Zetrix launches product to simplify KYC for Chinese nationals

Cebu Meeting of FSB Highlights Crypto RisksThe Regional Consultative Group for Asia of the Financial Stability Board (FSB) has highlighted the risks implicated by crypto assets in a series of meetings held on Thursday and Friday in Cebu, the Philippines.The FSB is an international body with a mandate to monitor the global financial system, as well as make recommendations in respect of that system. The agency was established by the G20 group of countries in April 2009, replacing its forerunner, the Financial Stability Forum.Photo by John Alvin Merin on UnsplashA regulatory framework for cryptoThe two-day event focused on non-bank financial intermediation (NBFI) in Asia and the development of an effective global regulatory framework for crypto-assets. It discussed recent developments in financial markets, together with their regional impact.In opening remarks, Philippine Central Bank Governor, Felipe Medalla, stated: “Crypto, the biggest issue there is, whether we like it or not is quite a lot, especially younger people who are actually gambling. They have huge losses, our view right now. Well, you’re there, it’s your problem and the regulation becomes strict the moment crypto meets banking.”International participants highlighted the need for the development of an effective global regulatory framework for crypto-assets. Particular concern exists with regard to the potential for systemic risk in relation to crypto and a potential overflow into the traditional financial system.Earlier this year, the FSB proposed a complete regulatory framework for cryptocurrencies, with the report having been originally submitted in October of last year. Among its key components is the imposition of tighter controls. It proposed the guiding principle of “same activity, same risk, same regulation” for crypto assets, mirroring the approach taken for traditional financial assets.Global approach to taming cryptoThis approach has proven to be problematic for people working within the digital assets space. Many of the core facets of cryptocurrencies are entirely different to anything we see in traditional finance. Trying to frame crypto within an existing approach and standard has been perceived by many to be akin to trying to fit a square peg in a round hole.It’s not the FSB's role or place to affect policy directly. That responsibility lies with policymakers and regulators in each individual country. However, the organization is seeking to influence those individuals and entities in the hope that they will employ its suggested regulatory framework.Klaas Knot, Chair of the FSB and President of the Dutch Central Bank, provided this view on crypto: “We will come up with a global regulatory framework. It also only makes sense to regulate this from a global perspective. Because, nowadays you can take a server and put it anywhere in the world and start issuing these digital assets.”From Knot’s take, it’s clear that governments and central bankers are cottoning on to the fact that individual nation-state regulation is futile to an extent where decentralized innovations like cryptocurrency are concerned. Others such as European Central Bank (ECB) President Christine Lagarde and Mark Branson, President of German financial markets regulator BaFin, similarly have called for a globally enforced regulatory approach over the course of the past year.Ongoing struggleWhile regulation can be helpful, particularly when it comes to the points at which crypto meets the traditional system, there’s no doubt that this emerging innovation will disrupt the conventional system to some degree or other. That may place an incentive before central bankers and governments to try and stymie the further development of digital assets.While a truly global approach to regulating digital assets could retard development of the sector, there is rarely total consensus among world governments on a single issue. Therefore, by its very nature, crypto, and the digital assets sector will likely continue to develop regardless. It’s more a question of how long that process takes.

With the general election just over a month away, South Korea’s ruling People Power Party (PPP) has retracted its campaign pledges to allow trading of spot bitcoin ETFs, local media outlet Chosun Biz reported. The PPP has previously drawn substantial attention from the crypto industry, as the party showed its intention to ease a range of crypto regulations in hopes of gaining more votes in the general election.  A political insider familiar with the issue said yesterday that the PPP has recently removed crypto-related agendas from its priority list. The crypto pledges, initially planned to be announced last week, have been permanently suspended, the person said. “The leaders of the PPP are currently focusing on nomination for local constituencies and its satellite People’s Future Party, rather than coming up with additional crypto agendas. As the PPP appears to be embarking on the election campaign starting in March, the likelihood of the ruling party releasing crypto pledges is very slim,” another political circle insider mentioned.Photo by Traxer on UnsplashTalks between PPP and FSC go in vainThe PPP’s decision to retract crypto-related pledges comes after its attempt to approve the introduction and trading of spot bitcoin ETFs met with opposition from the Financial Services Commission (FSC).  Unlike the PPP or its opposition Democratic Party of Korea (DPK) that scrambled to ease crypto regulations ahead of the general election, the FSC’s stance on viewing crypto assets as risky hasn’t changed much. Despite last month’s approval of spot bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC), the FSC continues to ban the issuance of crypto-based financial products or investments in them, stating that crypto assets are not defined as underlying assets under the current Capital Markets Act. This has gotten in the way of the PPP’s plan to delay taxation on crypto gains for as long as two years and allow institutional investments in virtual assets.  The PPP also had to verify all the party members to see if any of them had a record of wrongdoings related to crypto transactions, which further delayed the pledges. This shows politicians’ heightened awareness of crypto-related issues. Last year, the DPK lawmaker Kim Nam-guk made headlines for a scandal, as he was accused of failing to report a considerable amount of crypto assets transactions to the financial authority. PPP lags a step behind its opposition DPKThe DPK has also strived to come up with crypto pledges alongside the PPP. The crypto-related pledges released by the DPK so far largely overlap with those of the PPP, meaning there’s no particular merit to the PPP’s campaign vows leading up to the general election. Many see this as another reason for the PPP’s decision to withdraw crypto pledges. The DPK unveiled its plan on Feb. 21 to legalize spot bitcoin ETFs, and pledged to deduct taxes on crypto gains worth less than KRW 50 million ($37,400). Under the current law, only crypto gains that are worth less than KRW 2.5 million qualify for the tax deduction. Most of these pledges largely align with those of the PPP.  With the PPP’s withdrawal of its plan to ease crypto regulations, the excitement among crypto industry insiders for the upcoming general election appears to have subsided. “Despite the DPK’s promise to allow spot bitcoin ETFs, it is unlikely that we’ll see crypto assets being incorporated into the conventional financial system without the ruling party’s approval, let alone fostering the blockchain industry,” said one crypto insider. 

Korea’s financial regulator establishes dedicated units for crypto oversightThe Financial Supervisory Service (FSS) of South Korea revealed in a Wednesday (local time) press release that it is introducing new units specifically focused on virtual asset matters. This move is in anticipation of the upcoming implementation of the Virtual Asset User Protection Act scheduled for next July. The establishment of these dedicated organizations is a strategic step towards bolstering the integrity of the crypto market, with the goal of enhancing consumer protection.Photo by Ethan Brooke on UnsplashSupervision and investigation bureausThe newly established units will be known as the Virtual Asset Supervision Bureau and the Virtual Asset Investigation Bureau. These units are being created in response to the burgeoning crypto market.The Supervision Bureau will be responsible for extensive oversight of cryptocurrencies. Its roles will include supervising and inspecting virtual asset service providers (VASPs), monitoring market activities and enhancing policy and regulations in the sector. Additionally, the bureau is tasked with ensuring the effective implementation of these regulations and contributing to the promotion of market stability.The Investigation Bureau, the other key component of the new structure, will concentrate on identifying and addressing market abuse activities in the cryptocurrency sector, specifically targeting unfair trading practices.Until now, the Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC) has played a leading role in overseeing the crypto sector, primarily due to its responsibility in evaluating applications from VASPs.FSS’s greater role in crypto oversightThe FSS, on the other hand, has maintained a digital asset research team, which has been responsible for supporting virtual asset legislation, along with conducting market analysis and monitoring. However, the latest move is set to the FSS’s role in regulation and oversight within the crypto market.The Supervision Bureau will be under the leadership of Lee Hyun-duk, who currently serves as Head of Financial Investment Examination Department 2. Meanwhile, Moon Jung-ho, the present leader of Audit Oversight Department 1, will take charge of the Inspection Bureau. The process of appointing team members to these bureaus is scheduled to take place in early January.