Bhutan Launches Blockchain-Based National ID System

Strengthened KYC Spurs More Suspicious Transaction Reports from Korean Crypto ExchangesIn South Korea this year, there has been a significant surge in the number of suspicious transaction reports (STRs) related to cryptocurrencies, according to local news agency Yonhap.This increase is primarily attributed to cryptocurrency exchanges fortifying their Know Your Customer (KYC) procedures. This proactive response follows the controversy surrounding lawmaker Kim Nam-kuk’s significant virtual asset holdings, which were unveiled in May. His scandal came to light when a substantial amount of WEMIX tokens, valued in billions of Korean won, were transferred from the Bithumb exchange to the Upbit exchange. Upbit, deeming it a suspicious transaction, promptly reported the matter to the Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC).Photo by ron dyar on UnsplashGrowing number of suspicious transaction reportsAs the scandal continued to gain traction, the political realm reached a consensus to conduct investigations into the cryptocurrency holdings of all lawmakers. Additionally, the National Human Rights Commission of Korea initiated the tracking of all lawmakers’ cryptocurrency holdings last month, a process set to span 90 days.Data received by lawmaker Yoon Young-deok on October 30 from the FIU reveals that the number of STRs originating from virtual asset service providers (VASPs) has reached 11,646 in the first nine months of this year. This figure has already exceeded last year’s total of 10,797 STRs.Under the current Act on Reporting and Using Specified Financial Transaction Information, commonly referred to as the Financial Transaction Reporting Act, VASPs are mandated to report to the FIU if they have reasonable grounds to suspect that a customer’s financial transactions are connected to illicit property, money laundering, or terrorist financing. The Act has been in full effect since October 2021.In 2021, a total of 199 reports were submitted under this Act. The number of reports surged to over 10,000 the following year, and in the current year, it continues to grow at an even faster rate. The FIU reviews and analyzes these STRs in accordance with Article 10 of the Financial Transaction Reporting Act. It forwards the relevant information to law enforcement agencies only when it is deemed necessary for the investigation of a specific criminal case.Enhanced but varied approaches by exchangesCrypto exchanges have bolstered their customer verification requirements, especially for customers deemed to have a high risk of involvement in money laundering, in accordance with the Financial Transaction Reporting Act. This entails the need for additional scrutiny of the source of funds and the purpose behind transactions. Notably, if customer verification appears suspicious, exchanges are mandated to confirm the authenticity of the information using reliable documents.However, it’s important to note that the enforcement decree accompanying this Act grants exchanges the flexibility to verify documents based on their own business guidelines. This autonomy has been provided to assist exchanges in effectively mitigating money laundering risks by taking into account their individual business rights and characteristics.For instance, Upbit, South Korea’s largest cryptocurrency exchange, has implemented a fraud detection system (FDS) powered by artificial intelligence to continuously monitor and identify fraudulent transactions. This initiative has earned Upbit recognition from the FIU as an outstanding organization for reporting suspicious transactions during the first half of this year.On the contrary, Bithumb has devised and applies internal guidelines dedicated to anti-money laundering (AML) measures. The exchange has instituted a streamlined customer verification process for customers who are assessed as having a low likelihood of being engaged in money laundering activities. However, this simplified process is not extended to individuals from countries that have not adopted the recommendations of the Financial Action Task Force (FATF).Korbit monitors information related to customer verification through a dedicated department. It declines transactions for customers who have not undergone sufficient verification and validation procedures.Coinone’s AML department examines customer transactions comprehensively. It maintains ongoing reviews of customer information, business operations, risk assessments, and the source of funds. If any of these aspects are found to be suspicious or inadequate, the AML department proceeds with additional customer verification, including the disclosure of the source of funds.Some raise concerns about the inconsistency in customer verification standards for AML and STRs across different exchanges. When one exchange flags a transaction as suspicious, another might see it as routine. Such discrepancies highlight the need for uniform guidelines. Addressing this, the Digital Asset eXchange Association (DAXA), consisting of Korea’s five leading currency exchanges — Upbit, Bithumb, Coinone, Korbit, and Gopax — has set up an AML division to devise standardized rules for STRs.

Kazakhstan setback for Coinbase as government blocks website accessIn alignment with the Law on Digital Assets legislation which was enacted in February, Kazakhstan’s Ministry of Culture and Information has officially confirmed that access to the Coinbase website has been blocked within the country.The development follows the enforcement of regulations prohibiting the issuance and trading of unsecured digital currencies, according to local news media.Photo by Kai Pilger on UnsplashAccusation of regulatory violationThe authorities in Kazakhstan initiated the blocking of local IP addresses from accessing Coinbase as early as September. The action was taken in response to a request from the Ministry of Digital Development. The Ministry of Digital Development accused Coinbase of violating the Law on Digital Assets, resulting in the restriction of access to the platform.The Law on Digital Assets, introduced earlier in 2023, stipulates that the issuance and circulation of unsecured digital assets are prohibited. The exception to this rule is within the Astana International Financial Center (AIFC), a designated economic zone in Kazakhstan. Permits to operate crypto trading platforms within the AIFC are issued by the Astana Financial Services Authority (AFSA).Several cryptocurrency exchanges have already received approval from the AFSA. Notable names among these approved exchanges include Binance, Bybit, CaspianEx, Biteeu, ATAIX, Upbit and Xignal&MT.Reports of access issues to the Coinbase website initially emerged in September, with the local Telegram media outlet Finance.kz referring to it as the “great Kazakh investment firewall.” This firewall was not limited to Coinbase. It also affected access to other major international crypto exchanges such as Kraken.Stringent regulationKazakhstan’s approach to crypto regulation has been notably stringent, particularly concerning its significant mining sector, which ranks among the world’s largest. In October, eight leading cryptocurrency mining operators wrote an open letter to President Kassym-Jomart Tokayev, expressing concerns about the challenging conditions faced by the crypto-mining industry.Those entities included BCD Company, TT Tech Limited, Green Power Solution, Kinur Invest, KZ Systems, AI Solutions and VerCom. High energy prices for miners were cited as a significant issue, leading to what was described as a “very distressful situation” in the sector.Mining got off on the wrong footing in Kazakhstan. Following the banning of crypto mining activities in China in May 2021, there was a sudden influx of miners into Kazakhstan. As that development wasn’t planned for, it led to major stresses being placed on the country’s electricity grid. As a consequence, blackouts occurred.While this development in Kazakhstan is unwelcome news for Coinbase, the company has experienced more positive outcomes elsewhere. Last week it emerged that the U.S. crypto exchange had outperformed Q3 revenue estimates. That said, it also emerged that the exchange’s trading volumes had declined for the second consecutive quarter in a row.Kazakhstan’s move to block Coinbase access underlines the country’s determination to enforce its digital asset regulations, contributing to a growing trend of governments worldwide seeking to bring crypto-related activities under regulatory oversight.

ClayStack, the crypto liquid staking platform, has made a strategic move into the Ethereum restaking arena through EigenLayer, providing users with reward points in anticipation of its upcoming token launch.Photo by Kanchanara on Unsplash‘Redefining the staking landscape’The Singaporean platform describes its mission as redefining “the staking landscape by helping users unlock the underlying value of their crypto assets, and we are doing this by building a decentralized cross-chain liquid staking protocol.” In its efforts to deliver on that mission, it appears that the crypto startup is set to convert its Ethereum liquid staking token, csETH, into a liquid restaking token, leveraging the Ethereum restaking protocol offered by EigenLayer. Eigenlayer enables restaked sidechains, through which ETH restakers can participate in Ethereum-centric consensus protocols. Reward pointsIn an announcement on Tuesday, ClayStack revealed its plan to offer reward points to users participating in Ethereum restaking, with a 1:1 ratio for redemption when the platform's token is launched. Each clay point earned will be redeemable for one clay token during the token launch. Notably, the platform distinguishes itself by offering a 1:1 redemption system, setting it apart from other points programs. Founder and CEO Mohak Agarwal explained how the project is adopting EigenLayer's protocol for this new service. Agarwal had teased that the project had something new to offer in the pipeline when taking to social media last week, writing:”We are entering into a new era where staking will become more dynamic, accessible, and rewarding for the entire DeFi community.” Currently, ClayStack accepts native ETH for direct restaking on EigenLayer. Agarwal confirmed to The Block that other liquid staking tokens, such as Lido staked ether (stETH) and Rocket Pool ether (rETH), will be integrated into the platform in the coming days. He emphasized that these tokens will be directly deposited on EigenLayer, streamlining the restaking process. Growing interest in restakingEthereum restaking has gained significant traction since EigenLayer's launch in June of the previous year, with a total value locked (TVL) in smart contracts reaching approximately $1.7 billion. Renzo Protocol recently entered the Ethereum restaking space via EigenLayer, securing a $3.2 million seed funding round. Despite being in beta, Renzo has already achieved a TVL exceeding $116 million. ClayStack's TVL currently stands at around $2.25 million, having initially launched liquid staking for Polygon's MATIC token in 2022. Following that, the platform introduced Ethereum liquid staking in September. However, the latest move marks a shift in focus towards Ethereum restaking due to challenges faced on the Polygon network. Agarwal outlined the reward structure, stating that 20 clay points will be allocated per ETH per week, with rates subject to change every Monday but generally remaining constant throughout the week. There are no minimum or maximum points for individual users, although there is a weekly total cap for all users combined, which refreshes at the beginning of each week.