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Exchange closures in South Korea could eliminate $2.6 billion in cryptocurrencies

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Cryptocurrency exchanges operating in South Korea have until the 24th of this month to register with the Financial Services Commission (FSC). If that doesn’t happen en masse, about $2.6 billion in digital assets could be wiped out by applying the Financial Transaction Reporting Act (FTRA) to about 40 exchanges, the Financial Times said on Sunday (12).

The FTRA, South Korea’s largest financial operations supervisory body, requires compliance with anti-money laundering procedures, such as KYC (Know Your Customer) for all cryptocurrency companies, which must register accounts only with the real name of your customers. As a final warning, Coindesk noted on the report, the FSC advised brokers who were unable to meet regulatory obligations to inform their clients of any possible closure by September 17th.

As of September 24, according to the FSC statement, cryptocurrency brokerages that are not registered with the KFIU will not be allowed to operate in South Korea. Cryptocurrency companies must also obtain approval from the FSC and the Security and Security Agency. Internet in the country before the stipulated date.

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Most exchanges were not regularized

According to the site, about two thirds of the 60 exchanges have not yet been registered, according to the report, which is seen by experts as a possibility of creating a scenario of “run on banks”, in this case, run on exchanges. It is a situation where most clients try to withdraw their money fearing that the institution will cease to exist.

One of the problems is that in some extreme cases, financial institutions’ reserves have failed to cover the cost of customer withdrawals. And that’s why the experts’ warning makes sense, and that goes for both large and small exchanges. “They will feel poor all of a sudden. I wonder if regulators can handle the side effects,” Lee Chul-yi, head of exchange Foblgate, a mid-sized company, told the story.

There may be “huge losses”, according to experts

Also according to the Financial Times, about 90% of South Korean cryptocurrency trade is conducted in alternative currencies, some of which are known as “Kimchi currencies”. Through them, users operate by selling and buying locally as the so-called ‘kimchi premium’ changes; nothing different from arbitrage operations. It is estimated that with the FTRA taking over the market, around 42 Kimchi currency platforms will disappear, according to estimates by Kim Hyoung-joong, head of the Cryptocurrency Research Center at the University of Korea.

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“Huge losses are expected for investors,” said Cho Yeon-haeng, president of the Consumer Finance Federation of Korea, in the report. According to him, these losses may come from the suspension and freezing of funds. According to the FT, he also pointed out that many exchanges considered smaller are unlikely to offer customer protection.

According to Coindesk, in an attempt to persuade regulators and sever ties with the country, the Bitfront exchange, a subsidiary of Japanese technology giant LINE, recently said it would discontinue Korean support as well as card-based cryptocurrency purchases. of the South Koreans.

It is worth remembering that last month, Binance suspended trading pairs and payment options using the South Korean won, with the intention of proactively complying with local regulations.

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Taxes on cryptocurrencies in South Korea

Another important point to note is that the South Korean government intends to demand taxes on cryptocurrency operations. In April of this year, Finance Minister Hong Nam-ki said taxes on cryptocurrencies in the country were on the way.

“It is inevitable, we will need to impose taxes on the gains from trading virtual assets,” he said at a news conference. Hong has previously said that capital gains taxes on cryptocurrency sales could start in January 2022.

New inspection agency

Last month, the FSC announced the creation of an independent agency to oversee operations with cryptocurrencies, the ‘Crypto Asset Monitoring Bureau’.

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According to the agency, the initiative is part of an organizational change in the Korean Financial Intelligence Unit (KoFIU) to improve transparency in virtual asset transactions.

The entity, which starts operating this month, is in line with the revision of the law on information on specific financial transactions in the cryptocurrency sector, which came into force in March this year — the Special Financial Transactions Information Act (SFTIA) . The action was endorsed by the Ministry of Interior and Security.

Cryptocurrency exchanges operating in South Korea have until the 24th of this month to register with the Financial Services Commission (FSC). If that doesn’t happen en masse, about $2.6 billion in digital assets could be wiped out by applying the Financial Transaction Reporting Act (FTRA) to about 40 exchanges, the Financial Times said on Sunday (12).

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The FTRA, South Korea’s largest financial operations supervisory body, requires compliance with anti-money laundering procedures, such as KYC (Know Your Customer) for all cryptocurrency companies, which must register accounts only with the real name of your customers. As a final warning, Coindesk noted on the report, the FSC advised brokers who were unable to meet regulatory obligations to inform their clients of any possible closure by September 17th.

As of September 24, according to the FSC statement, cryptocurrency brokerages that are not registered with the KFIU will not be allowed to operate in South Korea. Cryptocurrency companies must also obtain approval from the FSC and the Security and Security Agency. Internet in the country before the stipulated date.

Most exchanges were not regularized

According to the site, about two thirds of the 60 exchanges have not yet been registered, according to the report, which is seen by experts as a possibility of creating a scenario of “run on banks”, in this case, run on exchanges. It is a situation where most clients try to withdraw their money fearing that the institution will cease to exist.

Advertisement

One of the problems is that in some extreme cases, financial institutions’ reserves have failed to cover the cost of customer withdrawals. And that’s why the experts’ warning makes sense, and that goes for both large and small exchanges. “They will feel poor all of a sudden. I wonder if regulators can handle the side effects,” Lee Chul-yi, head of exchange Foblgate, a mid-sized company, told the story.

There may be “huge losses”, according to experts

Also according to the Financial Times, about 90% of South Korean cryptocurrency trade is conducted in alternative currencies, some of which are known as “Kimchi currencies”. Through them, users operate by selling and buying locally as the so-called ‘kimchi premium’ changes; nothing different from arbitrage operations. It is estimated that with the FTRA taking over the market, around 42 Kimchi currency platforms will disappear, according to estimates by Kim Hyoung-joong, head of the Cryptocurrency Research Center at the University of Korea.

“Huge losses are expected for investors,” said Cho Yeon-haeng, president of the Consumer Finance Federation of Korea, in the report. According to him, these losses may come from the suspension and freezing of funds. According to the FT, he also pointed out that many exchanges considered smaller are unlikely to offer customer protection.

Advertisement

According to Coindesk, in an attempt to persuade regulators and sever ties with the country, the Bitfront exchange, a subsidiary of Japanese technology giant LINE, recently said it would discontinue Korean support as well as card-based cryptocurrency purchases. of the South Koreans.

It is worth remembering that last month, Binance suspended trading pairs and payment options using the South Korean won, with the intention of proactively complying with local regulations.

Taxes on cryptocurrencies in South Korea

Another important point to note is that the South Korean government intends to demand taxes on cryptocurrency operations. In April of this year, Finance Minister Hong Nam-ki said taxes on cryptocurrencies in the country were on the way.

Advertisement

“It is inevitable, we will need to impose taxes on the gains from trading virtual assets,” he said at a news conference. Hong has previously said that capital gains taxes on cryptocurrency sales could start in January 2022.

New inspection agency

Last month, the FSC announced the creation of an independent agency to oversee operations with cryptocurrencies, the ‘Crypto Asset Monitoring Bureau’.

According to the agency, the initiative is part of an organizational change in the Korean Financial Intelligence Unit (KoFIU) to improve transparency in virtual asset transactions.

Advertisement

The entity, which starts operating this month, is in line with the revision of the law on information on specific financial transactions in the cryptocurrency sector, which came into force in March this year — the Special Financial Transactions Information Act (SFTIA) . The action was endorsed by the Ministry of Interior and Security.

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Cryptocurrency

Central Bank of Spain requires cryptocurrency companies to register in the country

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The Bank of Spain (BDE) made available on Thursday (21) an electronic form for registering individuals and companies wishing to initiate or formalize operations with cryptocurrencies. The call comes a week after the agency formally sent a notice on the subject to the country’s financial institutions.

According to the BDE, registration is mandatory for companies operating in the cryptocurrency sector, regardless of whether they already have registration with the country’s central financial agency, that is, even banks. Such a requirement could confuse financial entities already licensed in Spain, as they are already directly supervised, Coindesk commented.

“The obligation to register in this form applies to all individuals or legal entities that provide exchange services between virtual and fiduciary currency and custody, regardless of whether they are also registered in other administrative records at the Bank of Spain or other competent authorities”, says a short excerpt from the BDE instructions.

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Another point is what clarifies the BDE about the registration of individuals who work in the exchange service in Spain, such as P2Ps. Something that the central bank makes clear is that these actors must register “regardless of the location of the service recipients”. However, both individuals and corporations will have to adapt or revise their money laundering policy.

Entities now have one week to start the registration process and deliver documentation. The BDE advises that “it is advisable to submit all documents complete from the start to avoid delays in processing the order”.

Cryptocurrencies in Spain

About four months ago, the BDE said it would provide instructions and the necessary forms to apply for registration. But the instructions have only just arrived, with just 7 days to go before the registration deadline.

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Another point of action by the BDE is the lack of clarity, since the entity works as the country’s central bank, but under the supervision of the European Central Bank (ECB).

The Spanish bank BBVA, for example, already has a bitcoin trading and custody service in Switzerland. CaixaBank, the third largest Spanish bank, is also preparing to explore the cryptocurrency sector with startup Onyze.

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This Is What Jack Dorsey’s Cryptic ‘705742’ Tweet Might Mean

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A simple but cryptic tweet from Jack Dorsey, Founder and CEO of Twitter and payments firm Square, has sparked a debate about the meaning of the post, and whether the well-known Bitcoin (BTC) advocate has any BTC-related plans that have yet to be announced.

As pointed out by many users replying to the thread, the tweet, saying just “705742,” likely refers to a block number on the Bitcoin blockchain. A block with that number was indeed mined on Tuesday at 20:14 UTC, but it is still unknown what else is special about the particular block.

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Twitter users were quick to pull up the bitcoin block explorer to see if there was anything unusual about block 705742, which at that point had yet to be mined. However, little out of the ordinary could be found.

Others, meanwhile, joked that the number could be Dorsey’s “[end of year] price target for bitcoin,” or that it could be somehow related to “Moscow time,” – bitcoin slang for the value of 1 USD in satoshis.

Speculating further, one user on Reddit suggested that the block number could be the first block to be mined by a new mining system that Dorsey has proposed.

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“Maybe the first block that Square mined as part of their [research & development] for a potential public mining platform,” the user wrote, before adding that it looks like the wallet that received the block reward already has both in and outbound transactions worth almost USD 2bn. “Seems like a plausible volume for Square/Cashapp,” the user added.

However, according to various Bitcoin blockchain explorers, the block in question included 2,787 transactions and was actually mined by the BTC.com pool. Moreover, the block was mined almost an hour after the tweet was published.

In either case, as reported, the latest tweet from the Twitter CEO followed another thread from last Friday, where Dorsey said that Square is considering building “a bitcoin mining system based on custom silicon and open source.” 

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“Mining needs to be more distributed” and it “should be as easy as plugging a rig into a power source,” Dorsey wrote, asking his followers what the biggest barriers are for people who want to run miners.

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Facebook Finally Launches Digital Currency Wallet Novi but Senators Want to Close This Project

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Amid the Facebook Novi launch, some federal legislators want the social media giant to discontinue the project.

Facebook Inc (NASDAQ: FB) has launched the pilot phase of its digital currency wallet Novi in the US and Guatemala using stablecoin Paxos. Facebook finally launches Novi and is going with Paxos’ USDP after its own native crypto Diem failed to secure regulatory approval. Furthermore, the social media giant heralded the pilot launch in a blog post on Tuesday.

Novi’s pilot launch is more than two years after it was first announced. The wallet will facilitate fast, secure, and free fund transfers between users via mobile smartphone apps. However, all users must register with government-issued identification.

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For now, Paxos’ stablecoin will serve as Novi’s transactional currency, while powerhouse exchange Coinbase will provide custodial services. According to David Marcus, head of Facebook’s Novi wallet, this pilot phase will, “test core feature functions, and operational capabilities in customer care and compliance.” Furthermore, it will test the viability of stablecoins as a valid and sustainable form of payment.

Facebook Launches Novi to the Disapproval of US Congress

Amid the Facebook Novi launch, some federal legislators are calling for the social media giant to discontinue the project. Senate Democrats addressed a letter to Facebook CEO Mark Zuckerberg on Tuesday questioning the company’s credibility with crypto. In their own words, Facebook “cannot be trusted to manage cryptocurrency”. The senators base this conviction on the social media company’s past inadequacies in handling cyber risks and keeping consumers protected. Signed by Senators Brian Schatz, Sherrod Brown, Elizabeth Warren, and others, the letter read:

“Facebook is once again pursuing digital currency plans on an aggressive timeline and has already launched a pilot for a payments infrastructure network, even though these plans are incompatible with the actual financial regulatory landscape — not only for Diem specifically, but also for stablecoins in general.”

Part of the Congress letter to Facebook further states:

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“We urge you to immediately discontinue your Novi pilot and to commit that you will not bring Diem to market.”

Facebook responded to the Senators’ query through a spokesperson for Novi, suggesting that the company would address the issues raised therein.

Facebook Has a Long-Running History with Federal Lawmakers over Its Operational Practices

In recent times, Zuckerberg and Facebook have locked horns more frequently with Congress. Back in 2019, Congress summoned the Facebook CEO to provide testimony on the Diem project (then called Libra). Zuckerberg’s summoning was the culmination of weeks of tussling, between Facebook and the federal lawmakers, who were skeptical of the project. In addition, the Zuckerberg hearing came just a year after Facebook’s Cambridge Analytica scandal. This may have been another reason federal legislators were agitated against the company.

Another recent red flag raised against Facebook was earlier this month from whistleblower Frances Haugen. Haugen appeared before the Senate Commerce Committee to testify on the threat Facebook posed to users. Some of these include the usage of Facebook itself and other affiliated services, such as photo and video-sharing behemoth Instagram.

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