Hong Kong’s OSL crypto exchange receives $91M boost

Crypto Travel Rule solutions provider CODE obtains ISO 37301 certificationCODE, a Travel Rule solutions provider and joint venture co-founded by Korean cryptocurrency exchanges Bithumb, Coinone and Korbit, announced on Wednesday (local time) that it has obtained the ISO 37301 certification for compliance management systems (CMS) from the Korea Compliance Initiative (KCI).Photo by Héctor J. Rivas on UnsplashBoosting complianceISO 37301 is an international standard that outlines the requirements and guidelines for an organization in establishing, developing, implementing, evaluating, maintaining and improving a CMS. It provides a framework for organizations to ensure that they are following all relevant and applicable laws, regulations, codes of conduct and more to exercise good governance, transparency and accountability.CODE has taken the initiative to bolster its CMS to provide more secure and reliable Travel Rule solutions by analyzing and managing compliance risks. The firm’s CEO Lee Sung-mi is responsible for overseeing these efforts as the recently appointed head of compliance. Through these measures, the company explained that it has been capable of building a system to comply with strict international standards.The Travel Rule under the Financial Action Task Force’s (FATF) Recommendation #16 outlines that virtual asset service providers (VASPs) must share certain personal information about customers — including names and account numbers — when facilitating crypto transactions that exceed a certain amount.CODE is also running mandatory training sessions and various programs for all employees to ensure adherence to compliance requirements. In particular, the firm operates a system to monitor Travel Rule compliance risks that may arise during cryptocurrency deposits and withdrawals.“Beyond establishing a robust compliance management culture as a Travel Rule solution provider, we will continue to work with our corporate members to ensure that this culture can be more widely adopted across the crypto industry,” said Lee Sung-mi.Contributing to anti-money launderingCODE has also recently teamed up with global blockchain analytics and crypto compliance solutions provider Elliptic to help Korean VASPs adapt to the evolving international regulatory landscape for anti-money laundering (AML) and the crypto Travel Rule.

KuCoin Ups Compliance via Mandatory KYCKuCoin, the Seychelles-headquartered global cryptocurrency exchange, has unveiled plans to strengthen its Know Your Customer (KYC) system by introducing mandatory identity checks.In an official announcement on Wednesday, KuCoin stated that this upgrade aims to ensure compliance with global anti-money laundering (AML) regulations. Effective from July 15, KuCoin will require all new users to undergo KYC authentication as part of the registration process. Those who fail to complete the KYC process will be unable to access KuCoin’s wide range of products and services, according to the exchange.Photo by Markus Winkler on UnsplashExisting and new usersFurthermore, existing users who registered prior to July 15, 2023, will also be required to complete the KYC process to access certain features on KuCoin. Withdrawals will remain unaffected for these users. However, they will no longer be able to deposit new funds, the announcement outlines.Despite the introduction of mandatory KYC, KuCoin’s existing non-KYC users will still be able to utilize services such as spot trading sell orders, futures trading deleveraging, and margin trading deleveraging. Additionally, other available services for existing non-KYC users include redemptions at KuCoin’s staking and lending hub, KuCoin Earn, and exchange-traded funds’ redemption.Johnny Lyu, the CEO of KuCoin, explained the KYC process, stating: “A complete KYC process requires users to provide their name, identification number, and identification photo, and undergo facial recognition.” Lyu emphasized that KuCoin carefully verifies customer identification and collects the necessary data in compliance with the laws and regulations of applicable jurisdictions.He added: “Typically, we require customer identification information including information on the customer’s name and further identifiers such as a physical address, date of birth, and national ID number.”Risk profile data collectionIn accordance with regulatory requirements, KuCoin also collects additional information regarding a customer’s business and risk profile. This includes details about the nature and volume of trading activity and the origin of virtual funds deposited, according to Lyu.Lyu underscored that KYC has always been a principle adhered to by KuCoin and that identity recognition is an established part of its process. He further highlighted that KuCoin’s KYC policy is designed to align with regulations in applicable jurisdictions, as there is no unified global KYC regulation at present.KuCoin has also made it clear that the exchange does not support the United States KYC requirements based on their current or updated KYC rules. This new mandatory KYC update will impact a significant number of cryptocurrency users globally. As of July 2022, KuCoin reported over 20 million registered accounts on its platform.Leading global exchangeKuCoin is also recognized as one of the world’s largest cryptocurrency exchanges in terms of trading volumes. At the time of writing, KuCoin’s daily trading volumes exceed $540 million, with more than 8 million monthly visits, according to data from CoinGecko. For comparison, major United States-based exchange Kraken receives approximately 5 million visits per month, with a daily trading volume of around $380 million.This move by KuCoin follows a trend of increasing KYC policies among cryptocurrency exchanges. In May, Dubai-based Bybit restricted non-KYC users from withdrawing more than 20,000 Tether (USDT) monthly. It has been reported that cybercriminals have taken advantage of KYC requirements, selling hacked and verified crypto accounts on the darknet for as low as $30 as of April 2023.

As the cryptocurrency market anticipates the approval of a spot bitcoin exchange-traded fund (ETF) in the United States and the subsequent boost to bitcoin’s unit price, Arthur Hayes, Chief Investment Officer (CIO) of family office Maelstrom, has issued a warning of potential market turbulence. Hayes, better known as the founder of crypto derivatives platform BitMEX, has moved on to Hong Kong-based Maelstrom, a family office that invests in early stage infrastructure ventures that implicate a move towards the decentralization of everything.Photo by Kanchanara on UnsplashMacroeconomic risk factorsIn a detailed blog post on Friday, Hayes outlines a number of macroeconomic variables that could lead to a bitcoin unit price downturn. Hayes begins by highlighting the depletion of the Federal Reserve’s reverse repo program (RRP), which has served as a significant driver for risky assets over the past year. This program allows qualified banks and investment firms to park cash and earn interest on it. The RRP balance has rapidly declined from a record high of $2.5 trillion at the end of 2022 to $700 billion. Hayes projects it to reach its historical average of $200 billion by March. As this liquidity source dwindles, he anticipates negative impacts on bonds and stocks, as well as cryptocurrencies. Fed BTFP expirationThe second factor contributing to the potential market turmoil is the expiration of the Bank Term Funding Program (BTFP) on March 12. This crucial Fed facility is designed to provide longer-term loans to commercial banks. The mechanism aids banking sector stability. Hayes is concerned that the BTFP might not be extended. Such an eventuality could lead to bankruptcy for banks holding massive unrealized losses on their bond holdings. It could lead to a “liquidity rug pull” event reminiscent of the banking crisis in March of the previous year. The crypto OG predicts that such an eventuality would force a response. “The combination of a lack of liquidity gushing from the RRP and the lack of printed money to cover the bond losses on banks’ balance sheets will decimate the financial markets globally,” he wrote. Hayes asserts that the combination of reduced liquidity from the RRP and the lack of printed money to cover bond losses could have a global impact on financial markets. In response to this scenario, he predicts that the Fed will cut interest rates during its March 20 meeting and reinstate the BTFP funding line. ‘Healthy’ correctionIn terms of bitcoin’s price, Hayes foresees a “healthy” correction of 20% to 30% from early March prices if the outlined scenario unfolds. However, he suggests the decline could be as much as 40% if BTC rallies to $60,000-$70,000 in the coming weeks. Despite this temporary plunge, Hayes remains optimistic about bitcoin’s resilience, emphasizing its status as a neutral reserve hard currency that is not a liability of the banking system and is traded globally. In a recent podcast appearance, Hayes expressed the view that the business model of U.S. dollar stablecoin issuer Tether will be challenged once multinational banks receive the go-ahead to offer fiat-backed stablecoins. Overall, Arthur Hayes has urged investors to be cautious and to prepare for potential market volatility in March, emphasizing the importance of understanding the interconnected factors influencing both traditional finance and the cryptocurrency market.