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Coin Geek
04-07-2025
- Business
- Coin Geek
Ban on Kimchi bonds ends; Singapore's new law kicks in
Getting your Trinity Audio player ready... South Korea has lifted a 14-year ban on Kimchi bonds to ease a lack of liquidity in the foreign exchange market amid a spike in USD-backed stablecoin usage. The Bank of Korea (BoK) announced the reversal this week in its latest move to relax the strict regulations in the forex market, which has taken a beating in the past 18 months due to political instability and economic headwinds. At the end of April, the country's forex reserves dipped to $404 billion, its lowest since mid-2020. 'This measure is expected to contribute to resolving the imbalance in forex supply and demand by improving foreign currency liquidity conditions and easing pressure on the weak won,' the central bank said in its statement. Kimchi bonds are denominated in foreign currencies, such as the U.S. dollar and the euro, and can be issued by local or offshore companies. BoK first banned these bonds in 2011 following a spike in short-term overseas debt, a pattern that had preceded two previous financial crises in 1997 and 2008. The central bank further claimed that local firms were raising funds via Kimchi bonds to circumvent limits on foreign debt for local use. Now, the bank is walking back the restrictions as the rise in stablecoin adoption threatens the forex market liquidity. In the first quarter, South Koreans invested 57 trillion won ($42 billion) in offshore digital assets. Under the new administration of President Lee Jae‑myung, digital assets are set to blow up even more. The ruling Democratic Party is pushing for enabling laws to boost adoption, including dropping the capital requirement for stablecoin issuers to under $400,000, a 90% reduction from a previous draft. In contrast, issuers require $3.2 million in paid-up share capital to operate in Hong Kong. Beyond stablecoins, South Koreans are pouring a record amount of capital into 'crypto' stocks. Data from the country's central securities depository shows that Circle (NASDAQ: CRCL) was the most popular overseas investment in June. But it's not just digital assets that threaten the South Korean forex market and the strength of the won. Continued rate cuts to stimulate a slowing economy have made local assets less attractive, while weak exports have drastically cut down the inflow of the much-needed U.S. dollars. 'The latest measure signals higher demand for the won in the long term, reflecting the government's will to open up the forex market further,' Korea Capital Market Institute's Hwang Sei-woon told the Financial Times. Singapore kicks out unlicensed VASPs New regulations that require virtual asset service providers (VASPs) based in Singapore but offering services abroad to obtain a new license have kicked in, and it could lead to a mass exodus from one of the world's leading digital asset hubs. In early June, the Monetary Authority of Singapore (MAS) set a June 30 deadline for local VASPs to cease serving overseas users or obtain a new license. Under an Act passed by legislators in 2022, VASPs serving local users were more leniently regulated, with those targeting offshore clients concerning the MAS as oversight would be more difficult. The financial regulator has now curbed the regulatory arbitrage window that some of the world's largest VASPs have capitalized on for years. Any company, partnership or individual serving clients outside Singapore must obtain a new Digital Token Service Provider (DTSP) license. MAS has made it clear that it will extend no grace period for compliance. The new restrictions will also apply regardless of how small the overseas clientele is to the VASP's overall user numbers. Any VASP that operates post-June 30 without the new license faces a $200,000 fine, while the operators could end up behind bars for up to three years. 'Crypto' firms are known to rush at the last minute to obtain licenses only after the regulators begin enforcement. However, in Singapore, this approach is unlikely to work as MAS has stated that it will only issue the new DTSP license in 'extremely rare' cases. Global exchanges based in Singapore are already exploring moves to friendlier jurisdictions, with Dubai and Hong Kong the most likely destinations. Bybit and Bitget, which are among the largest exchanges globally, are among those weighing relocation, Bloomberg reports. However, Binance intends to keep around 400 of its Singaporean employees in the country despite the new crackdown. Sources told Bloomberg that the Binance employees will most likely be unaffected as they mainly focus on back-office activities. Additionally, Binance is notorious for avoiding physical presence and refuses to confirm with media outlets if it has an office in the city. However, it's not licensed by the MAS as an exchange like Bybit, Bitget, and some of its other peers. Watch: Breaking down solutions to blockchain regulation hurdles title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen="">
Russia Today
10-06-2025
- Business
- Russia Today
Western businesses in no rush to leave Russia
The majority of Western companies operating in Russia are not planning to leave the country, despite the challenges posed by sanctions, according to a new survey by the Association of European Businesses (AEB). Many US, European, and Asian businesses exited Russia after the West imposed sweeping sanctions on Moscow over the escalation of the Ukraine conflict in 2022. Others left citing reputational concerns or fear of secondary sanctions. However, the annual poll from the AEB published on Monday indicates that most companies that stayed see long-term potential in the Russian market, despite Western restrictions weighing on short-term performance. Of the companies surveyed by the AEB, 67% said they were not considering leaving, up slightly from 66% last year. Most respondents said their Russian operations remain a key part of their global business. Companies identified opportunities such as market share growth (50%), business expansion (39%), and new customer segments (32%) as the primary reasons to stay. Over half (56%) said they are continuing investment projects, citing the Russian market's size, potential, and positive developments. The survey showed that while short-term business confidence among foreign firms has dipped, longer-term expectations have improved compared to last year: 82% of respondents said they were anticipating significant growth within a decade, up from 66% last year. The survey found that most companies have adapted to sanctions but still face challenges, including payment delays, reputational risks and reluctance from foreign partners to work with Russia-linked entities. About 87% said they were negatively affected by Western sanctions and Russian countermeasures over the past year, citing banking curbs, export-import restrictions, frozen assets, SWIFT disconnection, and software and transport limits. Some 71% said they don't expect any sanctions relief in 2025. Still, 59% forecast turnover growth over the next three years, up from 53% in 2024. The AEB said its Business Climate Index has climbed to 127 points out of 200, steadily improving since falling to 80 points in 2022. '[This] confirms that European companies in Russia have reached a certain equilibrium in the new economic reality,' AEB CEO Tadzio Schilling said. 'Business has entered a phase of stabilization – companies have adapted their operating models, found alternative supply chains and learned to work under the conditions of the remaining restrictions.' He added that the results reflect 'business environment's stability,' noting that despite the ongoing challenges and uncertainty, companies remain 'cautiously optimistic.' The AEB represents more than 380 companies from EU states, the European Free Trade Association, and other foreign countries operating in Russia. This year's survey was conducted between April and May and included input from top managers at 100 member companies across various sectors.
