Blog Archives - dongwonkwak

How Korean Custodial Company will use Deep Cold Storage Technology?

1/30/2021

Korea Digital Asset Trust (KDAC), a virtual asset custodial company invested by Shinhan Bank, utilizes the technology of a virtual asset financial company 'Bitgo'.

On the 28th, Bitgo announced that it has signed a business agreement with Shinhan Bank and KDAC to provide digital asset custodial services and develop solutions.

KDAC is a virtual asset custodial company co-founded by Korbit (www.korbit.co.kr), a virtual asset exchange, Blockchain, a blockchain specialist, and Fair Square Lab, a virtual asset research company. Shinhan Bank recently invested in KDAC to strengthen its virtual asset-related service capabilities.

Bitgo is a company that has been providing custodial services professionally so far, and is seeking technical cooperation related to KDAC's custodial service. Bitgo's subsidiary, Bitgo Trust, has been officially accredited by the Division of Banking in South Dakota.

In particular, Bitgo plans to provide its own technology, 'Deep Cold Storage', to the Korean market. Deep cold storage is a technology that creates and stores a key to access virtual assets in an offline environment not connected to the Internet. It also provides a directly managed custodial service using the technology.

Shinhan Bank Digital Innovation Director Kim Chul-ki said, “With this business agreement, we have secured the competitiveness of a custodial service that safely stores digital assets of institutional investors and customers that will be expanded in the future. We will continue to make models.”

KDAC CEO Kim Joon-hong said, “With this cooperation, KDAC will be able to contribute to safely shaping the Korean digital asset market. We will provide users with digital asset custodial services with the best security.”

Pete Najarian, Bitgo Chief Revenue Officer (CRO) said, "The Korean market is a very important market that Bitgo is paying attention to, and we will do our best to provide custodial solutions to build a reliable digital asset market." Revealed.

Kakao Map Controversy Over Personal Information Leakage

1/16/2021

The Personal Information Protection Committee announced on the 15th January that it requested Kakao to convert all existing Kakao Map favorites folders to private in connection with the controversy regarding the leakage of Kakao Map personal information.

In Kakao Map, the default setting of the user's favorite folder is PUBLIC, so personal information in the folder is disclosed to other people unless you set it to be private. In this regard, it was pointed out that the name and location of military units were revealed, and personal information was leaked because the address of family homes and dating places between lovers were publicly posted on favorites.

The Personal Information Commission said, "Up to now, Kakao has set the default setting when creating a Kakao Map favorites folder from PUBLIC to PRIVATE, but this is why Kakao Map users create a new favorite folder

It only applies to the last name," he said. "There is a problem that personal information is infringed because the contents of the previously created favorite folder are still public."

The Personal Information Committee said, "In response to this, Kakao agreed to change the contents of the previously created favorite folder to private from today by accepting the request from the Personal Information Committee." Committee spokesperson said, "We plan to inspect if any violations are found."

In fact, all existing account folders will be kept private at the request of the government.

All platforms using personal sensitive information such as blockchain platforms, the attention is required too.

Korean blockchain-based electronic contract grows bigger.

1/11/2021

With the revision of the Act on Electronic Documents and Electronic Transactions in 2020, electronic documents also took effect, while blockchain-based electronic contract platforms are emerging one after another. Blockchain technology prevents forgery and alteration of electronic documents and automates contract procedures.

According to the blockchain industry on the 9th January, existing companies such as IT specialist Douzone (www.douzone.com) and Law Firm D'Lite (www.dlightlaw.com), as well as blockchain startups, are releasing blockchain-based electronic contract platforms one after another. Most of these platforms have focused on preventing forgery, falsification and hacking of the contents of the contract.

Douzone unveiled the blockchain-based electronic contract platform 'We-Ha-Go-One' at the Digital New Deal and Non-Face Contract Innovation seminar held online on the 8th. We Ha-Go-One is a platform selected as the '2020 Blockchain Private-led National Project' by the Ministry of Science and ICT, focusing on small business contracts.

Ho Cheol SONG, CEO of Douzone Platform Business Division, who presented the seminar, said, "In the non-face-to-face era, it is important to secure the reliability of contracts without meeting in person."

He also explained, "By adding a blockchain-based DID (decentralized identity authentication) technology, we made it easy for small businesses to authenticate and use." In the future, we plan to discover a new business model by allowing multiple stakeholders to participate in the blockchain network.

As contracts are one of the major legal acts, law firms have also developed an electronic contract platform and introduced blockchain technology. “Co-Make,” developed by law firm D'Lite, uses LINE blockchain to prevent forgery and alteration of contract contents, and encrypts and transmits the contents. D'Light, a law firm, has undergone an inspection process, and a mobile version of “Co-Make 2.0” has also been released.

Recently, Co-Make launched Link-Sign as a LINE blockchain-based DApp (Decentralized Application) and announced its entry into the Japanese market. Link-Sign is a localized (localized) version of Comake for the Japanese market, and is also a blockchain app used for electronic contracts.

In addition to existing companies, blockchain startups are also introducing electronic contract platforms one after another. FirmaChain has launched a blockchain-based electronic contract solution 'Duite.' and is providing services in web and mobile versions.

FirmaChain replaces not only electronic documents but also written documents with electronic documents and stores them on the blockchain platform. FirmaChain said, "The goal is to replace all existing document-based legal actions and electronic signatures with a blockchain and a transparent platform."

With the emergence of electronic contract platforms, technologies that verify the authenticity of electronic documents used in contracts are also expanding the scope of application. This can be done with the Blockchain-based Time Stamping Authority (TSA) method.

Timestamp, which is an essential element of TSA, means a string representing a specific time. On the blockchain, a timestamp acts as a kind of electronic seal with the function of ‘proof of existence’ that the electronic document existed at a certain point in time and ‘proof of content’ that the data has not been changed after that. Therefore, it is possible to verify that a certain electronic document is authentic and that the content is also genuine.

Blocko (www.blocko.io), a blockchain start-up company, has formed a ‘DTT Alliance’, an alliance that utilizes its own TSA technology, and is introducing TSA to several companies. If the TSA proves the authenticity of the electronic document, it is possible to make an electronic contract with the document.

Korean government, concrete taxation plan for cryptocurrencies such as Bitcoin Etc.

1/9/2021

Korean government will start taxing cryptocurrencies such as Bitcoin from January next year. Investors are required to pay 20% as tax on any excess income over 2.5 million won obtained from buying or selling cryptocurrency.

On the 6th, the Ministry of Strategy and Finance unveiled the '2020 Tax Law Amendment Follow-up Enforcement Decree Amendment', which includes details on the taxation of cryptocurrency. Through this revised bill, the government specified taxation measures for calculating the necessary expenses for cryptocurrency.

Taxable targets include profits obtained from the cryptocurrency trading process, profits from cryptocurrency rentals, and inherited cryptocurrencies. From January 1, 2022, those who earned profits from cryptocurrency must pay 20% of the profits exceeding 2.5 million won per year as other income tax.

Taxable income is the amount of total income minus necessary expenses (actual acquisition price, etc.). In this revised bill, the first-in, first-out method was introduced as a method of calculating the acquisition price when calculating necessary expenses. It is a method of calculating the necessary expenses, assuming that the cryptocurrency purchased first was transferred sequentially.

The taxation proceeds also on cryptocurrencies held before January 1 of next year, the time of taxation. The government introduced the concept of agenda acquisition price in the amendment. Accordingly, the acquisition price of cryptocurrencies held before January 1, 2022 is calculated as the larger of the market price at December 31, 2021 and actual acquisition price.

Here, the market price at the time of December 31, 2021 refers to the average of the prices announced by cryptocurrency exchanges at 00:00 on January 1, 2022. Among the exchanges designated by the Commissioner of the National Tax Service among exchanges that have completed reporting virtual asset business operators to the authorities in accordance with the SFIA (Specific Financial Information Act), the cryptocurrency price standards are disclosed daily.

In addition, the amendment specified the range of data that virtual asset providers must submit to impose income tax. From January 1, 2022, virtual asset providers are required to submit transaction specifications for each trader, including quarterly and yearly transaction details of exchange users.

In the case of non-residents and foreign corporations, the virtual asset business entity is taxed in a way that withholding the lesser of 20% of the cryptocurrency income or 10% of the payment amount. The amount of tax withheld by the non-resident was to be paid by the 10th of the month following the withdrawal date of KRW and cryptocurrency.

Earlier, the government planned to impose taxation on income generated from cryptocurrency from October this year. However, it was pointed out that the timing was too early when considering the schedule for accepting reports from virtual asset business operators due to the enforcement of the Special Financial Information Act, and the taxation period was postponed for three months.

TOMNTOMS Belated Coin Issuance will be Effective?

1/6/2021

TOMNTOMS (www.tomntoms.com), a coffee specialty store, issues a virtual asset 'TOMTOM Coin'. The idea is to use it as a payment method and customer rewards within TOMNTOMS.

Considering that the so-called 'Reverse ICO' which introduces virtual assets into existing services, was once popular, it is also evaluated as a rather late attempt. Unlike the unsuccessful precedents, it is pointed out that the number of applications should be increased as much as possible. They also need to find a good reason to use virtual assets rather than regular points.

◆Just a point? What the reason for using virtual assets?

TOMNTOMS announced that it will first introduce TOMTOM coin in the official application My Tom in the first half of this year. After using it for in-app payment, it plans to use it in offline stores and overseas stores in the future.

As the first-generation franchise café in Korea, it has a strong user base, so it is possible to secure virtual asset users as well. However, in order to do this, it seems necessary to inform users of the advantages of virtual asset payment.

In general, the biggest advantage of virtual asset payment is the reduction of fees. For other payment methods such as card payment, there is an intermediary that takes a fee in the middle, but there is no intermediary for payment using virtual assets and blockchain technology.

Other virtual asset payment services also have these advantages. Since there is little commission, it is advocating that it is a profit to the affiliated store, and it is taking a strategy to return the commission saved through discounts to users. Also, from the user's point of view, if a virtual asset used as a payment method is listed on the exchange, the asset can be used for both investment purposes and payment purposes.

Therefore, TOMNTOMS is also expected to present such technological advantages. It means that differentiation points of virtual assets must be obtained, which is different from the method of collecting store points and receiving discounts.

An official from TOMNTOMS said, "The potential value of the blockchain technology grafted to TOMTOM coin is high, and the range that can be utilized is expected to be wider." and said that he will highlight its technical advantages.

It is important to inform the advantages of using virtual assets, but it is also important to find out where to use TOMTOM coin. There have been cases in which companies such as Cyworld's Clink and Hanbit Soft's Bryllite have issued virtual assets based on existing services, but eventually failed because they could not find an appropriate place to use the token.

In addition, virtual assets that have secured usage already exist in the market. Major virtual assets such as Bitcoin (BTC) and Ethereum (ETH) are many payment applications or cards that support the coin. Visa card also supports the Bitcoin network, so you can pay at most stores. In addition, Crypto.com Coin (CRO) and Paycoin (PCI), which were released for payment services, are also actively expanding their use in Korea.

In comparison, TOMTOM Coin is a latecomer as a payment virtual asset. If the application is limited to TOMNTOMS, the scalability will inevitably decrease.

TOMNTOMS position is that it will provide other uses besides store payment. An official from TOMNTOMS said, "We will not use TOMTOM coin as a simple payment method, but as a utility token to form a consensus between customers, store owners, and headquarters."

Although he did not talk about the specific utilization plan, it is expected that TOMTOM Coin will be paid as a reward for the use of customer data, and the head office will use the data to enhance the service.

An official from TOMNTOMS said, "We are in the process of scrutinizing how to use TOMTOM Coin, and first, we will use it as a utility token for customers and headquarters to contribute to service improvement."

Why US Monetary Authority's allowing stablecoins is good for Korean virtual asset Industry?

1/5/2021

On the 4th January, the US Office of the Comptroller of the Currency (OCC) released a legal interpretation that banks can use ‘stable coins (virtual assets with constant value)’ for payment and remittance business.

According to the document, US banks will be able to verify stablecoin transactions while acting as nodes (network participants) on the blockchain in the future. You can also exchange or store stablecoins for fiat currency.

The Korean virtual asset industry sees this news as a good news for the entire market. This is because U.S. regulators have recognized virtual assets and blockchain technology as financial infrastructure.

Like Korea, the United States has been criticized for not easily accepting innovative technologies in finance. But this time OCC turned the plate over.

OCC Commissioner Brian Brooks made a statement and said, “Other countries have built real-time payment systems, but the US wants to provide real-time payment technology. Some of the technologies are managed by banks, and nodes such as blockchain It is based on a verification network.”

In a word, it means that banks are promoting technology advancement by enabling blockchain technology, and furthermore, a public blockchain that anyone can participate in. It is interpreted to mean that the private sector is advancing the technology rather than the state stepping out to build a payment system.

Collaboration between the financial sector and virtual asset companies is a scheduled procedure. Stablecoin projects are of course cheering. This is because there is a great use of banks.

Jeremy Allaire, CEO of 'Circle', a stablecoin USDC issuer, said, “(With this legal interpretation) US banks can use the public blockchain and stablecoin as financial infrastructure.”

Most of the stablecoins on the market are based on public blockchains. USDC alone was issued based on public blockchains such as Ethereum and Solana.

The growth of the public blockchain project is expected as banks can utilize public blockchain-based stablecoins and also participate as nodes in the blockchain. Until now, most of the blockchains used by banks have been closed, that is, private blockchains, but the game has changed again.

With this, CEO Allaire explained that the public blockchain can be used in the same way as remittance networks such as SWIFT (International Interbank Payment System) and ACH.

He also predicted that "decentralized, open source software will be the infrastructure for the global economy as well as the US payment system."

If stablecoins and public blockchains are used as financial infrastructure, virtual assets and blockchains are used in endless applications. This is why the industry saw the news of OCC as a favorable factor.

NFT-based art trade record high, Over $82 billion

1/4/2021

As interest in Non-Fungible Tokens (NFT) based art works increased, the volume of transactions was the highest ever.

On the 2nd January, CoinDesk quoted CryptoArt, saying, "The total transaction amount of NFT-based art works in December was $82.1 million (approximately 8,871 billion Korean won), more than tripled compared to November, recording the highest level ever."

Sales of physical works plunged last year as the coronavirus pandemic disrupted the operation of museums and art galleries. On the other hand, sales of NFT-based works recorded a record high. Related sales were $2.6 million in November and $8.2 million in December.

NFT stands for Non-Fungible Token, and refers to a cryptocurrency that can't be replaced with another token. This ensures that the item is unique and unique with its own value. It is mainly based on the ERC-721 token and is used for game items and collectibles.

"The industry is starting to understand the value of NFTs to verify the authenticity of works," said Richard Chen, cryptoart creator.

The NFT art market that CryptoArt tracks is Nifty Gateway, SuperRare, MakersPlace, Async art, and KnownOrigin.

Most of the works can be purchased through Ethereum (ETH) or Ethereum-based stablecoins. Credit card payments are also accepted on some platforms, such as Nifty Gateway and Maker Place.

The NFT market is growing rapidly with clear use cases. In October, Japanese blockchain company Coinbook launched the trading card platform 'NFT Treka'. As the first content, a limited sale of 100 packs of photo cards of the famous Japanese idol group 'SKE48' was sold, and it was sold out within 30 minutes of starting.

Bitcoin consignment service for Korean companies and institutions will be released in January of this year.

1/3/2021

Virtual asset consignment service will be started for Korean companies and institutions. Although it is interested in virtual assets as an investment vehicle, it is expected to be good news for Korean companies and institutional investors who have been hesitant because there is no suitable counter.

In particular, Kookmin Bank's safe trust know-how, which exceeded 200 trillion won for the first time among commercial banks in Korea last year, and the technology of Haechi Labs, a blockchain specialized company that specializes in virtual asset wallet management services, are added to help businesses safer virtual assets. It is expected that an environment for investment will be created.

■Korea's first company bitcoin consignment service

Korea Digital Asset (KODA), a comprehensive virtual asset management company, announced on the 27th December that it will start bitcoin consignment service for Korean companies and institutions from January 2021. KODA is a joint venture created by investing shares of Kookmin Bank, blockchain technology company Haechi Labs, and digital asset investment company Hashed (www.hashed.com).

The virtual asset consignment business is planned to be provided by KODA in cooperation with the virtual asset exchange. Prior to the official launch of the service, KODA is currently discussing the use of consignment services with several companies.

It is planned to start with bitcoin and expand to virtual assets with significant market capitalization such as Ethereum and stable coin (value-stabilized currency). KODA CEO Moon explained that Kakao's virtual assets, KLAY and XRP, are also considering support.

KODA plans to provide not only virtual asset consignment, but also a transaction service that enables companies to buy and sell virtual assets. Currently, in Korea, there are limited windows for institutional investors to trade virtual assets in Korean won, and there is a large uncertainty in the conclusion of the transaction due to lack of liquidity. KODA will also provide a service for buying and selling virtual assets that companies can liquidate their investments. And it is very important point for foreign investors.

CEO Moon said, "We will establish ourselves as a partner that can resolve concerns that may arise when investing in virtual assets such as bitcoin purchase, sale, storage, trust, and tax accounting for companies and institutions." It will be resolved through cooperation with specialized over-the-counter (OTC) companies such as Cumberland DRW LLC Korea."

■'Whitelist' service to stop money laundering

KODA plans to release a 'whitelist' solution in January this year that allows remittances only to virtual asset wallets that have been approved in advance such as KYC (Know-Your-Customer) to block various regulatory risks such as virtual asset money laundering.

Although the obligation to prevent anti-money laundering (AML) of virtual asset providers has been stipulated through the revised Special Finance Information Act, it is still technically difficult for the banking sector to grasp information on the recipient of virtual assets, and KODA will solve this.

The solution is that, specifically, a wallet issued by an exchange for which KYC has been completed is registered with KODA, a third-party trusted institution, and when an exchange customer requests a remittance, it checks whether it is registered with KODA and allows remittances only to the registered wallet.

Initially, it will focus on preventing the threat of preventing money laundering of virtual assets through registration with domestic exchanges and cooperation with KYC overseas exchanges in the future. KODA plans to provide a whitelist solution for free to create a transparent transaction ecosystem for virtual assets, and it is known that it is currently conducting verification with some exchanges.