Kiln raises $17M to fund APAC growth

India’s RBI Cites Stablecoin Risks With Call for Global RegulationIn its latest Financial Stability Report released on Wednesday, the Reserve Bank of India (RBI) expressed concerns about the potential harm stablecoins could inflict on emerging markets and developing economies (EMDE).Photo by rupixen.com on UnsplashPerennial criticThe RBI has been a consistent critic of cryptocurrencies, but particularly so in the case of stablecoins, from an EMDE perspective. However, the lack of authenticated data and inherent data gaps in the crypto ecosystem hindered a comprehensive assessment of financial stability risks.According to the report, one of the ways stablecoins could pose a threat to an EMDE is through currency substitution. Since the underlying assets of stablecoins are generally denominated in freely convertible foreign currencies, the widespread adoption of stablecoins could lead to currency mismatches on the balance sheets of banks, firms, and households, resulting in an increased risk to the economy.Monetary policy headacheFurthermore, the presence of stablecoins in the economy could create challenges for an EMDE’s central bank in setting domestic interest rates and managing liquidity conditions. The decentralized, borderless, and pseudonymous characteristics of crypto-assets make them potentially attractive instruments for circumventing capital flow management measures.Another concern highlighted by the RBI is that stablecoins could undermine credit risk assessment and interfere with banks’ ability to mobilize money and create credit by offering an alternative to the domestic financial system. Additionally, the report emphasized the difficulty in tracking peer-to-peer transactions, on the basis that they increase the potential for illicit activities.In light of these risks, the RBI reiterated its call for global coordination and regulation. It emphasized the need for a globally coordinated approach to analyze the risks posed to EMDEs compared to advanced economies (AEs). As India holds the G20 presidency, one of its priorities is to establish a framework for the global regulation of unbacked crypto-assets, stablecoins, and decentralized finance (DeFi).Establishing a CBDCWhile the RBI has been cautious about cryptocurrencies, it has shown more enthusiasm for central bank digital currencies (CBDCs). In November, the RBI launched a wholesale digital rupee pilot project. It followed that up in February with a retail digital rupee pilot project. In March, it signed an agreement with the Central Bank of the United Arab Emirates to study a CBDC bridge aimed at facilitating trade and remittances.By calling for global regulation and highlighting the risks associated with stablecoins, the RBI aims to foster a safer and more secure environment for financial transactions while exploring the potential benefits of CBDCs in facilitating trade and remittances.As the discussions around stablecoins and CBDCs continue, we’re likely to see ever greater collaboration between regulators, policymakers, and international organizations with a view towards establishing a comprehensive regulatory framework that addresses the challenges and harnesses the potential of digital assets on a global basis.

Korea’s Intragovernment Group Launched to Thwart Crypto-Related CrimesThe South Korean government has taken a significant step today in combating cryptocurrency crimes with the launch of a dedicated intragovernmental division. The newly established joint crypto-crime investigation division operates under the Seoul Southern District Prosecutors’ Office and comprises 30 skilled investigators from seven different government agencies.Photo by Daniel Bernard on UnsplashMulti-agency collaborationThese agencies are the Public Prosecutors’ Office, the Financial Supervisory Service (FSS), the Korea Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC), the National Tax Service (NTS), the Korea Customs Service (KCS), Korea Deposit Insurance Corporation (KDIC), and Korea Exchange (KRX).The growth of the domestic crypto market in South Korea has been remarkable since the advent of cryptocurrency exchanges in 2014, attracting approximately 6.27 million individuals and reaching a valuation of 19 trillion KRW ($14.9 billion). Daily average trading volumes have surged to three trillion KRW, involving participants from various age groups, with individuals in their 30s and 40s constituting the largest share.Regulatory absenceHowever, the absence of adequate regulations has exposed customers to unfair practices in virtual asset trading. Although the recent passage of the Virtual Asset User Protection Bill at the National Assembly is encouraging, implementing comprehensive policies to safeguard crypto investors will take a significant amount of time.The risks associated with virtual asset investments are highlighted by the frequent delisting of cryptocurrencies from the nation’s top five exchanges. In the past two years, 1,053 cryptos have been delisted, and an additional 1,010 have been flagged as risky. The prevalence of unstable cryptocurrencies has resulted in high price volatility, incurring losses for investors. This volatile environment has also given rise to various crypto-related crimes, including unlawful listings, market manipulation, illegal foreign exchange trading, and pyramid schemes.Two teamsTo address these challenges, the joint crypto-crime investigation division is structured with two teams. The research and analysis team will study virtual asset issuers and distributors, identifying suspicious transactions. Virtual assets found to be fraudulent will be reported to the investigation team, which will then conduct thorough investigations and pursue legal action against problematic projects, while also recommending regulatory enhancements. Profits obtained through illegal means will be confiscated by the Seoul Southern District Prosecutors’ Office.The division’s main focus lies on virtual assets that have been rapidly delisted, those marked as risky, and those exhibiting significant price volatility. Committed to upholding fairness and transparency in the crypto industry, the joint crypto-crime investigation division will strive to protect market participants and make valuable contributions to the Korean economy.

DMM Crypto, the crypto exchange, blockchain gaming and NFT arm of Japanese e-commerce and internet firm DMM, has taken the decision to shut down the Seamoon Protocol. Economic zone concept projectTaking to X on Nov. 15, the project outlined that it has decided to cancel the economic zone concept project, Seamoon Protocol. The project added:”We would like to express our deepest gratitude to the business operators who have provided us with so much support thus far, as well as to all those who have placed their hopes in this project and shown us their kind support, and we would like to offer our heartfelt apologies.” The move suggests a sudden change in the fortunes of the project. As recently as last August, DMM Group had announced a collaboration with Progmat, a distributed ledger technology (DLT) platform for tokenization and stablecoins, with a view towards looking into the issuance of a stablecoin. The stablecoin was intended to act as a reserve currency, providing backing for Seamoon Protocol’s treasury pool while also acting as a price stabilization mechanism. At the time, DMM Crypto CEO Nagato Kasaki had said that the Seamoon Protocol had been launched in order to create a space “where a global community could experience DMM’s cultural universe and co-create new experiences together.” Notwithstanding that goal, no new services are planned to replace the Seamoon Protocol.Photo by Shubham Dhage on UnsplashLaunched in 2023, Seamoon Protocol ran on the DM2 Verse, a layer-2 network associated with the Oasys blockchain. DM2 Verse was designed to act as a community hub for the Seamoon Protocol, hosting NFT drops, games, tournaments and collaborations. Activity on Seamoon was powered by its own native SMP token. Changing business environmentNorbert Gehrke, a commentator on the Japanese fintech sector, outlined in a Medium blog post that Seamoon was abruptly terminated “due to recent rapid changes in the business environment that have created challenges for the project’s sustainability.” The company didn’t provide detail on the nature of the challenges encountered which impacted on the sustainability of the project. With the shutdown, issuance of the SMP token will be discontinued. Furthermore, new service applications for the Seamoon Protocol platform have been suspended. It’s unclear what will now happen with existing services which have been built on the platform. The company has suggested that this matter is under discussion.  One exception is the Kanpani Girls RE:BLOOM project, a Web3 game that was the first of five games that had been envisaged for the protocol. The company has confirmed that this project will be terminated.  In-game notices will be provided at a later stage to provide users with advice regarding refunds and compensation for game items. The game will be wound down by the end of January. Once decisions have been made relative to other services and projects, the company will make announcements on the social media channels of those affected services. DMM Crypto received investment from Neoclassic Capital last month, with a view towards pursuing a global expansion strategy.