Audit Finds Excessive Pay Features on China’s e-CNY Project

The South Korean Ministry of Foreign Affairs (MOFA) announced on Dec. 26 through an official website press release that it has imposed sanctions on 15 North Korean individuals and one institution for their involvement in illegal cyber activities, including cryptocurrency theft, to fund the country's nuclear and missile programs.Photo by Micha Brändli on UnsplashAccording to the MOFA, the sanctioned individuals have been stationed overseas as part of the 313 General Bureau of the North Korean Munitions Industry Department (MID), which is already subject to UN Security Council sanctions. The bureau is allegedly responsible for deploying North Korean tech personnel abroad and using the foreign currency earned to finance the development of nuclear weapons and missiles. The sanctions, which will come into effect at 15:00 UTC on Dec. 29, will prohibit financial and foreign exchange transactions with the designated entities unless approved in advance by South Korean authorities. Violations of these sanctions may result in legal consequences under South Korean law. North Korea behind 61% of 2024’s stolen cryptoThe MOFA cited a recent report by blockchain analysis firm Chainalysis, which showed that North Korean crypto hackers took roughly $1.34 billion in 47 separate incidents in 2024. These thefts account for 61% of the year's total stolen crypto funds and 20% of all incidents. In 2023, they had stolen approximately $660.5 million over 20 incidents. It's believed these funds help finance North Korea's weapons of mass destruction programs. The ministry further stated that North Korean tech personnel are often dispatched to countries such as China, Russia and nations in Southeast Asia and Africa, where they disguise their identities and secure work from global tech companies. Some of these individuals are also suspected of engaging in information theft and cyber attacks. Emphasizing the threat these activities pose to cybersecurity and international peace, South Korea has vowed to continue its efforts to thwart North Korea's illicit cyber activities in cooperation with the international community.

Former PBOC Governor: CBDC Development Must Focus on SecurityZhou Xiaochuan, a former governor of the People’s Bank of China (PBOC), has issued a call for China to prioritize security and vigilance against potential misuse as it advances the development of its central bank digital currency (CBDC), known as the e-CNY.Photo by FLY:D on UnsplashSafeguarding the CBDC ecosystemXiaochuan made this appeal during the Digital Finance Forum, which was held in Beijing last week. He emphasized the necessity of safeguarding the CBDC ecosystem.The PBOC has been actively engaged in trials and innovations related to the e-CNY, even rolling out a pilot application in January 2022. The digital yuan’s journey, however, comes with significant responsibilities, particularly in terms of security and prevention of misuse.Thwarting potential abuseZhou acknowledged that in the realm of finance, security has always been a paramount concern, and this sentiment couldn’t be more accurate when applied to the realm of digital currency. He stressed that, as technology costs continue to decline and systems become more user-friendly, the risks associated with misuse also decrease. In this context, it becomes imperative for China to adopt stringent security measures and robust regulatory frameworks to thwart any potential abuse.Zhou underscored the illicit utilization of cryptocurrencies and stablecoins in facilitating various activities, including arms trafficking and drug trade. He pointed out that addressing these issues necessitates a concentrated effort, making it clear that a proactive approach to prevention is essential.The development of the e-CNY has seen impressive progress, with pilot projects initiated in 2019 and later expanded to 26 locations across 17 provincial-level cities and regions, including major metropolitan areas like Beijing, Shanghai, Shenzhen, and Suzhou.Last month another official from the PBOC spoke to the need to make the e-CNY accessible in all retail payment scenarios within China at a trade forum in Beijing. Digital yuan use is also being broadened to facilitate its availability in the special Chinese administrative area of Hong Kong.Proposing two-tier systemZhou advocated for a two-tier system in the operation of e-CNY, a structure already in place. The People’s Bank of China presides over the first tier, responsible for issuance and regulation, while the second tier comprises commercial institutions such as commercial banks, internet platforms, and telecommunications operators.This dual-layered design promotes dynamic evolution within the digital currency landscape, enhancing service quality and fostering innovation through healthy competition. Zhou stressed the importance of exploring cross-border transactions, an area that entails both technological advancements and policy orientation.Hong Kong has actively embraced e-CNY for cross-border payments, advancing into the second phase of technical testing and preparing to incorporate it into its predominantly local payment system.On a related note, Lu Lei, the deputy administrator of the State Administration of Foreign Exchange (SAFE), highlighted the programmable features of CBDCs as tools for enhancing monetary policy effectiveness.While current CBDCs are positioned as M0 currencies, strictly currency in circulation plus commercial bank reserve balances, he proposed that central banks could evolve them into M2 currencies. M2 is a measure of money supply that incorporates checking deposits and other forms of deposits that are readily convertible to cash, alongside cash itself.

Korean Parliament to Hold Hearing on Virtual Assets Amid ControversiesThe National Policy Committee (NPC) of the South Korean National Assembly has reached an agreement to conduct a hearing on virtual assets next month. This decision comes following discussions between the ruling and opposition parties, as reported by local news outlet Kukinews.Photo by KS KYUNG on UnsplashHearing dateLawmakers Yoon Han-hong and Kim Jong-min, who serve as administrative secretaries of the NPC, have agreed today to hold the virtual assets hearing on July 11. Yoon is a member of the ruling People Power Party (PPP), and Kim is a member of the opposition Democratic Party of Korea (DPK).During a full session held this afternoon, Lawmaker Kim proposed the idea of a hearing on virtual assets, to which NPC Chair Back Hye-ryun agreed.Growing public interestToday’s meeting was organized to foster a better understanding of the current issues surrounding virtual assets, given the increasing public interest, particularly in light of the recent controversy involving Lawmaker Kim Nam-kook’s alleged ownership of cryptocurrency tokens and the employment of PPP leader Kim Gi-hyeon’s son in a crypto-related company.The NPC intends to finalize the plan for the hearing on June 30, just before the plenary session on the day. The specific focus of the hearing and the participants, including witnesses, will be determined through consultations between the administrative secretaries.