Hong Kong and the UAE Collaborate on Crypto Regulation

Korean Financial Regulator to Inspect Non-Fiat Crypto Trading PlatformThe Financial Intelligence Unit (FIU) under the Korean Financial Services Commission (FSC) plans to launch a comprehensive inspection on crypto trading platform Fobl (previously known as Foblgate) from March 11.©Pexels/김 대정Unlike other major Korean crypto exchanges, such as Upbit or Bithumb, which allow trading between fiat currencies and cryptocurrencies, Fobl only offers trading between cryptocurrencies.Inspection on non-fiat exchangesThe FIU’s inspection of Fobl is a follow-up to the regulator’s inspection of GDAC, another Korean non-fiat crypto exchange. This suggests that the FIU will focus on inspecting non-fiat exchanges in the first half of this year.Many in the cryptocurrency industry have been paying attention to the FIU’s move after its first inspection of GDAC, as it could signal the direction in which the regulator would take. Earlier this year, the FIU announced that it would conduct inspections not only on non-fiat crypto exchanges but also on wallet solutions, custodians, and staking service providers. It is known that the FIU has been reviewing anti-money laundering (AML) systems and asset management statuses of these crypto enterprises.Fobl’s possible addition of fiat tradingThe Korean crypto industry suspects Fobl might transform itself into a fiat crypto exchange, considering the FIU’s notice that it will prioritize examining non-fiat exchanges that are preparing to support fiat trading.Fobl CEO’s take on the marketPrior to this news, Fobl CEO Ahn Hyun-joon said in a recent interview with Etnews that the platform is in talks with multiple banks to acquire real-name bank accounts and is complying with all the regulations required by the authorities. During the interview, he also raised concerns about the uncertainty that faces non-fiat crypto trading platforms, pointing out that 97% of the crypto trading in Korea is being carried out in crypto exchanges that support trading of Korean won.In Korea, the financial regulator requires virtual asset service providers (VASPs) offering trading in Korean won to hold real-name registered accounts at domestic banks as a measure to prevent money laundering.

GDAC joins hands with Zodia Markets to cultivate global digital asset networkGDAC, a cryptocurrency exchange run by Korean blockchain-based fintech company Peertec, has signed a business deal with Zodia Markets, a European digital asset marketplace under the UK’s Standard Chartered Group. As key institution-first digital asset platforms in their respective regional markets, the two enterprises plan to work together to build a global digital asset and stablecoin network to drive innovation, with a focus on preventing money laundering and reducing financial costs.Photo by m. on UnsplashAbout Zodia Markets and GDACThe Standard Chartered Group established Zodia Markets in 2021 following approval from the UK’s Financial Conduct Authority (FCA). The group’s latest partnership with GDAC represents a step further into the Korean market, in which it is already a major player through its local branch, the Korea Standard Chartered Bank.GDAC has been making strides in cybersecurity by forging partnerships. The exchange teamed up with Genians, a cybersecurity firm listed on the KOSDAQ stock exchange, and attracted investments from it to accelerate the establishment of a global security network. In October, GDAC entered into a collaborative agreement with crypto wallet provider Bitgo, aiming to enhance the security of the exchange’s wallet services.The exchange serves not only profit-oriented corporations but also non-profit organizations, such as the Community Chest of Korea. It also runs the GDAC Fund Service, a digital asset management solution for corporate clients that it jointly founded with Woori Financial Group.Dedication to different client demographics“Through our partnership with Zodia Markets, a subsidiary of the UK’s Standard Chartered Bank, we look forward to providing even higher-value digital financial services to our corporate clients,” said Lee You-ree, CCO of GDAC. “We also plan to continuously launch helpful, high-liquidity digital financial services for individual customers as well through our work with a European digital financial platform.”

Recent reports from local media outlets indicate that Indonesian authorities have conducted raids on crypto mining sites, accusing them of illicitly siphoning electricity from the utility poles of the state-owned electricity company. The government’s intervention comes as part of a broader effort to address energy theft and regulate the cryptocurrency mining industry in the country.Photo by Fré Sonneveld on UnsplashTen mining sites raidedOfficials from the state-owned electricity company PLN highlighted the importance of coordinated efforts in exposing the unauthorized mining operations that were tapping into the national grid without approval. According to the reports, the ten illegal bitcoin mining sites which were raided incurred a financial loss of approximately 1.4 billion Indonesian rupees, equivalent to $100,000 for the state. The impact of energy theft extended beyond financial concerns, raising environmental and community-related concerns. Local students, alarmed by the potential consequences, urged PLN and regional police to investigate the mining operations. Subsequent action revealed that the theft was indeed taking place, prompting PLN officers from the Bukit Barisan Customer Service Implementation Unit (UP3) to conduct a raid. However, the officers faced threats and resistance, leading to a close coordination between PLN and the North Sumatra Regional Police. The raid uncovered a total of 1,300 bitcoin mining machines engaged in illegal operations, with each machine consuming a substantial 1,800 watts of electricity. Inspector General Agung Effendi, the North Sumatra Police Chief, disclosed that the illicit activities had been ongoing for an estimated six months, resulting in the arrest of 26 individuals across the ten locations.PLN reassured stakeholders of continued collaboration with the police to prevent further electricity theft and safeguard the national grid from such unauthorized activities. Worldwide concernThe incident in Indonesia reflects a global concern over the energy consumption of cryptocurrency mining operations generally, but also with regard to illegal activity. In recent years, the environmental impact of these operations has become a focal point in public policy debates, with climate activists emphasizing the harm caused. Government officials, on the other hand, express concerns about the potential disruption to the total distribution network if not properly regulated. In September, neighboring Malaysia identified illegal crypto mining activities in the state of Sarawak as the reason for recurrent power disruption. Meanwhile, in Singapore in August, authorities uncovered a crypto mining scam that cheated investors out of $1.3 million dollars. Indonesia joins other countries that have conducted raids on crypto mining operations accused of running large-scale, unregistered facilities. Malaysia has witnessed multiple arrests related to digital asset mines, while in Venezuela, authorities seized bitcoin machines and weapons from a recaptured prison controlled by a criminal gang. Legitimate mining potentialNotably, this marks the first such incident in Indonesia, and energy theft charges in the country are punishable by up to five years in prison or 200% of the stolen energy’s value. Despite these problems, Indonesia also understands the opportunity that exists where legal bitcoin mining is carried out. In May, Ridwan Kamil, Governor of the province of West Java, participated in a fireside chat titled “The Indonesia Bitcoin Mining Campaign.” During that event, Governor Kamil recognized the potential that bitcoin mining offers Indonesia. He stated: “[Indonesia has] the second most geothermal potential in the world — more than 800 rivers with hydropower. As bitcoin allows the transformation of energy into money, bitcoin could be transformative for Indonesia.” The global trend of addressing energy consumption in crypto mining is evident in Kazakhstan, where regulators seek to limit miners’ access to the national grid unless they operate solar-powered mines. Indonesia, with its pro-crypto population, is also moving towards increased regulation, mandating all crypto exchanges to register with the Commodity Futures Exchange (CFX) to continue operations beyond August 2024.