SBI and Saudi Aramco to explore digital asset business partnerships

FPG Halts Withdrawals Following HackFloating Point Group (FPG), a prominent crypto prime brokerage platform, has temporarily halted trading, deposits, and withdrawals following a cyber security incident that occurred on Sunday.Photo by Thom Milkovic on UnsplashIncident responseFPG, headquartered in Singapore while maintaining a base in Hoboken, New Jersey in the United States, manages over $50 billion in assets. The firm took immediate action upon discovering the incident by engaging third-party forensics experts and law enforcement agencies.The company acknowledged the problem publicly via a tweet thread on Twitter on Wednesday. FPG stated that the company has locked all third-party accounts and secured its wallets while it investigates the extent and details of the breach. Although the full extent of the loss is still under investigation, the current estimate stands at approximately $15 million to $20 million in lost cryptocurrencies.Investigative cooperationIn response to the incident, FPG is collaborating with the FBI, the Department of Homeland Security, regulatory bodies, and Chainalysis to comprehend the nature of the attack and initiate asset recovery measures. As the investigation involving those entities is ongoing, specific details are not being disclosed at this stage, but FPG has pledged to provide updates as new information becomes available.The cyber security incident comes six months after FPG obtained a SOC 2 certification, which verifies the implementation of robust security, privacy, and control measures by service organizations to ensure the reliable handling of sensitive data and systems.Originally founded in 2018 at the Massachusetts Institute of Technology (MIT) in the US, FPG functions as both a crypto prime brokerage platform and an agency trading desk for asset managers, offering access to liquidity across various markets. In December, FPG announced that its blockchain foundation customers accounted for 5% of the total treasury management market.Backed by prominent investors such as Coinbase Ventures, Anthony Scaramucci of SkyBridge Capital, and Naval Ravikant, the founder of AngelList, FPG has raised a total of $12 million in funding thus far.In August of the previous year, FPG successfully registered as a virtual asset service provider (VASP) in the Cayman Islands. This registration ensured the secure custody of customer assets and safeguarded them from the company’s creditors in the unlikely event of bankruptcy.Broader crypto issuesIt has not been a good couple of weeks for the crypto sector relative to hacks and platform withdrawal pauses. Within the past twenty four hours, two Asia-based crypto lending platforms, Haru Invest and Delio, have suspended withdrawals. In those cases, the issue is suspected to relate to platform contagion and solvency issues.Earlier this month, the Atomic Wallet platform was hacked despite the understanding that the project offered self-custodial wallets. Originally, the loss was estimated at $35 million, but more recent reports are now estimating that figure to be in excess of $100 million.As FPG continues its efforts to mitigate the aftermath of the cyber attack, industry participants eagerly await further updates and measures undertaken by the company to recover from this incident and restore trust among its clients.

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.

Crypto Travel Rule solutions provider CODE obtains ISO/IEC 27001 certificationCODE, a Travel Rule solutions provider and joint venture co-founded by Korean cryptocurrency exchanges Bithumb, Coinone and Korbit, announced on Tuesday (local time) that it has obtained ISO/IEC 27001 certification for information security management systems (ISMS).Photo by Scott Graham on UnsplashEnhanced cybersecurity and operational resilienceThe ISO/IEC 27001 is a standard by which companies can develop, implement, maintain and improve their ISMS to carry out robust risk management, cybersecurity and operational excellence as required by institutions like the European Union’s General Data Protection Regulation (EU GDPR).“CODE will provide a service environment that encourages confidence in our corporate members and the overall market starting with the acquisition of this information security management system certification,” said Lee Sung-mi, CEO of CODE.Consecutive effortsAs a Travel Rule solutions provider, CODE has been ramping up efforts to strengthen its compliance and information security capabilities. The company’s ISO/IEC 27001 certification comes shortly after it obtained ISO 37301 certification from the Korea Compliance Initiative (KCI). ISO 37301 is a standard for compliance management systems (CMS) that assesses organizations based on their compliance with laws, regulations, codes of conduct and more to exercise good governance, transparency and accountability.