Asia's Crackdown on Digital Assets: A New Era of Personal Accountability

Welcome to Crypto Long & Short, our institutional newsletter. This week, we cover: - Alexandra Levis Expert Insights Asia's Digital Asset Crackdown: Personal Accountability on the Rise By Bob Williams, FinTech, digital assets, and blockchain advisory leader (Asia/Pacific), Lockton Companies A wave of new digital asset regulations in Asia is pushing trading platforms and asset managers to strengthen their governance and reassess their Directors' and Officers' (D&O) liability insurance arrangements. Recently, Hong Kong, Singapore, and South Korea have announced plans to refine their regulatory frameworks, increasing pressure on senior management to stay informed and evaluate their risk transfer strategies. In Hong Kong, the Securities and Futures Commission (SFC) has issued a circular clarifying senior management's responsibilities regarding client virtual asset custody, emphasizing expectations around governance, internal controls, and effective oversight. Singapore has introduced licensing requirements for digital token service providers serving overseas customers, focusing on the competency and fitness of key individuals as core admission criteria. Senior management must demonstrate a clear understanding of the regulatory framework and exercise effective oversight. South Korea is proposing the Digital Asset Basic Act, which would formalize the digital asset market by regulating issuance, trading practices, and distributions, introducing new governance structures around asset listing and delisting decisions. These regulatory changes increase compliance obligations for trading platforms and related service providers, making D&O insurance essential in protecting directors and officers from financial consequences of legal actions, investigations, or claims arising from alleged regulatory breaches. Informed Perspectives Crypto Scams: Not Just Targeting the Uninformed By Haidy Grigsby, special agent, cybercrime and digital evidence unit, Tennessee Bureau of Investigation Contrary to common assumptions, crypto scams are increasingly targeting experienced investors, retired professionals, and former market participants. A typical strategy involves initial contact through a wrong-number text, LinkedIn message, or social media outreach, which often turns personal or romantic, known as 'pig butchering.' Scammers flatter expertise, create exclusivity, and get the target to move the conversation to encrypted apps. Victims are instructed to open accounts on real exchanges, then use self-custody wallets to access external sites through built-in Web3 browsers, often unaware they have left the trusted app. These fraudulent markets mimic real ones, allowing one daily trade at a set time, ostensibly to capture optimal volatility. Victims choose long or short, allocate funds, and confirm a brief trade lasting seconds or minutes, with the scammer claiming to contribute their own funds to reinforce trust. Balances appear to grow, and profits seem real, but in reality, no trading occurs, and the returns are simply numbers entered by the scammer. To build credibility, victims are encouraged to withdraw a small amount after a 'winning' trade, which appears processed successfully but is funded with cryptocurrency stolen from other victims. The websites change domains and branding frequently, with victims being told the company is merging, upgrading, or rebranding, when in reality, these changes occur due to law enforcement takedowns. When victims attempt larger withdrawals, the narrative shifts, with explanations such as regulatory holds, tax prepayments, liquidity verification thresholds, or tier upgrades, each paired with urgent demands for more funds. Convincing victims of the truth remains a significant challenge, as they often struggle to accept that the person they built trust with and gave substantial sums of money to never existed. Headlines of the Week - By Francisco Rodrigues This week's headlines demonstrate that institutional adoption in the cryptocurrency space continues to grow, yet old dangers persist, including protocol exploits, state-sponsored attacks, and technology disruption. Chart of the Week Hyperliquid's TradFi bet now accounts for 40% of its volume Hyperliquid's HIP-3 has scaled significantly, representing 35-40% of total protocol volume, with Commodities driving ~60% of volume and pure crypto categories accounting for just ~12%. Listen. Read. Watch. Engage. Looking for more? Receive the latest crypto news from coindesk.com and market updates from coindesk.com/institutions. Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc., CoinDesk Indices, or its owners and affiliates.