South Korea Reveals Guidelines for Public Officials’ Virtual Asset Disclosure

About three years ago, in March 2021, the South Korean financial regulators implemented the Specific Financial Transaction Information Act to ensure that local cryptocurrency exchanges provide safe and sound crypto trading services to investors. It was also a move to prevent exchanges and investors from engaging in illicit money laundering practices.  However, the law has come across as a hassle to many crypto exchanges, as they were required to undergo verification processes to prove their reliability and to receive real-name accounts from banks. These accounts enable their users to trade crypto against the Korean won, helping exchanges stand out in the fiercely competitive crypto market amid surging Bitcoin prices. At the moment, only five crypto exchanges in Korea are qualified to provide such services. Bithumb, one of these few qualified fiat-to-crypto exchanges, has renewed its real-name account contract with NH Nonghyup Bank (NH Bank) for six more months, according to local news media Yonhap News Agency. Photo by Robin Jonathan Deutsch on UnsplashVarious factors in play for relatively short renewalCrypto insiders say that extending the contract for only six months appears to be quite a conservative move, as Bithumb has been making a year-long contract with NH Bank every year since 2018. Experts suggest various factors may have influenced Bithumb's decision, including the volatile crypto market, the Virtual Asset User Protection Act becoming effective in July and the exchange's planned initial public offering (IPO).  Some say the relatively short renewal of the contract comes after a flurry of complaints from Bithumb users about the unfavorable user experience, including the cumbersome process they must go through to increase the deposit limit of their real-name accounts linked to Bithumb. This appeared to have prompted Bithumb to feel reluctant about the 6-year-long collaboration and seek a partnership with another bank such as KB Kookmin Bank or the online-only Kakao Bank, according to local media Bizwatch. One bank official said that the relatively short renewal reflects Bithumb and NH Bank's commitment to addressing the inefficiencies of crypto transaction services, as the two companies plan to enhance their investor experience and marketing efforts over the next six months.  Crypto boom drives partnership between exchanges and banks NH Bank appears to be persuading Bithumb to maintain their partnership, one bank official said, because providing real-name accounts to crypto exchanges not only benefits exchanges but also banks. Having young crypto investors – mostly in their 20s to 40s – open real-name accounts at banks is seen as a significant opportunity to expand their customer base. One crypto insider said the ability to issue real-name accounts usually puts banks in a superior position when entering a partnership with crypto exchanges, but that doesn't seem to be the case in times like this when the crypto market is bullish more than ever.  

Coins.ph Suffers 12M XRP ExploitCoins.ph, a leading cryptocurrency exchange in the Philippines, is grappling with the alleged loss of over 12 million XRP tokens, valued at $6 million, in a purported exploit.That’s according to various reports that have been emerging from the Philippines in recent days. The incident not only spotlights serious questions about the security protocols and regulatory oversight of crypto exchanges in the Philippines but it also sparked fears of an impact on market sentiment relative to the XRP unit price.Photo by Kanchanara on UnsplashHacker used various platformsThe reports revealed that an exploit targeted Coins.ph, resulting in the unauthorized transfer and exchange of 12 million XRP tokens in a mere 30 minutes. The hacker behind this incident managed to navigate through various platforms, including OKX, WhiteBIT, OrbitBridge, SimpleSwap, ChangeNOW, and Fixed Float, leaving users and investors alarmed.Coins.ph’s wallet, the focal point of the exploit, has a connection to BitGo, a California-based crypto custody firm, which initiated its activation back in 2018. At present, neither Coins.ph nor BitGo has issued any official statements regarding this reported breach.The alleged exploit brings to the forefront once again, the importance of robust security protocols and regulatory oversight within the cryptocurrency industry in the Philippines and elsewhere. Coins.ph is a major player in the crypto sector in the Southeast Asian country, having more than 10 million users.The hacker responsible for the exploit attempted to execute several transactions, trading nearly 13 million XRP tokens, with one transaction seemingly failing to go through. Following the successful acquisition of approximately 12.2 million XRP tokens, the hacker swiftly moved these assets to different exchanges.Responding to the incident, some platforms promptly blocked or marked the stolen XRP tokens and sought assistance from blockchain analysis firms such as Cristal and Chainalysis. This exploit is being deemed as one of the most substantial thefts of XRP tokens in recent history.It’s understood that WhiteBIT blocked the movement of some of the XRP that has been implicated in the hack. WhiteBIT told The Block: “WhiteBIT, as soon as received a request from the Philippines-based exchange Coins, promptly reacted and blocked 445,000 Ripple.”XRP impactXRP, the native cryptocurrency of the Ripple network, which primarily focuses on facilitating cross-border payments, has been grappling with its price stability in recent times. This has been largely due to the ongoing legal disputes between Ripple and the US Securities and Exchange Commission (SEC) over allegations of conducting unregistered securities offerings.While it had been speculated initially that the hack would have impacted the XRP unit price, XRP seems to have held up well. At the time of writing, it was trading at $0.526. There has been an overall uplift in the crypto market as a whole over the course of the past 24 hours which may be a contributing factor, with digital asset market cap being up 2.7%.As the crypto community waits for official responses from Coins.ph and BitGo, the incident serves as a stark reminder of the importance of safeguarding digital assets and enhancing regulatory oversight in an industry that continues to evolve and expand.

HKEX Launches Blockchain-Based Settlement PlatformHong Kong Exchanges and Clearing Limited (HKEX) has unveiled a blockchain-based settlement platform in a move that could potentially transform the landscape of international stock trading, bolstering transparency, efficiency, and operational security.Photo by Ruslan Bardash on UnsplashHKEX SynapseAccording to an announcement on Wednesday (local time), the new platform is called Synapse, and it is set to launch on October 9. The platform utilizes smart contracts developed in the DAML programming language, offering a range of benefits for market participants.Synapse’s primary objective is to streamline post-trade workflows, minimize settlement risks, and enhance transparency in the financial markets. It will be deployed on HKEX’s Stock Connect, a program that allows international investors access to over 1,000 mainland Chinese stocks through Hong Kong routing.With an average daily turnover of RMB 109.3 billion ($15.18 billion) in the first half of 2023, up 5% from the previous year, with a 50% increase from 2020 levels, Stock Connect has established itself as an important channel for international investment.DAML-based smart contractsOne of Synapse’s standout features is its use of DAML, an open-source smart contract language. DAML has the capability to synchronize data across both blockchains and centralized databases, which can significantly improve operational efficiency. By incorporating smart contracts into the settlement process, Synapse enables automatic generation of settlement instructions, reducing the time and manual effort required for trade confirmation. This not only reduces the likelihood of errors but also accelerates settlement, enhancing liquidity and boosting investor confidence.Additionally, Synapse facilitates concurrent processing by simultaneously generating settlement instructions for all parties involved in the trade. This near-instantaneous status update mechanism is especially crucial when connecting traders across different markets. HKEX’s connection to Hong Kong’s Depository Trust and Clearing Corporation via its Institutional Trade Processing service further centralizes cross-border transaction matching, creating a robust ecosystem for seamless trading.Synapse’s launch reflects HKEX’s interest in nurturing international participation where Mainland China’s equity markets are concerned. Glenda So, HKEX Group Head of Emerging Business and FIC, expressed her enthusiasm for the platform’s potential to strengthen both market and investor growth strategies. She believes that Synapse will not only enhance post-trade efficiencies but also contribute to building a more resilient financial ecosystem.Established interest in crypto/blockchainThis is not HKEX’s first expression of interest in blockchain-based technology. In a report it published earlier this year, the Hong Kong stock exchange concluded that crypto exchange-traded funds (ETFs) have the potential to play an important part in building the next phase of digital asset expansion in Asia. Trading in the first crypto ETFs commenced on the platform in December of last year.It’s worth noting that Hong Kong has been rapidly evolving into a hub for Web3 firms, further emphasizing the importance of platforms like Synapse to enhance the efficiency and security of financial transactions in this dynamic environment. While developments in the crypto space are ongoing, Synapse’s blockchain-based settlement platform represents yet another milestone in the evolution of crypto and blockchain-centric financial infrastructure in the region.