Seoul Govt to Hire Blockchain Expert to Enhance Administrative Services for Citizens

JPEX Exchange Scandal Sees Crypto Regulation Under Scrutiny in Hong KongWhile Hong Kong has been developing steadily as a crypto sector hub, the focus in the Chinese autonomous territory has turned towards regulation after a recent scandal involving an unlicensed cryptocurrency exchange.Photo by Ihor Saveliev on UnsplashOngoing investigationYesterday we reported on some arrests relative to problems experienced at crypto exchange JPEX. The fallout continues on Tuesday, with the Hong Kong police now understood to have arrested eight individuals, including social media influencers who promoted the exchange and JPEX employees, on allegations of fraud. This illicit activity in and around the JPEX exchange has affected over 1,600 investors, implicating more than $150 million in assets.JPEX, in response to mounting pressure, announced the suspension of trading on its platform. In a statement, the exchange mentioned ongoing negotiations with third-party market makers to address liquidity shortages. However, JPEX also accused an unidentified third-party market maker of maliciously freezing funds, further complicating the situation.Politicians and regulators speak outResponding to the incident via a press conference on Tuesday, Hong Kong’s Chief Executive, John Lee, emphasized the significance of investing in virtual assets through licensed platforms. Lee stated:“This incident highlights the importance that when investors want to invest in virtual assets, then they must invest on platforms that are licensed.” He also pledged that the Securities and Futures Commission (SFC) would closely monitor the situation to ensure investor protection.Elizabeth Wong, the Head of the SFC’s fintech unit, revealed that an investigation was underway to determine whether JPEX had violated anti-money laundering laws. The SFC had already declared JPEX unlicensed, prompting numerous complaints from investors who were unable to withdraw their virtual assets or experienced unexplained reductions in their balances.Assets frozenHong Kong authorities have taken decisive action against those involved in the scandal. They have frozen bank accounts valued at 15 million Hong Kong dollars ($1 million) and seized three properties valued at 44 million Hong Kong dollars. The police have reported receiving 1,641 complaints related to JPEX, involving a staggering $1.2 billion Hong Kong dollars. By last Wednesday, the SFC had received in excess of 1,000 complaints and at that point, they notified the general public.The JPEX scandal has drawn attention to the need for stronger cryptocurrency regulations in Hong Kong, a region that has become attractive to cryptocurrency firms since mainland China banned cryptocurrency transactions in 2021. In mainland China, trading cryptocurrencies on foreign exchanges from within the country remains illegal.Hong Kong’s response to cryptocurrency regulation has evolved. Beginning on June 1, the SFC started accepting applications from cryptocurrency exchanges, allowing licensed operators to serve retail investors, provided they understand the associated risks. Previously, only professional investors had access to such exchanges. Currently, only two exchanges in Hong Kong, OSL Exchange and Hashkey Exchange, have received approval to operate.As Hong Kong reevaluates its approach to cryptocurrency regulation, the crypto sector will hope that it strikes a balance between fostering innovation and protecting investors from fraud and market manipulation.

The South Korean National Tax Service (NTS) is reportedly in the process of setting up virtual asset accounts for its district offices. This initiative is aimed at confiscating and liquidating the digital assets of individuals who fail to pay their taxes. This move comes after the creation of similar accounts by public prosecutors' offices, leading to speculation in the crypto industry that virtual asset accounts will soon be allowed for corporate entities as well.Photo by Nataliya Vaitkevich on PexelsDirect confiscation of virtual assetsA report by the local news outlet Etoday today has revealed that each district office of the NTS is working towards establishing a virtual asset account. This development will empower the tax agency to directly sell virtual assets confiscated from tax delinquents. Previously, the NTS would freeze the accounts of overdue taxpayers at Korean cryptocurrency exchanges, compelling them to convert their assets into Korean won. These funds were then confiscated by the NTS. The new initiative is set to streamline the process, enabling the tax authority to directly confiscate virtual assets without the intermediary step of conversion to Korean won. Speaking about this development, an NTS officer said that as each district office director holds the authority to collect taxes from taxpayers with overdue payments, it's necessary for each office to have its own account. Prosecutors’ Offices’ Upbit and Bithumb accountsThe crypto industry views this development as a potential step towards allowing the creation of virtual asset accounts for corporate entities, starting with government agencies. In December, the prosecutors' offices established their entity accounts at major cryptocurrency exchanges Upbit and Bithumb. Since then, the prosecution has utilized these accounts to sell confiscated virtual assets, aiming to recover funds that had not been collected.  An official from a cryptocurrency exchange indicated that the South Korean government is currently focusing on allowing entities that serve the public good to own virtual asset accounts. This approach is seen as the starting point, with expectations that the trend will gain momentum in the future. The official added that it's rare for the government to provide blanket permissions from the outset, suggesting a gradual and cautious approach to the integration of virtual asset accounts.Money laundering concernsMeanwhile, the Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC), along with other financial regulators, has remained silent on the matter of virtual asset accounts for corporate entities. This reticence stems from concerns with the financial authority that the introduction of corporate crypto accounts could potentially lead to money laundering and the creation of slush funds. An official from the National Assembly’s National Policy Committee said that they have not received any comments from the financial authority in response to inquiries about plans to allow such accounts for corporate entities. The current law doesn’t prohibit corporate entities from trading virtual assets. However, under the auspices of the financial authority, banks have refrained from offering real-name accounts to corporate entities. This policy has been a point of contention within the crypto industry. Advocates argue that allowing corporate accounts could mitigate issues of market manipulation and challenge the dominance of Upbit in the Korean cryptocurrency market.  The official from the cryptocurrency exchange pointed out that the financial authority does not have a clear legal basis for prohibiting the creation of corporate crypto accounts. They suggested that the regulator should develop clearer guidelines and enforce these rules for corporate entities. More serious discussions in AprilMore serious discussions about the introduction of corporate crypto accounts are anticipated to take place in April, following the conclusion of the general election. Last month, the main opposition party, the Democratic Party of Korea, made election promises to open the crypto market to institutional investors. Meanwhile, the ruling People Power Party has been quietly deliberating on virtual asset policy. Despite these political movements, earlier reports indicate a disconnect between the political parties' efforts to relax crypto regulations and the financial regulator's stance. Meanwhile, Hwang Seok-jin, a professor at Dongguk University’s Graduate School of International Affairs and Information Security, expects to see a conclusion on the permission of corporate crypto trading by the end of this year. He said that there has been ongoing discussion about the approval of spot Bitcoin exchange-traded funds (ETFs) and that allowing the trading of such funds requires the ownership of virtual assets by institutions. 

Web3 firm AIITONE rebrands as BU Technology, adding new business objectivesAIITONE, a Web3 and military technology firm located in South Korea, announced on Monday (local time) that it has rebranded and will now be known as BU Technology.Photo by Steve Johnson on UnsplashElectric trains, batteries as new objectivesDuring an extraordinary general meeting of shareholders on October 5, the company formerly known as AIITONE announced a change in its corporate identity to BU Technology. This rebranding coincides with an expansion of the company’s business objectives to include the manufacturing of electric trains, batteries and charging devices. With this move, BU Technology aims to diversify its sources of revenue.The meaning behind ‘BU Technology’BU Technology, which stands for “Beyond Your Technology,” embraces the motto “Beyond Your Today, Beyond Your Expectation, Beyond Your Imagination.” This slogan reflects the company’s ambition to be a forward-thinking tech enterprise that exceeds the expectations and imaginations of its customers.BU Technology applies extended reality (XR) technology to develop computer-based training (CBT) programs and simulators for military use. It’s also ventured into creating content for industrial safety that uses augmented reality (AR) and virtual reality (VR) technology. This content is recognized for its technical quality, notably in replicating realistic effects, including sound, wind and physical sensations.The fresh corporate identity and resolve of BU Technology are also anticipated to make a positive impression on its operations in the Middle East. Earlier this year, the company inked a memorandum of understanding (MOU) with the Royal Private Office of His Highness Sheikh Ahmed Bin Faisal Al Qassimi in the United Arab Emirates (UAE). This agreement is directed at strengthening the fintech sector across South Korea, China and Japan.Additionally, in September, BU Technology successfully launched a proof-of-concept (PoC) platform tailored for the blockchain-based security token projects of securities and financial firms. This PoC platform enables the testing and demonstration of the viability and operational processes related to security token ventures.Lee Jin-yeop, CEO of BU Technology, said that the rebranding effort is aimed at enhancing the company’s brand value and introducing a fresh image for the firm. He further emphasized that BU Technology is committed to advancing the three foundational pillars of its business: military applications, XR and blockchain technology.Lee stated that incorporating new business objectives is a strategy for diversification, intended to elevate the company’s overall value. He also expressed his commitment to steering the newly rebranded BU Technology towards becoming a frontrunner in the Web3 era.