Korea Exchange to conduct CBDC pilot test in H2

India’s digital currency transactions have surged, surpassing 1 million daily transactions in December, meeting the Reserve Bank of India’s (RBI) ambitious target set for the end of 2023.Photo by Julian Yu on UnsplashCBDC-based employee paymentsReuters cited three sources familiar with the matter who have revealed that Indian banks played a crucial role in achieving this milestone by disbursing certain employee benefits through the central bank’s digital currency (CBDC), known as the e-rupee. As Indian crypto influencer and YouTuber Sumit Kapoor put it, the transaction level increase “happened because people working in regular banks were encouraged to use digital rupees instead of the normal money for their deposits and benefits.” RPI letter confirms increaseA letter seen by CoinDesk sent by the Governor of the Reserve Bank of India (RBI), Shaktikanta Das, to RBI staff on Dec. 29 confirmed the increased CBDC use, stating that it “exceeded the milestone of 1 million transactions in a day on Dec. 27, 2023.” The e-rupee, developed as a digital counterpart to physical cash, utilizes distributed ledger technology. The RBI initiated the e-rupee pilot in December 2022, initially recording an average of 25,000 daily transactions by the end of October. Despite its integration with the Unified Payments Interface (UPI), a popular framework for mobile app-based peer-to-peer money transfers, the transaction volume saw a substantial increase last month. Union Bank paymentsAccording to India’s Economic Times, the Union Bank of India is working towards transferring claims related to a number of employee benefits to CBDC wallets rather than the accounts of those salaried employees. Union Bank stated: “With an aim to promote CBDC wallet transactions, banks have been advised to encourage all staff members to transact using the digital currency and ensure 100% staff registration on digital rupee app.” Other banks have been playing their part in the current transaction level surge. This has included major private and state-run lenders such as HDFC Bank, Kotak Mahindra Bank, Axis Bank, Canara Bank and IDFC First Bank. These institutions disbursed employee benefits directly into CBDC wallets rather than traditional salary accounts, demonstrating a significant shift in adoption patterns. The RBI anticipates that non-financial firms will follow suit, contributing to a further boost in transaction volumes. The user base for the e-rupee has also witnessed steady growth, reaching approximately 4 million users, up from 3 million in December, according to an executive familiar with the pilot. Globally, several countries, including China, France and Ghana, are in the pilot stages of their central bank digital currency (CBDC) projects. Nigeria has rolled out its digital currency, although success has been limited despite offering incentives such as discounts on auto-rickshaw rides. To incentivize e-rupee transactions, Indian banks are offering rewards, aligning with the RBI’s push to enhance transaction volumes. Sharat Chandra, co-founder of the India Blockchain Forum, commended the move to compensate employees using CBDC and suggested expanding adoption incentives to other areas, such as toll tax collections, to further encourage widespread usage. The positive momentum in India’s digital currency landscape reflects a growing trend toward embracing innovative financial technologies. 

Seoul prosecutors charge eight suspects linked to crypto price manipulationEight individuals involved in a cryptocurrency fraud, which is separate from a murder case associated with the same token, have been formally charged and referred to court by public prosecutors in South Korea.The Joint Virtual Asset Crime Investigation Unit of the Seoul Southern Prosecutors’ Office has recently disclosed the arrest of two key figures in the scandal related to a cryptocurrency called Puriever (PURE). The unit apprehended the chief executive of the PURE issuer, referred to as “A” for anonymity, and a market manipulator. Both have been charged with fraud. In addition to these arrests, the prosecution has charged six other individuals–including an executive from a cryptocurrency consulting firm, anonymously named “C,” and a broker. These additional suspects have been charged but not arrested.Photo by Adam Śmigielski on Unsplash$16 million from over 6,000 victimsThe prosecution has accused the suspects involved in the PURE case of illicitly inflating the token’s price through deceptive disclosures and market manipulation during April and May 2021. This scheme reportedly enabled them to amass illegal profits totaling KRW 21 billion (close to $16 million) from approximately 6,100 victims. In March of this year, it came to light that the PURE was at the center of a series of criminal activities, including kidnapping and theft, which ultimately led to a murder in Gangnam, Seoul.The prosecution has uncovered that “A” and “C,” key figures in the PURE scandal, transferred 55.2 million PURE to a partner company under the guise of an initiative to reduce air pollution, as falsely stated in their disclosure. The suspects reportedly employed a skilled manipulator to inflate the token’s price artificially. Once the price peaked, they sold off the tokens, capitalizing on the artificially inflated value.Circulation supply manipulationThe case reveals a collective scheme orchestrated by a token issuer, a consulting entity, a broker, and an experienced market manipulator. A key tactic in their scheme involved locking their cryptocurrency wallet to artificially limit the token’s circulation supply. Furthermore, these fraudsters employed a bot to perform wash trading, which boosted the daily trading volume of the token. This strategy created a false impression of high demand and activity in the market.A representative from the prosecution emphasized that the cryptocurrency market is more susceptible to manipulation than the stock market. This vulnerability is attributed to the lack of a monitoring and supervision system in the crypto sector, despite its speculative nature. In response to these challenges, the prosecution has expressed a firm commitment to enhancing its crypto investigation capabilities with the goal of effectively combating criminal activities. These efforts are aimed at fostering a fair and transparent trading environment, safeguarding the integrity of the cryptocurrency market.

Among various accounts within a bank, a demand deposit account is considered a “station” where people can temporarily store their money and easily withdraw it for future investments. These accounts are highly liquid, since users can deposit or withdraw funds at any time without having to pay a penalty to a bank.  Following the recent cryptocurrency boom, the five major banks in Korea – KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and NH Nonghyup Bank – are seeing a significant influx of funds into their demand deposit accounts, according to local media outlet Money Today. This is partly attributed to an increasing number of youths who are seeking to invest in crypto assets, parking their money in these banks’ demand deposit accounts. Shinhan Bank and Nonghyup Bank have seen the highest increase in their deposits, owing to their affiliation with local crypto exchanges that have access to real-name accounts from these banks. Photo by André François McKenzie on UnsplashBTC’s surge attracting young investors to cryptoExperts say that these deposits could be potentially transferred to the crypto market by owners as Bitcoin’s value continues to climb. An insider from a crypto exchange noted that the bullish crypto market, spurred by the U.S. approval of spot bitcoin ETFs, is driving a number of young investors to turn to crypto investments, encouraging them to channel their deposits into buying crypto tokens.  Data from these five major banks shows their total demand deposits by the end of February exceeded KRW 614 trillion ($460 billion), seeing a month-over-month increase of about KRW 23.5 trillion. During the same period, the banks’ combined regular savings grew by KRW 23.6 trillion, while their combined installment savings saw a decrease of KRW 13.3 trillion. This came after the government-led savings product “Youth Hope Installment Savings” reached its maturity, which returns users their principal with relatively large interest gains.  Banks scrambling to attract crypto investors with new savings productsIn response to the potential decline in interest rates in the second half of this year, an increasing number of customers are seeking to put their money into savings products with an interest rate of as low as 3%, according to a banker. In a bid to attract more users, local banks are busy introducing new savings products.  KB Kookmin Bank launched a savings product offering a relatively high annual interest rate of up to 4%, and Shinhan Bank rolled out a savings product targeting youths with an annual interest rate of up to 3.85%.  Meanwhile, Kbank, an online-only bank, is deemed among the largest beneficiaries of the crypto boom, as the bank saw its average daily new customers triple compared to last year. Since 2020, Kbank has served as the provider of real-name accounts to Upbit, the leading crypto exchange in Korea.  Ha Joon-kyung, a professor at the Department of Economics at Hanyang University, said the sudden surge in demand deposits means that a significant portion of these funds will be invested in high-yielding but risky assets, including cryptocurrencies, stocks and real estate.