New York Bans CoinEx While Seizing Crypto Assets

HashKey Enhances User Security with Exchange Insurance PartnershipHong Kong-based cryptocurrency exchange HashKey has taken a step towards bolstering its users’ security by signing a memorandum of understanding (MOU) with fintech firm OneDegree to provide insurance coverage for digital assets held on the platform.Photo by Manson Yim on UnsplashIndustry-wide significanceThat’s according to a report in local news media on Wednesday. The move represents a positive development not only for HashKey users, as it extends protection to both hot wallets and cold storage addresses, but for the overall crypto space.After the trail of destruction left by a series of high-profile crypto collapses in 2022, the overarching crypto space has been crying out for adequate solutions that reassure crypto market participants that their funds are safe when placed on centralized crypto platforms. In the traditional banking world, in most jurisdictions there are insurance-based schemes that guarantee a certain percentage or level of depositors funds. In many cases, these schemes are backed by the central government.Asian crypto market participants have been hit harder than most due to these collapses having nothing in place in terms of deposit safeguards. In Singapore, crypto lenders Vauld and Hodlnaut failed, leaving deposit shortfalls. The city-state’s residents were particularly hard hit when it came to FTX as many Singaporeans had opted to use the exchange given that the authorities had banned Binance from trading there.Xiaoqi Weng, the Chief Operating Officer of HashKey, emphasized the company’s commitment to fortifying its financial, technical, and service infrastructure to offer customers comprehensive protection. The goal is not only to enhance user security but also to contribute to the overall development of Hong Kong’s digital asset ecosystem.Mitigating riskYanlin Guo, Co-founder of OneDegree, underscored the importance of establishing a robust framework for cryptocurrencies that includes insurance to identify and mitigate potential risks effectively. This collaboration between HashKey and OneDegree aims to provide added peace of mind to cryptocurrency investors who entrust their assets to the exchange.HashKey achieved a significant milestone on August 3 when it became the first cryptocurrency exchange to receive regulatory licensing from the Hong Kong Securities and Futures Commission, enabling it to offer services to retail investors. Subsequently, on August 28, the exchange launched its trading services, albeit with relatively low trading volumes.Currently, HashKey Hong Kong supports the trading of Bitcoin and Ethereum, with no options for margin trading or cryptocurrency derivatives. Nevertheless, the exchange accepts fiat deposits in both US dollars and Hong Kong dollars from authorized financial institutions worldwide.The issue of user insurance has been a contentious topic in the cryptocurrency industry, with various exchanges offering different levels of protection. Some exchanges provide no insurance beyond a contractual claim to users’ assets in the event of bankruptcy. Others offer insurance solely for fiat deposits, while a select few, such as Binance and Bitget, extend coverage to crypto-related incidents.HashKey has answered a market need by integrating this insurance product into its trading service. It’s likely that other platforms will follow suit in the not-too-distant future.

Korean Blockchain Firm Proposes Fintech Collaboration in CambodiaSouth Korean fintech and blockchain company KONDOR recently made an announcement through a press release regarding the establishment of a blockchain fintech advisory board in Cambodia. The firm has proposed a business agreement to the Securities and Exchange Regulator of Cambodia (SERC) with the aim of ensuring sustainable growth in the financial sector and capital markets.Photo by allPhoto Bangkok on PexelsFintech advisory boardThe advisory board comprises experts from various fields, including finance, economics, law, blockchain technology, fintech, and artificial intelligence. They will function independently, offering counsel on policy decisions.Sou Soucheat, Director General of SERC, highlighted that Cambodia is currently in the process of rebuilding and has a youth-driven economy and financial markets. He sees the collaboration with KONDOR as a valuable opportunity to develop a future-oriented financial system.The advisory board will see participation from KONDOR and other notable members, namely VEXK, a global digital asset exchange in Vietnam; Blue Contents, a Honolulu-based digital economy research center; and the Paññāsāstra University of Cambodia, a key player in the country’s educational field.KONDOR and VEXK have put forth a proposal for the joint establishment of a trust company and the pursuit of a custody license in alignment with Cambodia’s revised trust law of 2019.Procuring licensesFollowing the proposal’s approval, VEXK plans to procure a license as a digital asset exchange, as well as a license to establish a trust company. This would enable VEXK to effectively oversee clients’ digital and physical assets through accounts within the established trust company. The safety of these assets will be ensured through insurance coverage provided by reputable global insurers. Furthermore, VEXK will acquire the ability to facilitate USD trading and will retain the digital asset exchange license for five years.The license application will gain support from the SDG Impact Fund, a US-based organization managing $11 billion worth of assets, and the Estates & Infrastructure Exchange (EIX), a project bond exchange based in London.EIX CEO Mark Worrall said that active support from a securities regulator in the dynamic and expanding Web3 era would certainly contribute to Cambodia’s economic growth.

South Korea’s FIU Faces Staffing Cuts Amid Crypto ChallengesThe Financial Intelligence Unit (FIU), a department operating under the South Korean Financial Services Commission (FSC), is downsizing its Virtual Asset Inspection Division, reducing its members from nine to seven, as reported by the local news outlet Etoday. The FIU has faced chronic understaffing for several years, and with the cryptocurrency market expanding and issues accumulating, there is growing concern within the industry about the possibility of a regulatory and supervisory gap.Photo by JEONGUK — on UnsplashTemporary division’s tenure extensionMeanwhile, the FIU seeks to extend the tenure of the temporary virtual asset inspection division, currently scheduled to operate from September 16, 2023, until June 30, 2024. Presently, this division comprises one rank 4 officer, four rank 5 officers, three rank 6 officers, and one rank 7 officer. However, the upcoming organizational changes will involve the removal of one rank 5 officer and one rank 6 officer. Moreover, the two temporary employees (one rank 5 and one rank 6), assigned specifically to examine and analyze financial transactions related to virtual assets, will be reduced to a single rank 5 officer.Understaffing and budget issuesAfter several years of grappling with staffing shortages, it appears that a decision has been made to actually reduce the overall number of FIU personnel. Last year, when the NPC of the National Assembly reviewed the budget of the FSC, it pointed out the shortage of FIU personnel. According to the NPC’s report on the FSC, as of 2022, the FIU’s capacity was 83 staff members. However, the current number stands at only 68, which includes 34 individuals who have been seconded from other agencies. Additionally, there are an additional 13 personnel whose positions are not represented in the organizational chart.The FIU’s spending on labor costs has consistently been lower than that of the FSC’s headquarters each year. Between 2017 and July 2022, the FIU used, on average, 83.71% of its allocated budget for labor costs. In contrast, the FSC had a higher average utilization rate at 89.2%. The NPC pointed out that this discrepancy is largely due to staffing imbalances between the two organizations, suggesting that a reevaluation of staffing levels may be necessary.The FIU has long been considered a less popular unit within the FSC. In recent years, the situation has become particularly challenging for the Virtual Asset Inspection Division, which has been swamped with various problems. This has led to a general reluctance among FSC staff to join this particular division.A person familiar with the matter told Etoday that departments within the FSC focusing on financial policy areas like insurance, banking, and capital markets have traditionally been the go-to choices for those aiming for promotions. However, the source added that there’s been a recent shift: more officers are now showing interest in joining the FIU, often with an eye toward transitioning into related industries after retirement.MOIS hesitant on permanent staffingMeanwhile, the Ministry of the Interior and Safety (MOIS) has been reluctant to make the FSC’s Financial Innovation Bureau and the FIU’s Virtual Asset Inspection Division permanent fixtures. While the FSC argues that solidifying these divisions would necessitate a larger staff and budget, the MOIS is holding back. According to another source, the staffing issue isn’t exclusive to the FIU; the FSC as a whole is understaffed. Despite the FSC’s desire to expand its workforce, the MOIS remains unwilling to approve the additional resources.Crypto professionals are worried that financial regulators are cutting back on staff even as challenges within the sector continue to mount. An official from a virtual asset exchange voiced frustration, pointing to the contrasting approach in neighboring Japan. The official noted that Japan is actively pushing to advance its Web3 sector by not only establishing a dedicated virtual asset department within its Financial Services Agency, but also by forming specialized task forces to address specific challenges. The official finds it baffling that Korea, on the other hand, is downsizing departments that tackle these important issues.