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Majority of Korean crypto exchanges to shut down this month, insiders say

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The deadline for South Korean crypto exchanges to meet new compliance requirements is looming fast, with all operators expected to submit requests for an official license with the Financial Services Commission (FSC) no later than Sept. 24.

Industry actors and representatives for smaller exchanges have contested the new requirements for much of the past year, yet without success. Now insiders reportedly expect that close to 40 of the country’s estimated 60 crypto operators will be forced to shut down.

The crux of their objection has been the obligation that all exchanges show evidence that they are operating using real-name accounts at South Korean banks. The FSC has justified by arguing that there is a high demand from customers for more protection for their assets held at smaller crypto platforms. Yet South Korea’s banks have, for the most part, refused to engage in any risk assessment process for applicant exchanges, except for the country’s top four trading platforms. 

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These four exchanges – Upbit, Bithumb, Korbit and Coinone – already account for over 90% of South Korea’s total traded volume, and experts have in recent months made the case that the FSC’s new framework is poised to further cement the country’s crypto space as a monopolized market.

Moreover, estimates by Kim Hyoung-joong – a professor and head of the Cryptocurrency Research Center at Korea University – predict that the mass exchange closures will eliminate 42 “kimchi coins” – a moniker for smaller altcoins that are listed on smaller platforms and traded against the Korean won. Lee Chul-yi, head of local crypto exchange Foblgate, has told the Financial Times that:

“A situation similar to a bank run is expected near the deadline as investors can’t cash out of their holdings of ‘alt-coins’ listed only on small exchanges. […] They will find themselves suddenly poor. I wonder if regulators can handle the side-effects.

With altcoins estimated to account for 90% of traded volume in South Korea’s crypto markets, the FSC has reportedly advised those exchange operators who expect to shut down to notify their clients no later than Sept. 17. Cho Yeon-haeng, president of Korea Finance Consumer Federation, has claimed that customer protection is unlikely to be the priority for those exchanges facing imminent closure and that “huge investor losses” are therefore expected due to the freezing of assets and suspension of trading on smaller platforms.

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The regulatory heat will also affect international exchange operators. Binance has already pre-emptively halted Korean won trading pairs this summer to ensure it does not foul Korean authorities.

The new measures have been designed to curb Koreans’ enthusiasm for crypto trading amid concerns that retail investors, especially those from younger generations, are borrowing excessively in order to trade as they struggle with suppressed wages, a frozen job market and ever-rising real-estate prices.

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Crypto Exchanges Facing “Digital Tax” Blow in U.K.

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Cryptocurrencies are neither currencies nor commodities, according to Her Majesty’s Revenue and Customs

Cryptocurrency exchanges have to pay a 2% digital services tax in the U.K., according to a Sunday report by The Daily Telegraph.

They do not qualify for an exemption granted to financial marketplaces since the Her Majesty’s Revenue and Customs office doesn’t recognize cryptocurrencies as “financial instruments.”

The tax on the local revenues of large tech companies was introduced in April 2020.

CryptoUK, a crypto lobbying group, is not happy about the lack of the exemption since it would further stifle the industry.

The U.K. arm of the Coinbase exchange is expected to easily surpass the revenue threshold of £25 million ($33 million) due to the crypto trading boom in 2021.

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However, HMRC is adamant that crypto assets cannot be classified as either commodities or currencies.  

In October, European governments forged a deal with the U.S. to establish a new global tax regime to eschew America’s retaliatory tariffs.

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Bitpanda New Partner Lydia’s 5.5M Users Will be Able to Invest in Crypto

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Major French mobile financial services app Lydia is slated to offer its 5.5m users exposure to a wide range of crypto assets after a partnership with the Austrian crypto exchange Bitpanda.

As part of the deal, Lydia will integrate Bitpanda’s digital asset investment product, dubbed ‘White Label Solution,’ to allow its customers to invest 24/7 in more than 100 digital assets, including cryptocurrencies, fractional stocks, exchange-traded funds (ETF), and precious metals.

Founded in 2013, Lydia is a daily financial “super-app” said to be used by a third of the French 18 to 35 year olds. The app has raised a total of USD 131m in two funding rounds in 2020, though it did not disclose valuation.

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“With Lydia trading, our ambition is to widen access to investment assets, to make it accessible to everyone whether they are simply curious, beginner investors or experts,” said Cyril Chiche, the app’s CEO and co-founder.

“Our goal is to reimagine what it means to invest, by making simple, easy-to-use financial products for everyone,” Eric Demuth, Bitpanda co-founder and CEO, was quoted saying.

Bitpanda raised USD 170m earlier this year in a Series B funding round and earned a valuation of USD 1.2bn, becoming Austria’s first tech unicorn. In its Series C funding round, however, the exchange raised USD 263m, earning a valuation of USD 4.1bn.

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Meanwhile, the exchange has been aggressively expanding its presence across Europe. Just recently, Bitpanda unveiled a partnership with Fabrick, an Italian open finance provider, that will offer digital asset trading services to Italian banks and fintechs. 

The exchange has also hired former JPMorgan executive Joshua Barraclough as CEO of its advanced trading platform Bitpanda Pro.

“We are confident that this is just the beginning: we are committed to offering everyone investment options for any budget and risk appetite,” Demuth added.

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Gemini looks to secure $400M in funding, set to battle Facebook on Metaverse

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  • The recent funding round will nearly double the wealth of Gemini founders aka the Winklevoss twins.
  • The two brothers also have big plans for Metaverse development putting up a head-on competition with Facebook.

In its latest funding round, cryptocurrency exchange Gemini has announced a $400 million fundraise at a valuation of $7 billion. Founders of Gemini, the Winklevoss twins will retain 75 percent ownership of the company post this investment.

As per reports, their combined net wealth will nearly double from $6 billion in April to $10.5 billion as of date. The latest funding round will be led by capital management giant Morgan Creek Digital. It also includes participation from ParaFi Capital, a decentralized finance (DeFi) venture firm.

Gemini joins the list of several other crypto companies raising funds amid the booming market condition. Some of its biggest rivals like Coinbase Global and ConsenSys Inc have also been taking advantage of these favorable market conditions.

In terms of the capital raise New York-based Morgan Creek has contributed $75 million. As a result, its general partner Sachin Jaitly became the third member of Gemini’s board of directors. As reported by Bloomberg, no plans are final at this stage and the terms of the deal can still change.

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Metaverse becomes the new battleground for Gemini

It seems that Winklevoss twins are all set to battle their old rival aka Facebook’s Mark Zuckerberg over the newly brewing Metaverse revolution. Speaking to Forbes regarding this, Gemini co-founder Cameron Winklevoss said:

There’s these two parallel paths, in terms of technology right now. There’s a centralized path, like Facebook or Fortnight, that is one step away from being a metaverse, and that’s totally fine.

But there is another path, which is the decentralized metaverse and that’s the metaverse where we believe there’s greater choice, independence and opportunity, and there is technology that protects the rights and dignity of individuals.

It looks like the twins are all set to take the battle with Facebook head-on over the development of Metaverse. The Gemini co-founders had already put the building blocks for metaverse back in 2019. The two brothers bought NFT exchange Nifty Gateway that helps in picking up unique digital assets.

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The Nifty Gateway platform adopts a similar path to that of Gemini. The platform is completely decentralized allowing NFT creators to host their work. “Decentralization is a spectrum,” says Cameron. “We want to continue to move down the spectrum towards empowerment. But you have to start somewhere.”

Interestingly, the Gemini co-founders have also made personal investments in the Metaverse through the Winklevoss Capital. The twins have taken a stake in the early version of the metaverse dubbed The Sandbox (SAND), built by Animoca Brands.

As part of The Sandbox deal, the two brothers have also bought a plot of virtual land. They will soon build the first of many virtual locations. Gemini co-founder Tyler Winklevoss said:

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Instead of building brick and mortar bank branches in meatspace. We’re gonna build a Gemini experience in different metaverses, where you can go into Gemini, and trade but it would be immersive instead of on your phone.

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