Bhutan’s GMC to establish strategic crypto reserve

Kbank’s Upbit Customer Deposits Total $2.2BKbank, an internet-only bank in South Korea, is facing criticism due to its relatively high proportion of cryptocurrency customer deposits compared to other banks. Kbank reportedly manages approximately KRW 3 trillion (equivalent to $2.2 billion) in deposits from customers of cryptocurrency exchange Upbit, which accounts for about 18% of its total customer deposits.This percentage stands out, being notably higher than other banks that provide accounts to the other four crypto-to-fiat exchanges in Korea. That is according to a report by Maeil Business Newspaper, which obtained documents submitted to lawmaker Kim Hee-gon by the Financial Services Commission (FSC).According to Korean law, crypto exchanges must secure real-name bank accounts from banks to offer crypto trading services against the Korean won. Kbank offers its accounts to Upbit, the dominant player in the Korean crypto market.Photo by David McBee on PexelsNotable exposure to crypto exchangeThe FSC documents showed that Kbank’s Upbit customer deposits totaled KRW 3.09 trillion, making up 18% of its total deposits, which amount to KRW 17.2 trillion.In a striking contrast, Nonghyup Bank had 0.2% of its deposits, equivalent to KRW 557.8 billion, in Bithumb, which is the nation’s second-largest cryptocurrency exchange. Kakaobank, another internet-only bank, had 0.3% (KRW 112.2 billion) of its deposits in Coinone. Shinhan Bank held 0.01% (KRW 43 billion) in Korbit, and Jeonbuk Bank had a similarly small 0.02% (KRW 4.2 billion) in Gopax.Lawmaker Kim pointed out that Kbank has become a bank dedicated to crypto trading. Kim proposed that financial authorities take proactive measures to assess the potential risks that may emerge when Kbank utilizes Upbit customer deposits as a basis for offering credit loans. Such risky financial practices could potentially result in higher loan defaults and the emergence of a greater number of individuals with poor credit histories, which could ultimately jeopardize the stability of the financial market.Regulatory gapThe current Financial Transaction Reporting Act mandates that virtual asset service providers (VASPs) segregate customer deposits from their own assets as a measure to combat money laundering. However, it has been noted that there are regulatory gaps stemming from the absence of specific guidelines for the custody of these deposits.According to the Financial Supervisory Service (FSS), Nonghyup and Kakaobank store deposits in separate accounts within the bank. On the other hand, Kbank and Jeonbuk Bank keep deposits in corporate accounts under their respective exchange partners’ names.When deposits are stored in separate accounts within the bank, only the bank has access to those funds, and they are essentially operated in a manner similar to a trust, preventing the bank from using the funds arbitrarily. In contrast, funds held in corporate accounts can be used by the bank as a source for lending. Lawmaker Kim warned that in scenarios such as exchange bankruptcies or similar situations, banks holding customer funds in corporate accounts could face difficulties in ensuring customer protection.Each of these banks receives reserve funds from crypto exchanges in anticipation of potential compensation requirements in the event of unforeseen losses. The FSS states that as of the end of last month, the reserve amounts held by each bank were as follows: Kbank had KRW 200 billion, Nonghyup Bank had KRW 100 billion, Kakao Bank had KRW 73 billion, and both Shinhan Bank and Jeonbuk Bank had KRW 30 billion.Kbank’s Upbit customer deposits are approximately 72 times larger than Shinhan Bank’s Korbit customer deposits. However, the reserve amounts held by Kbank are only 6.7 times greater than those held by Shinhan. Lawmaker Kim emphasized the importance of banks maintaining reserve funds that are proportional to the customer deposits held in their partner crypto exchanges.Signs of recoveryMeanwhile, the Korean cryptocurrency industry, which faced a downturn in the latter half of last year due to events like the Terra collapse and FTX’s bankruptcy, has exhibited signs of recovery in the first half of this year.The Financial Intelligence Unit (FIU) of the FSC recently reported that the cryptocurrency market cap in South Korea has reached KRW 28.4 trillion as of the end of June this year. This reflects a 46% increase compared to the end of last year when it stood at KRW 19.4 trillion. Additionally, the total operating profit of domestic exchanges surged by 82% to KRW 227.3 billion over the past six months, compared to the previous figure of KRW 124.9 billion.The total market’s max drawdown (MDD) was 62%. MDD assesses the extent to which an asset has declined in value from its highest point to its lowest point within a specific time frame, before experiencing a recovery. The FIU considers this MDD to be high, urging investor caution.

American crypto exchange and custodian Gemini announced via its blog on Oct. 29 that it has been awarded in-principle approval for a Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS). In an X post on Oct. 23, Dan Clarke, who worked for Gemini in Singapore in an International Marketing & Operations role in 2021, outlined that back then the company ran the first crypto-related full page ad in the Straits Times with the slogan “We’re in Singapore. For Good.” Fast forward three years and it appears that Gemini is making good on that commitment through this latest regulatory-compliant milestone.Photo by Swapnil Bapat on UnsplashSingapore to play a crucial roleThe MPI license will enable Gemini to offer digital payment tokens and cross-border money transfer services in Singapore. Gemini’s Asia-Pacific (APAC) business is headed up by Saad Ahmed. Ahmed commented that Singapore has been at “the heart” of its operational expansion within the APAC region. Expanding on that further, he stated:“While the United States remains our largest market and global headquarters, Asia and Singapore in particular play a crucial role in our global strategy.”  Ahmed outlined that Singapore represents the company’s second-largest market, with plans to double its current Singaporean workforce and move to a larger office space. The Gemini executive believes that this in-principle licensing approval takes the company one step closer to offering services that cater to the needs of residents of the city-state.  Serving users across the APAC regionIn its blog announcement, the firm said that “since establishing our regional headquarters in Singapore, we’ve focused on expanding our footprint, ensuring that we bring a localized, secure, and compliant trading experience to users across the region.” With the regulatory environment in its home market being currently hostile to crypto, Gemini has pursued a strategy followed by many of its peers in looking for growth opportunities overseas instead. In April of last year, the company announced that it was in the process of opening an engineering center in India.  In June 2023 the company publicized its intention to pursue a crypto trading license within the United Arab Emirates (UAE). At the time the company’s co-CEOs, Tyler and Cameron Winklevoss, referred to the “hostility and lack of clarity” when it came to the regulatory environment within the United States. Regulatory clarity to drive growthAhmed believes that regulatory clarity in Singapore will be a driver of growth, leading to greater adoption across the region. With regard to the U.S., he has the expectation that the crypto industry will grow regardless of whether former U.S. President Donald Trump or Vice President Kamala Harris wins the upcoming presidential election.  Notwithstanding that, Gemini’s Winklevoss twins have donated over $2 million to Trump’s campaign, while also contributing funds to a super political action committee (PAC) supporting John Deaton, a Republican challenger to the Senate seat of fierce crypto critic Senator Elizabeth Warren.  Regulatory conditions in Canada have proven to be too much to handle for the company. At the end of September, Gemini announced that it would close all customer accounts in Canada by December 31 as a direct consequence of new regulations which have been introduced by the Canadian Securities Administrators (CSA).

LG CNS to leverage blockchain for digital transformation in New York CityLG CNS, a technological arm of the South Korean conglomerate LG Group, has signed a memorandum of understanding (MOU) with New York City and the American Chamber of Commerce in Korea (AMCHAM Korea). This agreement, signed at New York City Hall, focuses on collaboration for digital transformation, also popularly referred to as DX. Among those present at the signing were NYC Mayor Eric Adams, LG CNS’ CEO Hyun Shin-gyoon and AMCHAM Korea’s CEO James Kim.Photo by Emiliano Bar on UnsplashStudent internship and M/WBE supportUnder the MOU, the three entities will forge a technology partnership, focusing on the implementation of cutting-edge DX technologies like artificial intelligence (AI), digital twins, the Internet of Things (IoT) and blockchain in the city. Additionally, they’ll provide internship programs for college students and extend support to NYC’s Minority and Women-owned Business Enterprises (M/WBE).Expansion in North AmericaThe partnership is expected to position LG CNS for broader expansion in North America, particularly in smart city infrastructure, electronic government and cloud computing. After in-depth discussions with NYC and AMCHAM Korea, the Korean tech company will also consider establishing a local branch in New York City. This move aims to reinforce LG CNS’s collaboration with the two partners.Mayor Adams remarked on the collaborative effort, stating that the MOU signifies an important step forward as it will offer outstanding training and opportunities for residents across all five boroughs of the city. He also expressed his anticipation about welcoming LG CNS to New York City.Meanwhile, CEO Hyun highlighted that LG CNS plans to leverage this strategic partnership to support the sustainable growth of New York City by utilizing innovative DX technology.