South Korea, Chainalysis Collaborate to Thwart North Korea’s Crypto Crimes

Cryptocurrency exchange Backpack has recently forged a strategic partnership with Banxa, a global crypto on-ramp provider, to introduce a comprehensive digital asset on- and off-ramp solution. Onboarding into cryptoThis collaboration, announced by Banxa on Monday, marks a significant milestone for Backpack users globally. If crypto and Web3 are to live up to their promise, then on-ramping and onboarding people from conventional financial services is key to broadening out adoption. Given the service provided by Banxa, the partnership has great importance. Notably, Backpack Exchange, which recently secured a virtual asset service provider (VASP) from the Virtual Asset Regulatory Authority (VARA) in Dubai, emerged from the minds behind Solana's renowned Mad Lads NFT collection, adding a layer of credibility to this venture. Since then, the platform has been steadily expanding its operational footprint. Throughout the latter half of 2023, the exchange acquired several operational licenses across various jurisdictions worldwide, further solidifying its regulatory compliance and global presence. The platform’s user base spans across more than 130 countries. Banxa hit the headlines in the crypto sector earlier this month when it emerged that the firm’s UK affiliate had become the first entity in 2024 to take its place on the Financial Conduct Authority’s (FCA) crypto register.Photo by Shubham Dhage on UnsplashIndustry responseAnndy Lian, a Singaporean intergovernmental blockchain expert and the author of the book "NFT: From Zero to Hero," views this partnership as a game-changer for Backpack users. Lian told Cointelegraph that this link-up will add to the ease with which users can now engage in buying and selling cryptocurrencies using fiat currencies through various payment methods like credit cards, bank transfers and e-wallets. He emphasizes that such convenience will undoubtedly drive up the adoption and liquidity of Backpack and its associated tokens, thereby enhancing the overall user experience. Trading volume high pointThe announcement of this partnership comes on the heels of Backpack's achievement of surpassing $1 billion in 24-hour trading volume on Sunday, merely four days into the launch of its trading preseason. The exchange had already exceeded $300 million in daily trading volume within the first 24 hours of trading on Feb. 15. In light of this exponential growth in trading volume, Armani Ferrante, the founder and CEO of Backpack, took to the X social media platform to issue a word of caution to traders. Ferrante warned against potential overexcitement that might lead to unfavorable trading outcomes. Ferrante stressed the long-term vision of the platform and urged users to trade responsibly, emphasizing that Backpack has extensive development plans in store, with the preseason serving as just the beginning. Ferrante previously worked for bankrupt exchange platform FTX, which was seen as being at the center of the Solana ecosystem prior to its collapse. The Solana-based Backpack appears to be going some way in filling that void within the Solana community. With that, Solana-based trading pairs feature strongly in Backpack’s overall trading volume statistics. At the time of writing, SOL was trading at $109, down 1.7% over the course of the past 24 hours.  

Hitachi collaborates with Concordium on biometric crypto walletJapan’s Hitachi Solutions, a subsidiary company of the Hitachi multinational conglomerate, has joined forces with the Concordium Foundation, unveiling a collaboration that centers on a state-of-the-art biometric crypto wallet.Photo by Nuno Antunes on UnsplashAlternative approach to securing cryptoAnnounced on Tuesday by the Concordium Foundation, a Swiss-based development team behind the Concordium layer one blockchain, this “proof of technology” initiative has the potential to fundamentally change how users access and secure their cryptocurrency accounts.Breaking away from traditional methods, the proposed biometric crypto wallet leverages users’ fingerprints or facial scans to generate a set of seed words, eliminating the need for users to store or remember them. This novel approach simplifies the restoration process, allowing users to recover their accounts with a mere biometric scan.Improving UXIf crypto and Web3 are to be adopted by ordinary people en-masse, user experience has long been identified within the sector as an area that still requires development. Making users responsible for the storage of a private key is fraught with difficulty, given the likelihood of private keys being lost or compromised.Various approaches are being taken to solve this issue. Tangem Wallet is one such alternative that utilizes near-field communication (NFC) in combination with an app and a card with an inbuilt chip, negating the need for the user to memorize a private key.This biometric-centered approach from Hitachi and Concordium represents another user-friendly approach to the problem of user authentication, harnessing the power of Hitachi’s Public Biometric Infrastructure (PBI) and Concordium’s self-sovereign identity framework. The result is an account creation process based entirely on biometric data, enhancing both security and user convenience.Complementary technologyConcordium’s network, with its stringent ID process for account creation to combat malicious activities, stands to gain substantial benefits from this technology. The biometric wallet will fortify users’ access to their IDs, a critical aspect of network security. Moreover, the technology’s applicability extends beyond Concordium, offering potential integration with any blockchain network.Users of the biometric wallet will have the flexibility to unlock their accounts either by regenerating seed words through a biometric scan or by decrypting a copy of the seed words. This dual-layered approach ensures that access is granted solely through the user’s unique biometric data, enhancing security and mitigating the risk of loss or theft.Developing this cutting-edge technology poses challenges, particularly in handling the inherent “fuzziness” of biometric data, where no two scans produce identical results, even from the same individual. Hitachi’s team addressed this by employing fuzzy key generation and specialized error correction technology, effectively distinguishing between scans.Unlike traditional crypto wallets that necessitate secure storage of seed words, the biometric wallet by Hitachi and Concordium, alongside solutions like multiparty-computation wallets and magic links, aims to overcome this hurdle. The goal is to resolve the issue of lost backup, a significant barrier to wider crypto adoption.This is not Hitachi’s first foray into the crypto/blockchain space. In mid-November the company announced a collaboration with the Japan Exchange Group (JPX), banking giant Nomura and Nomura portfolio company BOOSTRY to launch a $69 million digital green bond on the blockchain. In October Hitachi joined a consortium of Japanese companies with a view towards developing decentralized identity technology.

Japan's Financial Services Agency (FSA) is proposing new legislation in an effort to prevent the assets of Japanese investors held on crypto exchanges from being transferred overseas. According to local news outlet Jiji Press, the Japanese regulator recently put forward the idea of drafting such a bill. It’s thought that the move suggests that the Japanese regulators have learned from the collapses of cryptocurrency exchanges Mt. Gox and FTX. Photo by Jaison Lin on UnsplashLearning from past failuresWhile Japan already had a higher standard of regulation in place prior to the FTX collapse, likely as a consequence of the authorities having experienced the downfall of Mt. Gox in February 2014, there is still room for improvement.  While funds had been ring-fenced for FTX Japan users, those who accessed services advertised in Japan through the FTX app were deemed to have been accessing a service which fell under an international jurisdiction, denying them the same protections otherwise offered to FTX Japan platform users as a consequence of the regulations that had been put in place. Incorporating a holding orderJapanese media outlet Nikkei described this latest move by the Japanese FSA as follows: “The Financial Services Agency is moving towards creating a new ‘holding order’ in the Payment Services Act, which regulates cryptocurrency exchanges, that will order them not to take domestic assets entrusted to them by customers overseas.” Consequently, the regulator is looking to add this as the latest proposed amendment to the Payment Services Act. Back in September it emerged that amendments to that existing legislation were being looked at with a view towards making it easier for businesses to incorporate digital assets into their service offerings. The regulator has also been mulling over the reclassification of crypto as a financial instrument by amending the Payment Services Act accordingly. Additionally, a more generous tax policy is being proposed. Currently, the Japanese authorities impose a tax rate of up to 55% on cryptocurrency-related revenues. Corporate holders of digital assets have to apply a 30% tax rate, irrespective of income or profits. With that, a 20% tax rate is being considered. The matter became a political issue prior to the East Asian nation’s recent elections, with the leader of the Democratic Party for the People (DPP) backing the application of a 20% crypto tax rate. The application of a holding order has applied previously to companies that have been registered under the Financial Instruments and Exchange Act. This proposed amendment would see it applied to virtual asset trading platforms as part of the Payment Services Act. Guarding against bankruptcy lossesIf applied, the amendment would prevent loss of Japanese investor funds in circumstances where a crypto exchange platform goes into bankruptcy. Legal precedent set in the FTX bankruptcy in the United States means that if a user’s funds go into a non-individually segregated hot wallet belonging to an exchange, any property rights, even if explicitly outlined in the terms of service, are lost.  A company can make a case to go into bankruptcy in any international jurisdiction, which means that this precedent has potential implications for all market participants. The proposed amendment from the Japanese FSA would serve to protect investors from such an eventuality.