Fingerlabs moves into Busan’s Blockchain Offshore Firm Development Center as corporate tenant

Korean Financial Watchdog to Penalize Bankers Involved in Illegal Foreign RemittancesThe Korean Financial Supervisory Service (FSS) recently completed an investigation into illegal foreign remittances of approximately 16 trillion KRW (~$12,137,718,400) that involved numerous bankers.©Unsplash/Paul FiedlerExploiting the kimchi premiumThe investigation, launched by the Korean financial watchdog last June, found that these lawbreakers sent funds to China, Hong Kong, and other overseas destinations through Korean crypto exchanges, trading firms, and bank branches with an aim of making money through arbitrage by taking the advantage of the kimchi premium, a term used to describe that the higher prices of crypto assets in Korean exchanges compared to their foreign counterparts.Bankers neglecting the KYC ruleSome of these bankers participated in the crime by raising the remittance cap and applying favorable exchange rates to trading companies that had no previous transaction records with banks. By law, bankers in Korea are obligated to follow the “know your customer” rule. It was found that 12 domestic banks and one futures firm were involved in this incident.The FSS has decided to impose strict penalties on these financial institutions, considering they were exploited for money laundering purposes. These entities are likely to have some of their services suspended, with the employees involved being fired.Accountability of top bankersOne key point to watch out for is whether the FSS would be able to hold executives accountable. Some say penalizing top bankers is not easy, given that it has to be proven that the employees’ criminal activities were due to a lack of executives’ internal control.The financial regulator recently announced plans to revise the law governing banks’ governance, but it is expected that such a bill would take some time to pass through the National Assembly.Through a revision of the law, the financial authority aims to hold top executives at financial institutions more responsible for serious financial accidents. It looks forward to bestowing top bankers with the obligation of comprehensive internal control management and making them accountable as an overall manager only in case of critical financial accidents. The term “top executives” in the bill will encompass not only bank presidents but also chairpersons of financial holding companies. More specific revision plans are expected to be revealed by the end of this month.

At the 'Beyond Coin: Brace for Digital Asset Super Cycle' conference held in Seoul on April 30, Lee Hae-bung, Head of Investor Protection Center at Upbit, said that it is significantly important for virtual asset service providers (VASP) to fulfill their responsibilities at a time when the government authority is laying the groundwork for crypto regulations, according to local media TECH M. Upbit is one of the few licensed cryptocurrency exchanges in South Korea. The conference was jointly organized by SEUM Law Firm and local media outlet TECH M.  During his speech at the conference, Lee stated that by adhering to industrial rules and meeting obligations, VASPs can protect not only crypto investors but also themselves. This is how the crypto industry can enhance the value of blockchain and build trust surrounding the cutting-edge technology, he asserted. Photo by Lukas on PexelsShifting paradigm Lee said everything created based on blockchain and ledger technology is now deemed assets and property in the modern world, warranting new regulations. This marks a contrasting shift from the past when only fiat currencies were considered assets and mediums of storage.  In the following sessions, he delivered presentations about cryptocurrency regulations in various countries such as the U.S., Singapore, Hong Kong and several EU member states. During his speech, four moral pillars – legal clarity, responsible innovation, accountability and resilience – were particularly highlighted as ethical requirements for VASPs.  Ten minus one equals zeroLee noted that Korea's crypto industry is currently going through transitional phases, during which the nationwide crypto craze disrupted the market and turned many good-willed investors into victims. The recent Bitcoin rally has lured many young Korean investors in their 20s and 30s to the crypto market, many of whom engaged in reckless investments with borrowed money.  The industry is now at a point where regulations are being laid out for investor protection, however, heading into a sustainable and healthy direction, he added.  "Ten minus one equals zero when it comes to regulating the crypto industry," Lee said, underscoring the significance of completing all the tasks related to establishing regulation in the local crypto space. “Transparency and accountability are the two most important values VASPs must safeguard on their journey to building trust. If VASPs fulfill these obligations, they should be able to gain the trust of users. Otherwise, they must bear liability for the consequences,” he added, citing the European Union’s Market in Crypto Asset (MiCA) Regulation as a model example that values transparency and accountability. The MiCA Regulation is currently being discussed by legislators from EU member states.  

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.