Crypto boom drives $17.5B surge in demand deposit at Korean banks

South Korea’s Financial Supervisory Service (FSS) has initiated on-site consultation services for virtual asset businesses to help them comply with the upcoming Virtual Asset User Protection Act (Virtual Asset Act), which is set to be effective in July. This news was reported yesterday by local media outlet News1. Photo by Hunters Race on UnsplashSupporting VASPs in preparation for the Virtual Asset ActThe consultation services offered by the FSS are fundamentally different from the on-site inspections that have been conducted by the Financial Intelligence Unit (FIU).  Until now, the FIU has been conducting on-site inspections to ensure virtual asset service providers (VASPs) have adequate anti-money laundering (AML) systems in place and comply with the Act on Reporting and Using Specified Financial Transaction Information (the Financial Transaction Information Act). While the FIU has been tasked with conducting inspections, the FSS’s latest on-site consultation services are dedicated to supporting businesses in developing new monitoring systems, which would enable them to prevent unfair transactions ahead of the implementation of the Virtual Asset Act. The FSS has already begun providing consultation services, with the local crypto exchange Upbit being its first client last week. An insider of FSS stated that the schedule for the on-site consultation will be arranged in advance for those seeking the service.  Demand for new FDSDuring a roundtable meeting with VASP CEOs held on Feb. 7, Lee Hyun-deok, the director of the Virtual Asset Regulatory Bureau under the FSS, emphasized the importance of coming up with a new fraud detection system (FDS) specifically designed to block unfair transactions. Most of the current FDSs within local crypto exchanges are focused on AML.  Unlike the Financial Transaction Information Act which mainly focuses on AML, the Virtual Asset Act focuses on punishing unfair trading practices that exploit abnormal price fluctuation or undisclosed information. The FSS recommends that VASPs implement a new system preventing such practices by April, as the Virtual Asset Act’s enactment is just around the corner.  An FSS insider said there is a high chance that VASPs will get the consultation service multiple times on various themes since a lot has to be done before the Act takes effect in July, adding that this consultation is to encourage VASPs to comply with the law rather than to conduct inspections on them. 

NEOPLY Receives Support from Abu Dhabi for Blockchain Expansion in UAENEOPLY, the open blockchain platform of South Korean investment holding company Neowiz Holdings, is set to receive support from the Abu Dhabi Investment Office (ADIO) in the United Arab Emirates (UAE) through its Innovation Programme, which provides incentives to a wide range of businesses in financial services, technology, and other high-growth areas, according to a press release.Photo by Kamil Rogalinski on UnsplashFinancial & non-financial supportWith the assistance of ADIO, NEOPLY will establish its global headquarters, H-Lab, for blockchain businesses in the Abu Dhabi Global Market (ADGM). H-Lab will benefit from both financial and non-financial support, including incentives, fee exemptions, and regulatory advantages concerning cryptocurrencies and blockchains. Moreover, H-Lab intends to collaborate with local universities to develop education and scholarship programs focused on Web3 and decentralized finance (DeFi).Operations in MENANEOPLY’s inclusion in the Innovation Programme of ADIO demonstrates the competitiveness of the blockchain project, providing it with the opportunity to expand its operations in the Middle East and North Africa (MENA) region. By leveraging the support, infrastructure, and talented workforce available through ADGM, the company will forge partnerships with leading global firms residing in the capital of the UAE to enhance its global presence.Korean firms in Abu DhabiAbu Dhabi has been increasingly attracting Korean companies. ADIO, an affiliate of the Abu Dhabi Department of Economic Development, was established in 2019 as part of the country’s initiative to promote non-oil industries and draw in advanced technology companies. In 2021, ADIO opened an office in Seoul to support the entry of innovative Korean firms into the UAE. Thanks to these efforts, several Korean enterprises, including cloud operations services company Bespin Global, hospitality tech company H2O Hospitality, and smart farm operating group K-BTS Consortium, have established entities or expanded their operations in Abu Dhabi.DeFi regulatory frameworkNEOPLY’s H-Lab will collaborate with ADGM to facilitate its development of a regulatory framework for DeFi, aspiring to become one of the world’s first regulated DeFi providers. The NEOPIN protocol, a centralized decentralized finance (CeDeFi) platform developed by NEOPLY, will work closely with ADGM’s Financial Services Regulatory Authority (FSRA) to establish an efficient and effective regulatory framework.Abdulla Abdul Aziz Al Shamsi, Acting Director General of ADIO, said, “Abu Dhabi’s enabling environment, coupled with the availability of world-class infrastructure and skilled talent, has positioned the UAE capital as a leading destination for investment in the Middle East. NEOPLY joins a wave of other innovative South Korean companies choosing Abu Dhabi as the catalyst for their next growth phase. They are joining a thriving innovation ecosystem and bringing new ideas and solutions to life in the UAE capital.”NEOPLY CEO Park Jin-ho stated, “With ADIO’s support, we are establishing our global headquarter in the heart of Abu Dhabi, which fills us with great anticipation for our financial innovation in the Middle East. With the active support of ADIO, the collaboration with ADGM, and the infrastructure of Abu Dhabi, we are committed to setting new standards in the global blockchain industry.”

American publicly-listed crypto exchange platform Coinbase is understood to be in talks with Indian regulators with a view towards enabling the re-entry of the exchange into the Indian market. News of the development emerged via a TechCrunch report published on Feb. 13. The publication cited two anonymous sources familiar with the matter. According to those sources, the American crypto exchange platform is in talks with officials from India’s Financial Intelligence Unit (FIU), a government agency that collects financial data regarding offenses under India’s Prevention of Money Laundering Act. Photo by Naveed Ahmed on UnsplashRegulatory pushbackThe FIU has been a key player in pushing back against exchanges that it believed were non-compliant in participating within the Indian market over the course of the past two years. In December 2023, the government agency moved to block overseas exchange businesses that it deemed to be operating illegally within the Indian market from engaging with Indian investors. That action was taken following calls from native Indian exchanges for a level playing field. At the time, they made the case to the Indian authorities that offshore exchanges were not operating in compliance with local regulations. Show-cause notices were issued against nine platforms at that time, although Coinbase wasn’t one of them.  The company had taken the measure of disabling new user sign-ups in India in September 2023. Prior to that, Coinbase CEO Brian Armstrong had complained about “informal pressure” being exerted by the Royal Bank of India (RBI). He said that the central bank was exerting “soft pressure” behind the scenes. On this attempt to re-enter the market, a spokesman for the company made the following statement to Cointelegraph: “Coinbase is excited by the opportunities in the Indian market and intends to comply with applicable regulatory requirements, but we have nothing to announce regarding a FIU registration at this time.” Kyle Chasse, founder of Web3-focused venture capital firm MV Global, outlined on X that it was “massive news,” adding that if the company re-enters the market, “huge liquidity could flow in from this.” Local partnersA source familiar with the matter told Decrypt that Coinbase wants “to do the same thing this time, but with local partners on board and a more clear strategy, which they didn’t have last time.”  The publication suggested that Coinbase executives will visit India in March to attend meetings with FIU officials. The timing of any official service re-launch in India will depend upon the regulatory steps that need to be followed by the company and the time taken to accomplish these requirements. In a related development, last week, Coinbase’s Chief Legal Officer (CLO), Paul Grewal, joined the board of directors of the U.S.-India Business Council, part of the U.S. Chamber of Commerce. While commenting on the appointment, Grewal spoke about a number of positive developments in India that are likely factors in the company’s renewed efforts to re-enter the Indian market. He stated: “India has one of the largest and fastest-growing web3 ecosystems in the world, with a booming developer community, pioneering startups, and bold institutional adoption. Since 2018, its share of global web3 developers has quadrupled to 12%, the highest growth among emerging markets.”