Market Watch
Things to Watch This Week (Jan 19 - Jan 23)
Trump Davos Speech and PCE Inflation
Markets face a shortened trading week due to the MLK holiday, with attention on Trump’s Davos speech, the latest PCE inflation data, and key earnings from companies like Netflix and Intel, which could set the tone for risk sentiment.
Random Musing This Week
Korean Regulatory Developments
Over the past week, South Korea’s crypto regulatory landscape has continued to evolve rapidly, with three landmark developments that together signal a shift toward institutional participation and broader market integration.
First, the Financial Services Commission finalized guidelines that end a nine-year ban on corporate cryptocurrency investment, allowing listed companies and professional investors to allocate up to 5% of their equity capital annually into digital assets. Under the proposed framework, eligible crypto investments will be limited to the top 20 tokens by market capitalization traded on South Korea’s five licensed exchanges. This change opens meaningful institutional access to a market that had been overwhelmingly retail dominated, with an estimated 3,500 entities set to gain participation rights under the new rules.
Next, the country has advanced its Security Token Offering (STO) framework as part of the Digital Asset Basic Act. Under the updated rules, STOs will be formally recognized within South Korea’s regulated capital markets, subject to licensing, disclosure, and compliance standards similar to traditional securities. For issuers and investors alike, this marks STOs as a legitimate instrument, potentially unlocking alternate funding channels for smaller enterprises while bringing greater investor protections.
The third significant development is the government’s announcement that it will ban unregistered cryptocurrency exchanges from operating in the domestic market. The timeline for enforcement is expected to accelerate throughout 2026, with exchanges required to complete registration, compliance controls, and reporting systems or face suspension of operations.
Over time, this dynamic could shift the composition of inflows. Instead of fast-moving retail speculation dominating turnover, a larger share of activity may come from regulated entities deploying balance sheet capital, participating in tokenized securities, or engaging in longer-horizon accumulation strategies.
The figure of roughly 3,500 entities refers to a group primarily of listed companies, large unlisted corporations, financial institutions, and other professional investors that were previously prohibited from holding or transacting in digital assets. The estimate is derived from the number of KOSPI and KOSDAQ listed firms, alongside registered financial institutions and certain professional investment entities.
At a high level, 5 percent of the combined equity capital of the roughly 3,500 eligible Korean entities represents a very large potential pool of capital. If you aggregate the equity capital of the aforementioned entities, estimates generally land in the range of $1.9-2.3 trillion in total equity capital. Taking 5 percent of that base implies a theoretical ceiling of roughly $90 to $110 billion that could eventually be allocated to crypto assets under the new framework. To put that potential corporate allocation in context, total current crypto ETF AUM is roughly $174 billion dollars.
In practice, actual deployment would almost certainly be far smaller, especially in the early years. However, while only a subset of these entities is likely to deploy capital meaningfully, even limited participation could materially change the quality and durability of capital flows by shifting activity away from short-term retail speculation and toward balance-sheet driven, longer-horizon allocation. Even if only 10 percent of eligible firms participated at an average allocation of 1 percent of equity, that would still translate into several trillion won of new, structurally long-term capital entering the market.
The key takeaway is not the headline maximum number, but the order of magnitude. This policy shifts Korea’s crypto market from being almost entirely retail driven to one where corporate balance sheets could, over time, represent a meaningful marginal buyer. Even modest participation rates could rival or exceed historical net inflows during peak retail cycles, with the added difference that corporate capital tends to move more slowly, concentrate on large cap assets, and remain invested for longer horizons.
Recap of Top Stories (Jan 12 - Jan 16)
Interesting
South Korea proposes 5% limit for listed firms’ crypto exposure
Commentary: South Korea’s Financial Services Commission is considering a rule that would cap corporate cryptocurrency investments at 5% of a company’s equity capital, as the country moves toward easing its long-standing restrictions on institutional crypto trading.
Under the proposal, eligible firms would be allowed to allocate up to 5% of equity capital per year to digital assets, limited to the top 20 cryptocurrencies by market value. Authorities are also expected to include trade execution guardrails, including split trading rules and price limits, to manage market impact as liquidity expands.
Citrea unveils U.S. Treasury-backed stablecoin for its Bitcoin ecosystem
Commentary: Citrea, a layer-2 blockchain for Bitcoin, introduced a U.S. dollar-pegged stablecoin designed to serve as a liquidity standard on its ecosystem.
Stablecoin liquidity remains a core bottleneck for Bitcoin-focused decentralized finance (DeFi), where capital often gets split across bridged versions of dollar tokens. “Fragmentation is a symptom of bridging, and we solve it by design: ctUSD is natively issued on Citrea,” said Orkun Mahir Kilic.
Bybit Pay links with digital wallets Yape, Plin to offer crypto payments in Peru
Commentary: Bybit Pay said it reached an agreement allowing its users to make crypto payments through Yape and Plin, Peru’s most widely used digital wallets.
Together, the two systems served about 28 million users in 2024 and handled nearly 90% of Peru’s in-person digital wallet transactions. Bybit Pay’s integration allows customers to spend stablecoins like USDT and USDC or major cryptocurrencies like bitcoin and ether with transactions settling in Peruvian soles for the recipient.
Societe Generale works with Swift to settle tokenize bonds using cash and stablecoins
Commentary: The cryptocurrency and stablecoin-focused arm of French bank Societe Generale, SG-FORGE, is working with Swift, the global interbank messaging system, to exchange and settle tokenized bonds using both fiat and digital currencies.
The transaction was carried out using SG-FORGE’s EURCV stablecoin, the first MiCA-compliant stablecoin natively compatible with Swift, which played an orchestration role across blockchain platforms and existing payment systems.
Visa teams up with BVNK to launch stablecoin payouts
Commentary: Visa is integrating stablecoin infrastructure from BVNK into its Visa Direct platform, expanding how its $1.7 trillion real-time payments network can move money globally.
The partnership, announced Wednesday, allows businesses in select markets to pre-fund payments in stablecoins and send payouts directly to recipients’ digital wallets.
Germany’s second-largest lender DZ Bank secures retail crypto trading MiCA license
Commentary: Germany’s DZ Bank revealed it received regulatory approval from BaFin under the European Union’s Markets in Crypto-Assets (MiCA) framework, enabling it to offer meinKrypto, a digital asset trading platform targeted at retail clients through the cooperative banking system.
More than 71% of cooperative banks in Germany’s cooperative banking association are interested in offering crypto services to private customers, according to a September 2025 study by Genoverband.
Tokenization firms reject Coinbase’s crypto bill equities claims
Commentary: A stalled crypto market structure bill and a high-profile pullback from Coinbase aren’t slowing momentum for firms building around tokenized securities.
Industry estimates suggest that tokenized versions of real-world assets — everything from funds, bonds, equities and other assets — could reach multiple trillions of dollars over the next decade. That projected scale helps explain why tokenization firms are forging ahead regardless of the delay.
Upcoming Market Events
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January 30 - CME Expiry
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