Legislation, US Presidential Election... Top 10 Issues in the Virtual Asset Market This Year

Bitcoin Halving Approaches
Token Securities Era Also Begins

This year, the virtual asset market is expected to witness various events, starting with the U.S. Securities and Exchange Commission (SEC) approval of Bitcoin spot exchange-traded funds (ETFs), the Bitcoin halving in April, and the enforcement of the Virtual Asset User Protection Act in July. Additionally, the U.S. presidential election event is scheduled for November.

Upbit Investor Protection Center announced on the 18th that it has selected the "Top 10 Virtual Asset Hot Issues of 2024" through its content service "Caddy," which highlights major issues in the virtual asset market.

January: Bitcoin Spot ETF Approval and Ethereum Denkun Upgrade

On the 10th (local time), the U.S. SEC approved 11 Bitcoin spot ETFs. It is reported that Bitcoin spot ETFs traded over $4.6 billion (approximately 6.1791 trillion KRW) on the first day of launch alone. The SEC’s approval of Bitcoin spot ETFs and their integration into the regulatory framework is drawing industry attention as a new turning point.

On the 17th, the "Ethereum Denkun Upgrade" proceeded as scheduled. The Denkun upgrade is a major upgrade following last year’s Shapella upgrade, focusing on reducing the burden on rollup chains to improve scalability and address cost issues. The official deployment is expected to take place in February.

March: Possibility of U.S. Federal Reserve Interest Rate Cut

Upbit Investor Protection Center identified the possibility of an interest rate cut by the U.S. Federal Reserve (Fed) as a key issue in March. If a full-scale rate cut occurs, it could lead to abundant liquidity and increased capital inflow into the virtual asset market. However, pessimism exists as the U.S. Consumer Price Index (CPI) rose year-over-year in December last year, which may delay the announcement of a rate cut in March.

April: Bitcoin Halving and Ripple Formal Trial

The "halving," where Bitcoin’s block mining reward is cut in half, is expected to occur for the first time in four years. Starting in April, Bitcoin mining rewards will decrease from 6.25 to 3.125 per block. There is anticipation that reduced supply will lead to price increases.

The outcome of the lawsuit between Ripple Labs (XRP) and the U.S. SEC, scheduled for April 23, is also a market focal point. The legal battle between Ripple Labs and the SEC, which began in December 2020, saw a turnaround last July when the U.S. Southern District Court of New York issued a summary judgment stating that XRP traded between individuals is not a security.

First Half of the Year: Dawn of the Token Securities Era

The full-fledged era of token securities (ST) is also expected to begin in the first half of the year. In December last year, the Financial Services Commission designated the Korea Exchange’s "KRX New Securities Market Launch" as an innovative financial service. Accordingly, various new securities such as real estate and artworks are expected to be traded on the newly established on-exchange market within the first half of this year, while token securities are anticipated to gain prominence in the over-the-counter market.

June: European Union MiCA Enforcement

The Markets in Crypto-Assets Regulation (MiCA), the foundational virtual asset law enacted by the European Union (EU), will come into effect on June 30. This is expected to strengthen investor protection for virtual asset investors worldwide. South Korea is also considering moving beyond the first phase of the Virtual Asset User Protection Act toward establishing a second phase of foundational virtual asset legislation.

July: Enforcement of the Virtual Asset User Protection Act

The Virtual Asset User Protection Act will be enforced starting July 19, following legislative notices on enforcement ordinances and supervisory regulations. This law includes obligations for virtual asset service providers and regulations against unfair trading practices, aiming to strengthen investor protection and establish a sound trading order in the market.

November: U.S. Presidential Election

The U.S. presidential election scheduled for November 5 is also expected to impact the virtual asset industry landscape. Given the significant influence of the U.S. within the virtual asset market, the election results and the positions of the two major parties are anticipated to have considerable effects.

Fourth Quarter: Bank of Korea CBDC Testing

Central bank digital currencies (CBDCs) issued by central banks worldwide are attracting attention. Among them, the Bank of Korea plans to conduct usability tests of deposit tokens in actual commerce with up to 100,000 general participants during the fourth quarter of this year.

An official from the Upbit Investor Protection Center stated, "We will continue to provide various content so that domestic investors can accurately and easily access information related to virtual assets," adding, "The center will do its best to resolve information asymmetry in virtual assets and strengthen investor protection."