Japan’s FSA Mandates Liability Reserves to Protect Crypto Users

BriefBits Crypto: This week's most important developments in Crypto world

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Discover how Asia’s crypto giants are reshaping markets and regulations while new investments and security challenges redefine the landscape.

In today's edition:

Japan’s FSA is pushing crypto exchanges to hold liability reserves for better user protection.
Naver’s $14.5 billion merger positions Upbit for a major Nasdaq IPO, dominating South Korea’s crypto market.
Crypto ecosystems face fresh security threats, regulatory crackdowns, and dynamic investment moves.

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Regulation

Japan’s FSA Moves to Mandate Liability Reserves for Crypto Exchanges, Boosting User Protection

Briefly: Japan’s Financial Services Agency plans to require crypto exchanges to maintain liability reserves to swiftly compensate users in case of hacks or unforeseen losses, reflecting a proactive regulatory approach amid growing institutional interest in yen-backed stablecoins.

Key Information:

Japan’s FSA will mandate exchanges to hold funds covering liabilities to protect users from losses due to hacks or operational failures.
The Financial System Council’s upcoming report will formalize recommendations following recent security breaches globally.
Japan hosts around 12 million crypto accounts, underscoring the critical need for enhanced user safeguards.
Major Japanese banks and fintech firms are actively developing yen-pegged stablecoins, signaling increased institutional adoption.

Adoption

Naver’s $14.5 Billion Merger Sets Up Upbit for Nasdaq IPO and Reshapes Asia’s Crypto Market

Briefly: South Korea’s dominant crypto exchange Upbit is poised for a Nasdaq IPO after Naver Financial and Dunamu finalize a $14.5 billion stock-swap merger, consolidating control and signaling a new wave of crypto institutionalization in Asia.

Key Information:

The stock-swap deal values the merger at KRW 20 trillion ($14.5 billion) and makes Upbit a wholly owned Naver subsidiary.
Upbit dominates South Korea’s crypto market with over 70% share and processed $642 billion in transactions in H1 2025.
Dunamu’s operating profit is projected at KRW 1.186 trillion by end-2024, nearly tenfold Naver Financial’s profit.
This move aligns with rising trends of crypto firms like Galaxy Digital and Kraken planning U.S. public listings.

🏃 Fast n' Fresh

InvestmentOndo Finance invested $25 million in Figure’s YLDS stablecoin to diversify its tokenized US Treasury fund, enhancing institutional exposure with 24/7 redemptions and a 3.68% annual return.

SecurityCardano suffered a network halt after a corrupted transaction targeted Charles Hoskinson’s stake pool, exploiting a 2022 cryptographic bug, revealing vulnerabilities and prompting a criminal investigation.

RegulationSouth Korea’s FIU expanded its crackdown on crypto exchanges following Upbit’s hefty fine, planning sanctions on other major players for AML and KYC failures while blocking offshore platforms.

TechnologyEnso announced full day-one integration with Monad’s mainnet launch, providing instant access to DeFi tools and liquidity that accelerate dapp development and ecosystem growth.

MarketBitcoin ETFs are facing record outflows nearing $3.5 billion in November 2023, driven by macroeconomic uncertainty and risk aversion, while altcoins and perpetual DEXs show mixed performance.

CorporateNasdaq-listed Enlivex plans a $212 million raise to buy Rain (RAIN) tokens, marking a pioneering corporate treasury bet on decentralized prediction markets, with ex-Italian PM Matteo Renzi joining the board.

📈 Numbers and Trends

Upbit's parent company announced a $14.5 billion stock-swap deal with Naver Financial, positioning Upbit for a Nasdaq IPO with over 70% market share and $642 billion in H1 2025 transaction volume.
Ondo Finance invested $25 million in Figure’s YLDS stablecoin to back tokenized US Treasury funds, which hold $777 million in TVL and offer 3.68% estimated annual returns.
South Korea’s FIU imposed a 35.2 billion won fine on Upbit and plans to sanction more exchanges for AML/KYC failures, with penalties on the horizon for Korbit, Bithumb, and others by mid-2026.
Bitcoin ETFs recorded $3.5 billion outflows in November 2023 alone, nearing the all-time record, amid Bitcoin price drops to $80,657 and macroeconomic headwinds.
Hyperliquid faces a $314 million token unlock releasing 9.92 million HYPE tokens (2.66% of supply), fueling community concerns over potential sell pressure during a recent 23% price decline.

💬 Quote of the Day

"Even if the team pinky swears to not sell, there is nothing holding them to that. So you have to assume a >0% amount of daily sell pressure."

Arthur Hayes, BitMEX co-founder

Hyperliquid’s $314M unlock fuels calls for clarity, sell-pressure warnings

1️⃣ Number of the Day

$642 billion - Upbit's transaction volume in first half of 2025

Upbit processed $642 billion in transaction volume during the first half of 2025, showcasing its dominant market position in South Korea and highlighting the scale of crypto trading activity fueling its upcoming Nasdaq IPO.

Naver’s $14. 5b power play puts Upbit on IPO path—and shakes up Asia’s crypto landscape

Japan’s FSA Mandates Liability Reserves to Protect Crypto Users

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