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Regulation

South Korea: Is Crypto Becoming A Legit Industry?

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The local crypto market in South Korea has been developing over the past months and the year altogether. The investors in it have always been optimistic about a drastic change that will bring a new positive outlook on the entire crypto landscape.

Even though the crypto market has endured the third-worst correction in its history since February 2018, the fact that the prices are now 78% down does not affect the cryptocurrency industry in South Korea.

Since June, there has been progressing in the digital-asset regulation, mainly due to the increasing efforts of the South Korean government to implement practical regulatory frameworks for cryptocurrency and blockchain companies.

The Financial Services Commission (FSC) which is the main financial watchdog of South Korea, has been focusing on legitimizing the industry by recognizing cryptocurrencies as verified financial institutions under its (FSC) authority.

Right now, the blockchain bill is expected to be passed by the Congress, where every cryptocurrency exchange will be required to comply with the same security, anti-money laundering policies and internal management as banks within the country.

If passed, the bill will also put an end to the numerous cases of security breaches and hacking attacks within the country. This week, South Korea has established a budget for blockchain development in 2019 which is estimated at 1 trillion won – and is the biggest investment in the field of innovative technologies in the country.

There are also plans for creating the new “Crypto Valley” in South Korea (Jeju Island) – all in order to attract cryptocurrency exchanges, developers, talents, as well as businesses.

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Regulation

The Swiss Federal Assembly Approved A Motion For Crypto Regulation

Just a day ago, the Swiss Federal Assembly approved a motion that was directed to the Federal Council in order for it to regulate cryptocurrencies. Switzerland as previously reported in our crypto news is known to be one of the best blockchain hubs in Europe after the development of the popular city of Zug being called the Crypto Valley. The motion was directed by Giovanni Merlini who is the Liberal Assemblyman and instructed the Federal Council on how to adapt the existing legislation for cryptocurrencies and to go over the possible associated risks. The council approved the motion with 99 votes in favor and 10 abstentions. This decision is a first step towards solving issued like money laundering, fraud, and extortion. While problems like these emerge as a problem in the fiat currency system, the fiat currency system has extremely harsh regulations that allow the government to prosecute criminals and to sanction any unfair practices such as price manipulation or fraudulent market activity. On the other hand, on the crypto market, there is no such regulation which allows the market holders to apply illegal price manipulation methods and not to get sanctioned at the end. The volatility of cryptocurrencies in the past was largely attributed to price manipulations as mentioned. While the ‘’whales’’ use these methods and tactics by placing a huge buy order to create a boom on the market, the crypto scams are much more difficult to prosecute because cryptocurrencies are not recognized as legal tender. For example, money laundering is one of the biggest problems for regulators because it is the easiest one to do. The obtained funds can be cashed out of a BTC ATM, exchanged for privacy coins on decentralized exchanges or multiple other tactics. Also, ICOs that are not regulated are another tunnel for money laundering. The decision to regulate the market comes after the idea to better understand the risks that come out by using crypto as well as how entities trade but also to learn more about market supervision and financial intermediaries. The banks are getting worried that the regulators accept crypto with their arms wide open since the Swiss minister of Economy Johann Schneider-Ammann stated that Switzerland aims to become a ‘’Crypto Nation.’’
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Bitcoin News

Bitcoin ETF: SEC Receives 84% Negative Feedback On Application

It seems like the enthusiasm for a Bitcoin ETF hasn't decreased - and such exchange traded fund is still waning. In the latest crypto news, we are seeing a new letter in a series of ones sent to the Securities and Exchange Commission in support of the investment vehicle. In fact, the SEC received just seven comment letters from the public that come as a response to a solicitation for feedback that it had requested in February 2019. Of these seven, six urged the Securities and Exchange Commission (SEC) to reject the Bitcoin ETF application - which is around 84% in terms of percents. According to the commenter named Dina Pinto:
“It is in my opinion that Bitcoin to date has no solid ground on which to base a serious product such as an ETF on. It is volatile, manipulated by the very few and has no real use case.” “I can see a lot of people getting hurt both financially and in other ways by you accepting this proposal. It is in my humble opinion that this proposal be rejected.”
Another commenter named D. Darnwell sent a letter in which he wrote:
“I would like to voice my disapproval of this Bitcoin ETP and would ask the SEC to take a much longer time horizon to take a ‘watch and wait approach’ to see if Bitcoin is worthy of becoming a financial product with all the positives and draw-downs it entails.” “Decline this ETP without hesitation.”
However, one Bitcoin ETF proponent named Sami Santos was confident, stating:
“Regarding the argument of the SEC that has not yet approved an ETF because of manipulation and mainly appreciates the protection of investors is contradictory, because without an investment fund, the investor is susceptible to buy bitcoins in deregulated exchanges and lose their investments (bitcoins). VanEck already offers insurance to cover possible losses and as such, the investor will show interest in investing in an ETF fund. So I see no reason not to approve VanEck ETF and Bitwise.”
To remind you, the September (2018) Bitcoin ETF application for VanEck SolidX Bitcoin Trust received more than 1,400 comment letters - of which 99% were positive. However, because of the crypto winter, this enthusiasm has dwindled. Currently, no one knows if this Bitcoin ETF will be withdrawn. If that's the case, the 240-day deadline clock will reset itself and be set once a new filing is submitted.
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Bitcoin News

Israeli Court Rules In Favor Of BTC Mining Company Against Igud Bank

Israminers, an Israeli Bitcoin (BTC) mining company sued Bank Igud (the Union Bank of Israel Ltd.) in May 2018 and seems like the Israeli court ruled in favor of the mining company after the bank shut down the company’s accounts over money laundering concerns. The crypto news and business outlet Calcalist reported the developments just yesterday. Israminers faced a lot of problems with cash flow after the bank blocked the company’s deposits after claiming that the deposits are against the terms of the bank. A long appeal process followed and a Tel Aviv district court judge explained that the policy of the bank on cryptocurrency clients is way too broad and should not include automatic rejections. Limor Bibi who is the judge in the case was quoted saying:
 “I believe that the sweeping policy, which does not distinguish between different types of activity, the scope of activity and different types of customers — in the field of digital currencies — is unreasonable.’’
At the same time, Bibi explained that the banks have a right to refuse deposits that originate from cryptocurrency trades.  However, the process continued and the regulatory attitude towards crypto trading showed the impacts on the legacy banking system. As previously reported, multiple banks claimed that they have issues with servicing private investors or small business who trade cryptocurrency. Banks usually have a hostile stance on cryptocurrency but their actions are quite contradictive. For example, The United Kingdom Barclays bank also shut down multiple accounts after developing a relationship with a few crypto exchange giants including Coinbase in order to speed up deposits and withdrawals. The Union Bank, on the other hand, appears that senior executives have benefited a lot from education in the blockchain sector when the local Bit2c startup held a seminar on its projects and developments in November 2018. At the start of March, a committee from Israel’s securities regulator officially issued a paper on recommendations for governing the economy around cryptocurrency which can help the bank to improve their treatment on crypto investments more uniformly in the future. The report noted:
 “The committee recommends considering adjustment of the existing regulation to create more suitable regulatory infrastructure for this trading activity in order to better cope with the risks incurred in this activity.’’
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Blockchain News

Companies Dealing With Crypto Need Rules, Not Crypto Itself: Winklevoss

Cameron Winklevoss’ statements reached our crypto news today for stating that crypto doesn’t need rules but the companies who deal with them need the rules. His statement comes as a response to the happenings with the QuadrigaCX crypto exchange. The Winklevoss twins are among the business owners who demanded the crypto market to be regulated since their Gemini exchange is ‘’fully regulated.’’ They aimed to change the image of the crypto industry as a place where theft, hacks and fraudulent activities occur by using cryptocurrency. Their campaign that crypto needs rules didn’t really catch the eye of most bitcoin users. Bitcoin was initially created so people can make transactions without having ‘’to trust’’ anyone. Cameron noted:
 “QuadrigaCX was editing its own internal ledger to move customer funds into special accounts controlled by insiders, who were allowed to trade using those funds and even transfer cryptocurrency out to external wallets.’’
Companies that offer custodial services by holding the bitcoins of their customers should be regulated in order to prevent another QuadrigaCX scandal happening. He added:
‘’Every incident in crypto to date has been/would have been PREVENTABLE w/ proper rules and thoughtful regulation.’’
Describing the failure of Mt.Gox and Quadriga, Cameron addressed the problems that still hover around in the crypto industry and he told while speaking at the Southwest Conference in Texas by saying:
‘’There are a lot of carcasses on the road of crypto that we’ve seen and learned from. At the end of the day it’s really a trust problem. You need some kind of regulation to promote positive outcomes.’’
The twins experience growth over the past few years and said that as long as crypto is growing, Gemini will continue to grow as well. They pointed out that the company had only 20 employees at the beginning and that they reached up to 200 nowadays. Their growth means that the stakes are becoming much higher today. Cameron wrote in a blog post:
 “As crypto has grown up a lot so has Gemini. We’ve grown from 25 to 200 employees…In 2016 crypto was niche — today it is something — tomorrow it will be everything.’’
According to him, it is time to regulate the industry because even the ‘’trustless’’ cryptocurrencies will require a trusted third-party.
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