Do Kwon Loses Fight to Conceal Singapore Records

Korean Crypto Market’s Healthy Growth Requires Corporate ParticipationA healthy growth of the South Korean virtual asset industry needs the private sector’s investment in cryptocurrencies, a legal scholar argued at a recent international academic conference titled “Digital Financial Transition and International Trends in Commercial Law.”That’s according to a report by local news outlet Edaily. Namgung Ju-hyun, an assistant professor of commercial law at Sungkyunkwan University Law School, attended the two-day event hosted over the last weekend by the Korea Commercial Law Association to point out that the current restrictions on corporate investments in cryptocurrencies have not only increased speculation within the domestic market but have also hampered Korean companies’ endeavors in pursuing blockchain-powered projects.Banks and companiesProfessor Namgung addressed the current situation where Korean commercial banks are withholding real-name bank accounts from firms without specific legal grounds. This practice became common after the Act on Reporting and Using Specified Financial Transaction Information was revised in March 2021. This Act requires virtual asset service providers (VASPs) to adhere to anti-money laundering (AML) regulations; therefore, firms wishing to trade cryptocurrencies with the South Korean currency must have real-name accounts with domestic banks. While the Act doesn’t explicitly restrict issuing such accounts to corporations, banks have shown reluctance to do so.However, in countries like the United States, cryptocurrency trading in the corporate world is thriving. For instance, institutional investors at Coinbase, America’s largest crypto exchange, accounted for over 85% of the total trading volume in the first quarter, a rise from 76% during the same period last year.Photo by JESHOOTS.COM on UnsplashMinor altcoins’ strong presenceProfessor Namgung identified the prevalence of retail investors and their speculative behaviors as the primary issue plaguing the Korean crypto market. A case in point is a relatively large proportion of trades in minor altcoins. As per a report by the Korean Financial Services Commission (FSC), the combined market cap of BTC and ETH accounted for only 33% in the domestic market, a contrast to their 58.2% share in the global market. Namgung underscored that the high trade volumes of volatile crypto assets contribute to the Kimchi premium, a phenomenon where crypto prices in Korea are higher than those in other countries.Namgung also mentioned that Korean companies like Hyundai Motor, Lotte Homeshopping, and Shinsegae, despite promoting projects based on non-fungible tokens (NFTs), face difficulties due to their inability to convert cryptocurrencies to cash on domestic crypto exchanges. In comparison, global companies like Nike are successfully leveraging NFTs for their projects and exploring new business opportunities.Role of financial authoritiesProfessor Namgung urged Korean financial authorities to devise guidelines that encourage corporate participation in the crypto market, eliminating uncertainties. As a step towards risk management, he recommended considering publicly traded companies or established firms of a certain size as initial participants in the crypto market.Input from international scholarsPrior to Professor Namgung’s talk, the international academic conference also featured presentations from foreign scholars, namely Mirella Pellegrini, a professor at LUISS University of Rome; Marco Bodellini, an associate lecturer in banking and financial law at Queen Mary University of London; and Albert H. Choi, a professor of law at the University of Michigan Law School.Professor Pellegrini discussed personalized financial products and investor protection in the digital market from the perspective of the European Union. Dr. Bodellini provided insights into central bank digital currencies (CBDCs) from a policy perspective, while Professor Choi focused on digital transformation and retail shareholder engagement.

NFTs not subject to South Korea’s Virtual Asset User Protection ActIn anticipation of the Virtual Asset User Protection Act coming into effect in July of next year, the South Korean Financial Services Commission (FSC) has issued an advance notice regarding its subordinate statutes.Photo by Ethan Brooke on UnsplashSeven specific provisionsThe subsidiary regulations under the Act detail seven specific provisions aligned with the Act’s objectives. Firstly, assets categorized as electronic securities, mobile vouchers, deposit tokens backed by the Bank of Korea’s central bank digital currencies (CBDCs) and non-fungible tokens (NFTs) will not be classified as virtual assets and hence, not regulated by this Act. However, in instances where NFTs are used as a means of payment for specific goods or services, they will be regarded as virtual assets.Secondly, banks will take responsibility for managing the deposits of users on cryptocurrency exchanges. This aligns with the Act’s requirement for virtual asset service providers (VASPs) to keep users’ funds separate from their own, either by depositing them in, or entrusting them to, reputable institutions. Under these regulations, banks are required to manage users’ assets in a manner consistent with how investors’ deposits are handled under the Capital Markets Act. This means that banks are allowed to invest VASP users’ assets only in secure instruments, such as state and local government bonds, and are also obligated to pay fees to deposit owners, taking into account the yields of these investments.80% of user assets in cold walletsThe third key aspect of the regulations is that VASPs are required to store a minimum of 80% of user assets in cold wallets, which are not connected to the internet. This is higher than the current requirement of 70%, enhancing the security measures for users of virtual assets. To calculate the total value of a virtual asset at any given time, its total supply is multiplied by its average daily price over the past year. VASPs are obligated to assess the value of virtual assets every month.The fourth regulation mandates that VASPs must enroll in an insurance plan, contribute to a rainy day fund or accumulate reserves. This is to ensure they can fulfill their compensation responsibilities in the event of incidents like security breaches or technical failures. The required preparation amount is set at a minimum of 5% of the user assets stored in hot wallets, as these are more susceptible to risks. VASPs are required to update their compensation thresholds or reserves monthly and must take any necessary actions to comply with these requirements by the next working day following the update.Information disclosure guidelinesAnother regulation addresses the issue of insider trading in the context of the virtual asset market. Under the current Capital Markets Act, information is considered disclosed when it’s made available through disclosure systems of the FSC or the Korea Exchange (KRX). However, since the cryptocurrency market lacks a similar system, the new statute provides criteria for determining when information is deemed disclosed.For instance, if a VASP, including exchanges, releases crucial information about a virtual asset on an exchange and six hours pass, that information is regarded as disclosed. This acknowledges the non-stop nature of the crypto market. Moreover, information disclosed post 6 p.m. is treated as officially disclosed after 9 a.m. the next day.Additionally, if a virtual asset issuer publishes significant information about its token on a website hosting its white paper, the information is deemed public after one day. This is conditional upon the website being publicly accessible and having consistently provided important token information for the preceding six months.These rules aim to provide clarity and fairness in information disclosure in the crypto market, adapting the principles of traditional financial markets to the unique dynamics of virtual assets.No arbitrary suspension of transactionsThe sixth regulation restricts VASPs from arbitrarily halting deposits and withdrawals of virtual assets unless there are justifiable reasons for such actions. Acceptable circumstances for suspending these transactions include situations where the VASP experiences a technical disruption in its system, where regulatory authorities instruct a VASP to cease deposits and withdrawals or where cyberattacks or similar incidents have occurred or are clearly imminent.Lastly, virtual asset exchanges are required to monitor for abnormal transactions continuously. These are transactions that show substantial shifts in the prices or trading volumes of virtual assets, particularly in response to news or rumors that could influence cryptocurrency prices. If VASPs suspect unfair trading practices, they must report to the FSC or the Financial Supervisory Service (FSS). When there is ample evidence of such activities, crypto exchanges are obligated to notify the police or the prosecutors’ office. In addition, the financial regulator has the authority to levy fines based on the prosecution’s decisions or after completing consultations with the prosecution if a year has passed since the day of the report.During the period of advance notice, which spans from Nov. 11 to Jan. 22, the FSC will seek comments from relevant organizations, experts and businesses. This process is aimed at refining the rules and regulations subordinate to the Virtual Asset User Protection Act. Moving forward, the financial authorities plan to publish a set of guidelines and Q&A materials and conduct explanatory sessions, with the goal of ensuring a smooth implementation of the Act.

Klip Wallet’s WalletConnect Integration Includes Access to OpenSea NFTsGroundX, a blockchain subsidiary of the South Korean messaging app behemoth Kakao, has announced that its digital asset wallet, Klip, now supports WalletConnect, a protocol that enables seamless connections between mobile cryptocurrency wallets and decentralized applications (dApps).Photo by Mariia Shalabaieva on UnsplashAccess to OpenSea and beyondThis integration brings new benefits to Klip users, as they can now easily access various platforms, including the popular non-fungible token (NFT) marketplace, OpenSea. With WalletConnect, users can efficiently manage a wider range of digital assets, making their experience more comprehensive and convenient.PC and mobile compatibilityAnother advantage of Klip’s adoption of WalletConnect is that both PC and mobile users can now access Klip and other blockchain services through this protocol. This ensures a smooth user experience across different devices, allowing for greater accessibility and flexibility.GroundX’s expansion effortsGroundX has been working on improving Klip’s functionality and services. Recently, it forged a partnership with the 1inch Network, a decentralized finance (DeFi) aggregator that offers competitive token swap rates on various decentralized exchanges, enhancing Klip’s token exchange capabilities. Thanks to this collaboration, Klip users can not only exchange Klaytn-based tokens but also tokens based on the Ethereum and Polygon blockchains. This expanded compatibility adds further value to the Klip wallet, empowering users with more options and opportunities for managing their digital assets efficiently.A spokesperson from GroundX emphasized that these recent enhancements in the Klip wallet will enhance its usability and convenience for users. The spokesperson added that the inclusion of various NFTs and DeFi assets within Klip through WalletConnect will lead to the expansion of the Klip wallet’s ecosystem.