Gate Ventures, Boon Ventures launching $20M crypto fund

Korean Financial Watchdog Takes Action to Prevent Abnormal Foreign Currency TransfersAccording to yesterday’s press release, the South Korean Financial Supervisory Service (FSS) has undertaken measures to tackle the issue of abnormal foreign currency transactions disguised as cross-border trade transactions. After identifying suspicious transactions of a total of approximately $7.2 billion involving 83 companies, the FSS has collaborated with the Korea Federation of Banks and domestic financial institutions to establish a task force. The objective is to improve the existing system and prevent such occurrences in the future.Photo by Eric Prouzet on UnsplashWeaknesses in internal controlsDuring inspections conducted within the banking industry since June 2022, the FSS uncovered weaknesses in internal controls related to foreign currency transfers. These included instances where banks neglected to verify the required documents for transfers and failed to detect abnormal transactions that had been ongoing for an extended period of time. The abnormal foreign currency transfers primarily involved funds flowing out of Korean virtual asset exchanges and being sent overseas under the pretense of trade transactions.Three-line defense internal control systemTo address these vulnerabilities, the task force has engaged in discussions and decided to build an internal control framework within the banking industry, rather than to add a new procedure. This was to minimize the disruption that the new system can pose to banks regarding foreign exchange transactions. The dedicated group has introduced a three-line defense internal control system.The new internal control system comprises three parts. Firstly, it involves standardizing a checklist of vital checkboxes that must be completed before initiating advance remittance transfers for imports. Secondly, the monitoring system employed by banks will be strengthened. Lastly, a follow-up system will be developed, clearly outlining the roles and responsibilities of banks and incorporating a review process.Implementation and timelineBanks plan to implement these improvement measures in July, following necessary preparations such as guidelines revision and rules update in the second quarter of this year. Since developing a computerized system and devising new procedures may require additional time, they will be gradually introduced in the third quarter.The FSS expects these improvements will ensure the systematic operation of banking institutions’ internal control functions related to cross-border prepayments, thereby preventing suspicious foreign currency transfers and curtailing companies’ risks of violating their obligations.

In a recent blog post, Christopher Hui, Hong Kong's Secretary for Financial Services and the Treasury Bureau (FSTB), announced a stringent deadline for unlicensed virtual asset service providers (VASPs) to submit licensing applications, as well as outlining the intention to develop a regulatory framework for over-the-counter (OTC) venues.Photo by Manson Yim on UnsplashUnlicensed VASP deadlineThe Hong Kong government's financial services department has set Feb. 29 as the cutoff date for applications from VASPs that are currently unregistered and unregulated. Those not approved must cease operations by May 31. The move comes as the Securities and Futures Commission (SFC) established a licensing system for VASPs, acknowledging a transitional period for those operating before its implementation. Midway through last year, the SFC issued a stern warning to unlicensed crypto trading platforms engaging in what it termed as “improper practices.” Hui emphasized that VASPs wishing to continue operations in Hong Kong must submit their license applications by the end of this month. Failure to meet the relevant requirements outlined by the SFC could result in the issuance of a "no-deeming notice" for existing service providers. This notice mandates that they must halt operations either by May 31 or three months after receiving the notice. Service providers failing to submit their applications by the February deadline are also expected to cease operations by the end of May. As the deadline approaches, Hui highlighted that the SFC is actively preparing for enforcement work, including issuing notices to disapproved service providers and intensifying publicity efforts. Proposed regulatory framework for OTCsHighlighting the specific role OTC venues played in some fraud cases involving unlicensed VASPs in 2023, Hui announced that the SFC plans to launch a consultation on a proposed regulatory framework for OTC crypto venues. The consultation will encompass virtual-asset outlets, including shops and online platforms. Hui emphasized the necessity of regulating OTC venues to prevent investor deception and protect against fraudulent activities. This move aligns with Hong Kong's ongoing efforts to create a vibrant sector and ecosystem for virtual assets. The city implemented a licensing regime for crypto companies in June of the previous year, with companies requiring approval before June of the current year to continue operations. Cautioning investorsHui also took the opportunity to caution investors about the volatility and value of virtual assets. He stressed that many digital assets lack intrinsic value and exhibit price volatility, urging investors to thoroughly understand details and assess associated risks before engaging in related investments. Furthermore, Hui emphasized that only platforms officially licensed by the SFC should be used for virtual asset transactions. Additionally, Hong Kong is exploring a regulatory regime for stablecoin issuers, proposing that fiat-backed stablecoin issuers obtain a license from the Hong Kong Monetary Authority. As Hong Kong strengthens its regulatory framework, it aims to create a secure and compliant environment for the evolving landscape of virtual assets.  

Korean Blockchain Firm Ozys Achieves ISMS Certification for Data SecuritySouth Korean blockchain technology firm Ozys has recently demonstrated its advanced security capabilities by securing a data security certificate from a quasi-governmental agency responsible for overseeing the nation’s internet services.Photo by Shubham Dhage on UnsplashCertificate from Korea Internet and Security AgencyOzys made an announcement on Friday (local time) that it has earned a certificate of Information Security Management System (ISMS) from the Korea Internet and Security Agency (KISA). The ISMS certification requires companies to meet 80 distinct criteria. Through these criteria, companies must demonstrate their approach to setting up and maintaining data security systems, as well as their plans for handling possible security incidents.Specializing in Web3 services, the blockchain developer offers a wide range of solutions related to decentralized finance (DeFi), cross-chain projects, and blockchain explorers.Smart contract developmentOzys has secured an ISMS certification specifically for blockchain-based smart contract development and service operations. Ozys is the first company in the country to attain this distinction in the realm of smart contract development.On this achievement, Choi Jin-han, CEO of Ozys, said that undergoing the ISMS certification process allowed the company to reassess its overarching security policies, bolstering its protective measures and response strategies for information assets. Choi further emphasized Ozys’ dedication to creating not just functional and user-friendly services, but also to pursuing various research initiatives focused on safeguarding customers.