Crypto sector mulls implications of appointment of new Thai PM

In the aftermath of a substantial security breach in November that resulted in a confirmed loss of over $48 million, Kyber Network, the multi-chain decentralized exchange (DEX) aggregator, has taken decisive steps to restructure its operations.Photo by kate.sade on UnsplashWorking towards recoveryCEO and co-founder Victor Tran posted a lengthy message on the X social media platform on Christmas Eve to announce a 50% reduction in the firm’s workforce. The move marks a pivotal moment in the company’s efforts to recover and rebuild. As part of its strategy to ensure sustainability, Kyber temporarily suspended its liquidity protocol initiatives and KyberAI. Despite these challenging measures, the core aggregator and limit order functions remain fully operational. Tran emphasized the company’s commitment to persist and evolve, highlighting its determination to navigate through recent adversities. Despite these challenging measures, the core aggregator and limit order functions remain fully operational. Tran emphasized the company’s commitment to persist and evolve, highlighting its determination to navigate through recent adversities. Zap API additionIn an effort to enhance its services, Kyber Network disclosed plans to introduce the Zap API. This new offering aims to provide decentralized applications, crypto wallets and other DeFi projects with a seamless means to connect their users to liquidity protocols. Tran also revealed that in an effort to support its workforce during the transition, the firm has established a “voluntary database” to assist departing employees in finding new career opportunities. This initiative seeks to connect these individuals with peer projects in the industry. Exploit fall-outKyber Network took to social media on Nov. 22 to advise its KyberSwap Elastic user base of a security incident. With that notification, it advised users to withdraw their funds immediately. Over the next few days, it became clear that $48 million had been exploited on the platform by a hacker. In the immediate aftermath of the incident, the hacker posted a message on the blockchain, stating: “Negotiations will start in a few hours when I am fully rested.” He/she progressed to issuing unusual demands, including gaining complete operational control of the company and temporary ownership of the KyberDAO governance mechanism. The nature of these demands sets this particular exploit apart from others. The Kyber team, however, chose to reject these demands. It chose to respond with a blockchain message of its own, outlining that it was cooperating with law enforcement in an effort to track the hacker. The company, which operates from offices in Hanoi, Ho Chi Minh City and Singapore, also offered the hacker a carrot of a 10% bounty if the hacker agreed to return 90% of users’ funds. Instead, the firm pledged to compensate affected users through the KyberSwap Elastic Exploit Treasury Grant Program. On Dec. 20, the firm provided further details on that grant program, outlining how affected users would be refunded. Furthermore, Kyber Network is actively collaborating with authorities to identify the hacker and recover the stolen funds.Earlier this month, blockchain security firm CertiK issued an alert on social media, outlining that the hacker had moved BNB tokens to the value of $338,000 into decentralized crypto tumbler Tornado Cash.

Japanese cabinet approves crypto tax reformThe Japanese government has green-lit an amendment to its fiscal 2024 tax reform plan, specifically targeting the taxation of companies holding third-party-issued cryptocurrencies.Photo by Louie Martinez on UnsplashIntroducing tax exemptionAccording to local news sources, this amendment brings about a crucial change by exempting such companies from the year-end mark-to-market valuation tax.The Fiscal Year 2024 Tax Reform Outline, now approved by the Japanese cabinet, marks a departure from the previous tax regime. Under the new framework, companies holding crypto assets will no longer be subjected to mark-to-market valuation at the end of the fiscal year. Instead, they will be taxed solely on the actual profits realized from the sale of virtual currencies and tokens.Alleviating the tax burdenThe primary motivation behind this amendment is to alleviate the tax burden on corporations engaged in the holding and operation of crypto assets. Previously, corporations holding third-party-issued cryptocurrencies were required to record profits or losses based on the difference between market value and book value at the end of the fiscal year. The new reform, however, exempts assets assumed to be held continuously from this mark-to-market valuation.News of moves to implement such reform emerged at the beginning of December. At the time, a report by Nikkei Asia suggested that Japanese lawmakers were working towards addressing issues related to crypto taxation. Japanese regulator, the Financial Services Agency (FSA) had first proposed such changes to the tax code via a 16-page submission on Aug. 31.Signaling investor-friendly approachThis policy shift aligns the taxation of companies with the tax system applicable to individual investors, signaling a more investor-friendly approach. Lawmakers from the Liberal Democratic Party and their coalition partner Komeito had reportedly considered a proposal to exempt corporations from taxes on unrealized crypto gains. This move is seen as Japan’s effort to boost liquidity in the market, putting it in line with other Asian regions striving to become prominent centers of crypto activity.The amendment, influenced by the Japan Cryptoasset Business Association’s (JCBA) call for tax reform, is anticipated to stimulate the growth of local startup businesses utilizing blockchain technology and attract international projects to the Japanese market.The proposal is set to be presented at the regular session of the National Diet (Japan’s national legislature) in January of the upcoming year, where it will require approval from both the House of Representatives and the House of Councilors.Notably, the Fiscal Year 2024 Tax Reform Outline encompasses a broader spectrum of economic policies, including a plan to reduce income tax and resident tax by 40,000 yen per person from June 2024 onwards.News of the crypto tax reform has been well-received by most industry commentators and market participants. Daiki Moriyama, Director of Singapore-based gaming blockchain project Oasys, reacted positively to the development. He told The Block:“The fact that the Japanese government has demonstrated its willingness to grow Web3 business by enacting tax reform for the second year in a row is extremely important to all Web3 business stakeholders around the world.”

Bitfinex Turkiye Facilitates Zero-Cost Deposits via VakıfBank PartnershipIn a strategic move to bolster its presence in Turkey, cryptocurrency trading platform Bitfinex has introduced a seamless and cost-free method for Turkish customers to deposit Turkish lira directly into their accounts.According to a press release published by the company on Thursday, this integration comes as a result of collaboration between Bitfinex Turkiye and VakıfBank, Turkey’s second largest bank in terms of asset size, and a significant player in the Turkish banking sector.Photo by Meg Jerrard on UnsplashExpanding market accessBitfinex’s Chief Technology Officer, Paolo Ardoino, emphasized the user-centric benefits of this partnership. He stated that Turkish customers can now deposit lira effortlessly and economically, streamlining their access to the cryptocurrency market.This development could potentially aid Bitfinex in expanding its operations within Turkey, which stands as one of the largest markets for leading global crypto exchange Binance. Ardoino stated that the move facilitates “the ability to deposit [lira] seamlessly and cost-effectively.” Additionally, Ardoino maintained that market access was being enabled “by integrating with VakıfBank,” and that “[Bitfinex] is making it easier” for customers to participate.Collaborating with the crypto sectorFounded in the 1950s, VakıfBank has 935 brick-and-mortar branches, a network of over 4,000 ATMs and almost one million point-of-sale (POS) terminals in use. This latest partnership is not the first touch point for the bank when it comes to the crypto sector. It has a similar deal in place with Istanbul-based crypto platform, CoinTR. In that instance, CoinTR customers can deposit or withdraw Turkish lira to or from their CoinTR accounts via VakifBank instantly, 24/7 and with zero fees.The bank has also participated in a blockchain-based trade finance initiative, the Turkish Trade Chain Project. In a press release published by the bank last year, it expressed the belief “that blockchain technology will make data sharing more transparent, traceable, verifiable and controllable by reducing the communication traffic between parties in the foreign trade process that requires many documents.”Partnering with TradFiBy aligning its services with a traditional financial institution, Bitfinex joins the ranks of other industry players like Fidelity, BlackRock, and PayPal, which have demonstrated increasing openness to cryptocurrencies despite the ongoing bear market.Turkey has proven to be an important market for cryptocurrencies like Bitcoin and USDT, the US dollar stablecoin issued by Bitfinex’s sister company, Tether. Runaway inflation in recent years has led to an outsized interest in decentralized money in the country.Bitfinex’s business in Turkey has not been without its hiccups. Earlier this year, a Wall Street Journal report alleged that Bitfinex Turkiye user accounts had been implicated in terrorist financing. One particular account was alleged to have been used for money laundering purposes by the armed wing of Palestinian militant group, Hamas.This latest initiative follows Bitfinex’s recent announcement of the launch of Bitfinex P2P, a peer-to-peer exchange catering to clients in Argentina, Venezuela, and Colombia. With such expansions and collaborations, the cryptocurrency sector continues to evolve, demonstrating resilience and adaptability in the face of bear market conditions and regulatory challenges.