Korea invites distinguished financial officials to discuss digital money

Korea’s Legislative Research Body Suggests Expanding Blind Trust System to Include CryptoThe National Assembly Research Service (NARS) of South Korea last Friday issued a report emphasizing the need to broaden the scope of the country’s blind trust system for public officials. Currently, this system primarily covers traditional stocks, but the report highlights the necessity of extending its coverage to include cryptocurrencies.Photo by O-seop Sim on PexelsPublic Service Ethics ActUnder the existing Public Service Ethics Act, public officials holding a rank of 4 or higher within the finance department of the Ministry of Economy and Finance and the Financial Services Commission are mandated to either divest themselves of stocks linked to their official duties and responsibilities or transfer them into a blind trust if the total value of these stocks exceeds KRW 30 million (about $23,000).Blind trustA blind trust is a mechanism through which a public official transfers their stock holdings to a trustee. Subsequently, the trustee handles these entrusted stocks by exchanging them for other assets and overseeing their management, administration, and disposition. Importantly, the original owner of the stock, who is the public official, is barred from participating in these aspects of the trust and is also kept uninformed about the trust property’s status or details.Debate over expansionThe current policy confines the blind trust framework exclusively to stocks. Nevertheless, there is an ongoing debate advocating for the inclusion of other assets, such as virtual assets and real estate, within its scope. The rationale behind this argument is that these types of assets can also potentially give rise to conflicts of interest. However, counterarguments have been raised, expressing concerns that extending the blind trust to these assets could excessively limit the property rights of public officials. Consequently, as of now, this broader application has not been implemented.Comparison with the USThe Korean blind trust system was inspired by the United States’ Ethics in Government Act of 1978, which does not limit the types of assets that can be included in a blind trust. In the US, a blind trust can encompass not only stocks but also bonds, mutual funds, virtual assets, and real estate. In light of this, the report recommends the expansion of the blind trust system to encompass virtual assets and real estate. This step is proposed to prevent conflicts of interest among public officials pertaining to a wider array of asset types.Enhancing trustee discretionMeanwhile, NARS also argued for broadening the trustee’s discretion in trust management to render the system more reasonable. This stems from the concern that the existing uniform property sale approach could lead public servants to incur losses. NARS has proposed potential solutions, such as extending the time limit for property sales or mandating the sale of only a portion of the assets, as viable options to address this issue.

QCP Trading, the trading arm of Singaporean crypto market maker and broker dealer QCP Group, has taken a significant step towards full licensing in Singapore, having been awarded in-principle approval (IPA) for a Major Payment Institution (MPI) license by local regulator, the Monetary Authority of Singapore (MAS). Regulated spot tradingIn a press release published by PR Newswire on behalf of QCP Trading Pte. Ltd. on Nov. 11, the company outlined further details on the receipt of the preliminary license. The company confirmed that the IPA represents an “essential step towards full licensing,” enabling it to prepare to offer regulated spot trading service facilities relative to digital payment tokens. QCP Trading is geared towards facilitating a broad range of crypto spot trading, including the trading of stablecoins and major digital asset tokens. The company offers on/off ramps into and out of cryptocurrency positions via multiple fiat currencies. Photo by Guo Xin Goh on UnsplashOperational expansionDarius Sit, founder of QCP Trading, commented on the development, stating that as the firm continues its pursuit of a full trading license, the focus remains on supporting Singapore’s reputation as a leader in digital asset regulation. Sit added that the company is proud of its “ability to remain agile and responsive to both global and local market conditions,” suggesting that this approach is the key to success in the rapidly evolving crypto sector. QCP Trading intends to continue to build a local team in Singapore and with that it is hiring in order to enable operational expansion. Melvin Deng, the company’s CEO, said that the firm is aiming “to champion robust governance frameworks,” and that its “early recognition of the critical role of regulation has proven to be a strategic foresight." Global expansionThe QCP Group appears to be pursuing a global expansion strategy as back in May, group company QCP Capital received IPA for regulated digital asset trading activities from the Financial Services Regulatory Authority (FSRA), the regulator within the Abu Dhabi Global Markets economic zone in the United Arab Emirates (UAE). In doing so, it became the first Singapore-headquartered crypto broker and market maker to receive preliminary approval within the Middle East region. At that point, QCP had 70 employees, with plans to relocate some of them to Abu Dhabi. In the lead-up to that IPA licensing award in Abu Dhabi, QCP had partnered with Further Ventures as part of its efforts in expanding into the Middle Eastern market. On Nov. 11, QCP Capital put out a warning via its Telegram channel, informing market participants that given the rise in the unit price of Bitcoin in recent days, it is necessary to be mindful of the risk of pullbacks, which will be required in order to account for the use of leverage within the market. In recent weeks, Fly Wing Technologies, a subsidiary of cryptocurrency service provider Matrixport, and the Singaporean subsidiary of American crypto exchange Gemini have received IPA approval with respect to MPI licensing in Singapore. At the beginning of September, crypto exchange OKX received full MPI approval. 

Singaporean Authorities Uncover $1.3M Crypto Mining ScamFour foreign nationals are facing charges in a Singaporean court related to a cryptocurrency mining investment scheme that allegedly cheated investors out of over S$1.8 million ($1.3 million).According to reports in local media, the accused individuals are associated with A&A Blockchain Technology Innovation, a Singaporean company that was previously investigated for potential cheating offenses related to the very same crypto mining scheme in 2022. The accused include Dutch national Yang Bin, who was the Chairman of A&A Blockchain at the time of the offenses, and Lu Huangbin, Wang Xinghong, and Chen Wei, who held various roles within the company. Lu, Wang, and Chen are Chinese nationals.Photo by Arul Kumaran on UnsplashConspiracy to cheat chargesThe four individuals are collectively facing twelve counts of engaging in a conspiracy to cheat, involving the aforementioned sum of money. Additionally, they are charged with carrying out payment services without the required license.The charges are connected to a cryptocurrency mining investment scheme offered by A&A Blockchain between May 2021 and February 2022. The scheme promised investors a fixed daily return of 0.5 percent, luring them in by falsely claiming ownership of a large number of cryptocurrency mining machines.Unlicensed crypto exchangeDuring the period of August 2021 to February 2022, A&A Blockchain operated a cryptocurrency exchange named AAEX, facilitating the trading of multiple cryptocurrencies. However, the company operated without a proper license from the Monetary Authority of Singapore (MAS) for providing payment services in the country.Under the Penal Code, those convicted of cheating offenses can face penalties that include fines, imprisonment for up to a decade, or both. The accused face a total of 12 cheating charges, out of which 10 are amalgamated charges. If convicted of an amalgamated charge, the punishment could be doubled for a single incident of the offense. Furthermore, engaging in payment services without the necessary license can lead to a jail term of up to three years, a fine reaching S$125,000 ($92,000), or both.The cases against Chen, Wang, and Yang have been adjourned until next month. Meanwhile, Lu’s pretrial conference is scheduled for a later date in September. The charges against these individuals come in the wake of a large-scale operation targeting anti-money laundering offenses within the city-state.The operation resulted in the arrest and charging of ten individuals suspected of forgery, money laundering, and resisting arrest. The group had reportedly amassed assets worth approximately S$1 billion ($736 million), residing in affluent properties and owning luxury vehicles.Good actorsThe nascent nature of crypto is being used as a cover for scammers and while those bad actors get a disproportionate level of coverage, there are plenty of good actors engaging positively with the innovation at hand.As an example of genuine efforts being made in crypto mining, Beijing-based Canaan, a leading mining equipment manufacturer, intends to hold an event in Singapore next month to celebrate ten years in the business. Singapore is also home to well-known crypto miner, Bitdeer, a company with significant mining operations in North America, Bhutan, Norway, and elsewhere.As the industry matures and makes a better fist at self-regulation, in tandem with ever-improving regulations and controls at a national level, scammers using crypto-related activities as a foil for their criminal enterprise will be forced out of the sector.