Bitkub Addresses Market Conditions Thru Job Cuts

An industry advocacy body for crypto and Web3 in India had urged the Indian government to take action against nine offshore exchanges, prompting the government to issue show cause notices and block URLs recently. Native industry pushbackAccording to CoinDesk, the publication has seen a copy of a letter that was sent in mid-December by the Bharat Web3 Association (BWA), addressed to the Indian Finance Ministry’s Department of Revenue Secretary, Sanjay Malhotra. The letter was penned by BWA Chairman Dilip Chenoy. Chenoy has been in the role since March of last year having a number of years of leadership experience within Indian industry bodies under his belt, with time spent previously as Secretary General of the Indian Chambers of Commerce and Industry and as Chairman of the board of Sant Longowal Institute of Engineering and Technology. According to its LinkedIn profile, the BWA seeks to “advocate for the collaboration between the regulatory bodies and the Industry for creating awareness about the new age technology and the emerging [Web3/crypto] asset class.” ‘Show cause’ noticesIt emerged last week that India’s Financial Intelligence Unit (FIU) had issued “compliance show-cause” notices to a number of overseas crypto platforms who have otherwise been active within the Indian market. The FIU is a national body tasked with liaising with and providing information to enforcement agencies where suspected illicit transactions are concerned. The offshore exchanges, including Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global and Bitfinex, have been given a two-week deadline to respond to the show cause notice. This notice questions why regulatory actions should not be taken against them, aiming to ensure compliance with the country's financial regulations. It’s understood that the BWA's letter requested a one-month grace period for offshore exchanges to register with the FIU. It remains unclear whether the government's actions were solely prompted by the BWA's letter or if it would have taken place independently. Notably, the BWA's letter aligns with the government's earlier mandate in March, requiring crypto businesses to register with the FIU and adhere to anti-money laundering processes under the Prevention of Money Laundering Act (PMLA). Since then, 31 domestic entities have registered with the FIU. Photo by Peter Glaser on UnsplashEnsuring a fair gameThe BWA's letter also proposes that offshore exchanges establish an Indian subsidiary, deposit the applicable tax deducted at source (TDS) from July 1, 2022 and face restrictions, including potential access blocks on mobile app stores and IP addresses, for non-compliance. While it's unclear if all these requests feature in the show cause notices, the BWA emphasizes the need for fair competition. Rajagopal Menon, Vice President of leading Indian crypto exchange WazirX, stressed that “all we are asking for is a level playing field." The BWA's letter also urges the government to grant Indian retailers a 30-day window to withdraw assets before implementing any restrictions. The fledgling BWA industry body recently celebrated its first anniversary with its founding member, CoinSwitch founder Ashish Singhal, stating that he got involved with the BWA “to help build an effective regulatory framework for Web3 and digital assets in India.” Singhal added that the BWA’s mission is “to help India realize its vision to be the leading digital economy.” 

South Korean internet giant Naver has announced that it is monitoring and removing blog posts that promote unregistered virtual asset service providers (VASPs).Photo by Pixabay on PexelsUnregistered status makes promotions illegalAccording to Digital Asset, a Naver official said the practice reflects the fact that unregistered VASPs are subject to criminal penalties, meaning advertisements or promotional content related to them could potentially violate the law. This marks the first instance of Naver publicly confirming its stance on advertising for unregistered crypto platforms. The official noted that this measure had already been implemented before the financial regulator issued a press release in December warning of the illegality of such activities. In December, the Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC) said that referral activities promoting unregistered VASPs through blogs and social media constitute an illegal crypto business. The regulatory clarification prompted influencers on platforms such as Telegram and YouTube to discontinue referral promotions related to these exchanges. Google Play to remove unregistered exchangesIn a parallel move, Google has revealed plans to cease support for unregistered crypto exchange apps on its Google Play Store. Google Korea said the decision was made voluntarily to align with its operational policy of complying with regulations in different jurisdictions. As a result, unregistered platforms will be removed from the Korean market in accordance with the FIU's regulatory rules. Beyond marketing restrictions, scrutiny of crypto exchanges is intensifying as the FSC moves to strengthen oversight. The regulator is reportedly devising a rule that would hold platforms liable for hacking incidents under a strict liability framework, meaning liability could be imposed even in the absence of negligence. According to MTN News, the financial authority is considering penalties of up to 10% of a platform’s revenue for such incidents. However, industry participants have argued that the proposed regulation is excessively harsh. One crypto industry source highlighted the disparity, pointing out that the potential 10% fine is more than three times higher than the maximum 3% penalty imposed on traditional fintech companies. Traditional finance eyes stablecoinsAmid this regulatory tightening, the traditional financial sector is positioning itself within the stablecoin segment. Banks are reportedly discussing whether to seek permission to offer yields on stablecoins, provided these fiat-pegged assets are issued by bank-led consortia. Citing industry sources, Electronic Times Internet reported that the Korea Federation of Banks (KFB) recently held a closed-door meeting with member institutions. The agenda focused on a coordinated response to upcoming regulations governing won-backed stablecoins, which form part of the second phase of South Korea’s digital asset legislation. Discussions included a review of the KFB’s ongoing research into won-backed stablecoins, commissioned to McKinsey & Company. The report, currently at its midpoint and scheduled for release in early February, will examine the feasibility of bank-led stablecoin issuance and explore potential use cases. This move is widely seen as an effort by the banking industry to secure customers and liquidity early on, while protecting its competitive advantage as a group of traditional lenders. The push by traditional financial institutions into stablecoin-related sectors is becoming increasingly concrete. According to another MTN News report, Shinhan Securities has formed a strategic partnership with Etherfuse, a tokenization platform that converts real-world assets (RWAs) into digital tokens. The partnership aims to collaborate on the issuance of "stablebonds" backed by government bonds. The planned issuance will use the ticker KTB, with Shinhan Securities acting as a brokerage responsible for securing and managing the underlying assets rather than serving as the issuer. Similarly, Hana Financial Group has established a stablecoin consortium including BNK Financial Group, iM Financial Group, Standard Chartered Bank Korea, and OK Savings Bank. According to local media outlet News1, the participants plan to raise funds to establish a special-purpose company that will later issue a stablecoin.These developments come as financial authorities move to use legislation to restrict early-stage stablecoin issuance to consortia in which banks hold at least a 50% stake plus one share, citing concerns over market stability.

Shanghai Court Recognizes Unique Traits of BitcoinThe Shanghai Second Intermediate People’s Court has added a layer of legitimacy to Bitcoin despite China’s prevailing anti-crypto stance.In a recently published report, the court recognized digital currencies such as Bitcoin as being unique and non-replicable. It went further still in singling out Bitcoin as being distinct from the thousands of other cryptocurrencies that are currently in existence.Photo by Zhou Xian on UnsplashSun chimes inThe significance of this development has caught the attention of Justin Sun, the Founder of the TRON blockchain network, who took to the X social media platform (formerly Twitter) to share insights from the report. Sun wrote:”The Second Intermediate People’s Court of Shanghai believes that with the development of internet technology, digital currencies represented by Bitcoin possess uniqueness and non-replicability.”Legal attributesDelving deeper into the report’s content, it becomes evident that the court was engaging in a discussion about the legal attributes of Bitcoin and how judicial decisions should be approached in cases involving cryptocurrencies.One striking aspect of the report is how it acknowledges the usage of cryptocurrencies in illegal financial activities, such as illicit fundraising. In this instance, the court has indirectly acknowledged the financial nature of cryptocurrencies, including Bitcoin, despite the fact that a ban has been in place on trading Bitcoin and other cryptocurrencies since 2021.That said, the report also notes that due to the regulatory stance on cryptocurrencies, the legal attributes of digital currencies remain ambiguous, creating challenges in their judicial handling. Despite some courts attempting to disregard the “monetary” and “property” attributes of digital currencies, these efforts have proved unsuccessful.Inherent characteristicsRegarding the monetary attribute, the courts still identify the sale price of digital currencies in their judgments. When it comes to property attributes, these courts struggle to ignore the inherent property value presented by digital currencies during legal proceedings.While acknowledging Bitcoin’s decentralized nature and lack of centralized control, the article still underscores its “major functions of currency,” such as scalability, circulation, storage, and means of payment, making it a global currency.Future implicationsThe legal opinion expressed by the Shanghai court provides a notable boost to the legitimacy of Bitcoin and other digital currencies. It asserts that these tokens undeniably possess value, even if the People’s Bank of China chooses not to formally recognize them.Moreover, the court’s inclination toward classifying cryptocurrencies as personal property aligns with another report from the Chinese courts as well as rulings in other jurisdictions, such as Singapore. Similarly the Shanghai court acknowledges that Bitcoin can be acquired through various means, including mining, inheritance, and buying and selling.The court’s recognition of the enduring value of cryptocurrencies echoes the sentiment that value is a collective human judgment. In this respect, the Shanghai court’s perspective aligns with the reality that many Chinese citizens continue to use digital currencies as a medium of exchange despite the existing ban.The Shanghai court’s unintentional validation of Bitcoin’s unique attributes and value may have broader implications for the legal status and recognition of cryptocurrencies in China and beyond. This latest development could contribute to a more nuanced approach to cryptocurrency regulation and legal interpretation in the future.