform for institutional investors in Singapore and beyond.SBI partnershipsFor its part, SBI has favored joint ventures and partnerships when it comes to its increasing involvement in the digital assets space. It has entered into a joint venture with Zodia Custody, a digital assets custodian which has been spun up by UK-based financial services giant Standard Chartered, to take on the Japanese market. Additionally, it has increased its shareholding in the custodian in recent months.Its crypto exchange subsidiary, SBI VC Trade, recently formed a partnership with the project team behind the XDC Network blockchain with a view towards making inroads into the Japanese market.AsiaNext is now focused on preparing for the launch of its digital asset exchange, which is scheduled to commence later in 2023. Having now established itself on a firm regulatory footing, and the support of its strategic partners, AsiaNext appears to be well-positioned in meeting the evolving needs of institutional investors in the Asian region.