Hana Bank to Establish Joint Digital Asset Custody Venture with BitGo

HSBC Expands Offering to Include Crypto ETFs in Hong KongThe Hong Kong and Shanghai Banking Corporation (HSBC), the largest bank in Hong Kong, has reportedly introduced its first cryptocurrency services for local customers.According to journalist Colin Wu’s tweet on Monday, HSBC now allows its customers to buy and sell Bitcoin-based exchange-traded funds (ETFs).Photo by Cheung Yin on UnsplashOffering three crypto ETFsHSBC’s cryptocurrency services specifically focus on the cryptocurrency ETFs listed on the Stock Exchange of Hong Kong. Currently, the exchange offers three crypto ETFs, including CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF, and Samsung Bitcoin Futures Active ETF.The introduction of these services will provide Hong Kong users with more exposure to cryptocurrencies. As of March 2022, HSBC Hong Kong had approximately 1.7 million active mobile customers, with about 95% of all retail transactions processed online. Plenty of the customers that currently access TradFi financial services don’t touch crypto-native products. Bridging this gap and bringing crypto to a more traditional financial services client base is a major step towards mass market adoption of crypto.Educating the marketIn addition to the roll-out of cryptocurrency services, HSBC reportedly launched the Virtual Asset Investor Education Center. The initiative is designed to protect investors from cryptocurrency-related risks by requiring them to read and confirm educational materials and risk disclosures before investing.The Virtual Asset Investor Education Center is accessible through HSBC’s virtual asset-related products, such as the HSBC HK Easy Invest app, HSBC HK Mobile Banking app, and online banking.This is also a significant step forward. It’s entirely valid that while there are good actors in the crypto space, the sector has also had a lot of sharp practice that reflects badly on it. This alone may be reason enough for many conventional investors not to touch digital assets. Their trust in a platform like HSBC will allow them to include crypto within their portfolios.The second aspect to that reluctance is rooted in a misunderstanding of digital assets, the risks involved, and how risk can be minimized. HSBC has clearly identified this by taking the initiative and launching its Virtual Asset Investor Education Center.Crypto ETF growth potentialThis development follows reports in mid-June that the Hong Kong Monetary Authority (HKMA) had exerted pressure on major banks to accept crypto exchanges as clients. The central bank and regulator specifically questioned HSBC and Standard Chartered about their reluctance to onboard crypto exchanges as clients.HSBC’s move to offer cryptocurrency services in Hong Kong reflects the growing acceptance and recognition of cryptocurrencies in the financial industry. By providing access to crypto ETFs, HSBC aims to cater to the increasing demand for digital assets among its customers in the region.The crypto ETF products that are currently on offer in Hong Kong are very recent. As an example, Samsung’s Bitcoin futures ETF was launched in January. The product has already seen a lot of interest due to growing uncertainty relative to the traditional global financial system.A report produced by the Hong Kong stock exchange in April found that crypto ETFs have the potential to play a significant part in unlocking the next phase of digital asset expansion in Asia. Clearly, HSBC have taken notice with this move to further enable that potential.

Rising Cryptocurrency Arbitrage Transactions Raise Concerns in South KoreaThe number of arbitrage transactions between South Korean and foreign cryptocurrency exchanges has been experiencing a notable uptick, according to a report by local media outlet Maeil Business Newspaper.In recent developments, foreign actors engaging in price manipulation have been transferring substantial amounts of cryptocurrency assets to Korean exchanges, driving up prices. Subsequently, they transfer these tokens from Korean exchanges back to overseas platforms, capitalizing on the price discrepancies to generate profits.Photo by Maxim Hopman on UnsplashBithumb’s case in H1According to documents submitted to Kim Hee-gon, a member of the ruling political party People Power Party, on Monday, KRW 3.4 trillion ($2.6 billion) worth of tokens were moved from Bithumb, a leading Korean cryptocurrency exchange, to foreign trading platforms during the first half of this year. Although this figure marks a 40% decrease compared to H1 2022’s KRW 5.7 trillion, primarily due to the significant decline in token prices across the cryptocurrency market, it’s noteworthy that the number of transactions has seen a significant increase.Other exchangesGopax, another major exchange in the nation, recorded token outflows totaling KRW 12.3 billion. On the other hand, Upbit, Coinone, and Korbit, which are also prominent exchanges, declined to provide data due to reasons like confidentiality concerns. However, given that Upbit holds an 82.0% share of the Korean crypto market, nearly four times larger than Bithumb’s share (14.2%), it is suspected that the volume of tokens transferred from Upbit to foreign platforms would likely have followed a similar proportion.While the value of tokens sent from Bithumb to overseas operators saw a year-over-year decrease, the number of transactions surged to 231,302, nearly doubling the figure of H1 2022’s 124,048 transactions. The average transaction size was KRW 14.7 million.Even though the overall enthusiasm for cryptocurrencies might have cooled off since last year, the spike in the number of transactions suggests that there’s been a surge in arbitrage trading between Korea and foreign markets.Kimchi premiumEarlier this month, a significant transaction caught the eye of cryptocurrency market observers in South Korea. On September 1, crypto data analytics firm Arkham identified that 170,000 CyberConnect (CYBER) tokens were transferred to Bithumb from a crypto wallet thought to be owned by DWF Labs, a firm specializing in cryptocurrency trading and investment. The timing of the transaction coincides with a period during which the Kimchi premium for CYBER exceeded 100%. The Kimchi premium refers to the crypto price gap between Korean exchanges and their foreign counterparts.The complicating factor here is that DWF Labs is a foreign entity that is managed by a foreign team.The use of corporate accounts is virtually prohibited in the Korean crypto market. The Travel Rule mandates that any transfers of tokens between Korean and international exchanges must go through accounts that have been verified under Know Your Customer (KYC) guidelines. Given these regulations, there are growing suspicions within the crypto community that foreign venture capitalists may have used accounts in borrowed names to conduct sales on Korean exchanges, which are restricted to Korean citizens. However, it’s worth noting that there is currently no legal basis for taking punitive action even if borrowed-name accounts were indeed used.Lawmaker Kim commented on the limitations of current financial regulations aimed at preventing money laundering in the cryptocurrency market. Despite efforts by financial authorities, including the introduction of the Travel Rule, Kim stated that these measures have not been very effective. He emphasized the urgency of enhancing the regulatory framework to curb potential illicit activities involving cryptocurrencies, such as those exploiting market arbitrage opportunities.

India’s digital currency transactions have surged, surpassing 1 million daily transactions in December, meeting the Reserve Bank of India’s (RBI) ambitious target set for the end of 2023.Photo by Julian Yu on UnsplashCBDC-based employee paymentsReuters cited three sources familiar with the matter who have revealed that Indian banks played a crucial role in achieving this milestone by disbursing certain employee benefits through the central bank’s digital currency (CBDC), known as the e-rupee. As Indian crypto influencer and YouTuber Sumit Kapoor put it, the transaction level increase “happened because people working in regular banks were encouraged to use digital rupees instead of the normal money for their deposits and benefits.” RPI letter confirms increaseA letter seen by CoinDesk sent by the Governor of the Reserve Bank of India (RBI), Shaktikanta Das, to RBI staff on Dec. 29 confirmed the increased CBDC use, stating that it “exceeded the milestone of 1 million transactions in a day on Dec. 27, 2023.” The e-rupee, developed as a digital counterpart to physical cash, utilizes distributed ledger technology. The RBI initiated the e-rupee pilot in December 2022, initially recording an average of 25,000 daily transactions by the end of October. Despite its integration with the Unified Payments Interface (UPI), a popular framework for mobile app-based peer-to-peer money transfers, the transaction volume saw a substantial increase last month. Union Bank paymentsAccording to India’s Economic Times, the Union Bank of India is working towards transferring claims related to a number of employee benefits to CBDC wallets rather than the accounts of those salaried employees. Union Bank stated: “With an aim to promote CBDC wallet transactions, banks have been advised to encourage all staff members to transact using the digital currency and ensure 100% staff registration on digital rupee app.” Other banks have been playing their part in the current transaction level surge. This has included major private and state-run lenders such as HDFC Bank, Kotak Mahindra Bank, Axis Bank, Canara Bank and IDFC First Bank. These institutions disbursed employee benefits directly into CBDC wallets rather than traditional salary accounts, demonstrating a significant shift in adoption patterns. The RBI anticipates that non-financial firms will follow suit, contributing to a further boost in transaction volumes. The user base for the e-rupee has also witnessed steady growth, reaching approximately 4 million users, up from 3 million in December, according to an executive familiar with the pilot. Globally, several countries, including China, France and Ghana, are in the pilot stages of their central bank digital currency (CBDC) projects. Nigeria has rolled out its digital currency, although success has been limited despite offering incentives such as discounts on auto-rickshaw rides. To incentivize e-rupee transactions, Indian banks are offering rewards, aligning with the RBI’s push to enhance transaction volumes. Sharat Chandra, co-founder of the India Blockchain Forum, commended the move to compensate employees using CBDC and suggested expanding adoption incentives to other areas, such as toll tax collections, to further encourage widespread usage. The positive momentum in India’s digital currency landscape reflects a growing trend toward embracing innovative financial technologies.