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Korean virtual asset exchange also cut off Ripple (XRP). Coredax to stop trading.

12/30/2020

While large overseas virtual asset exchanges such as Coinbase (www.coinbase.com) and OKCoin (www.okcoin.com) have stopped trading Ripple (XRP), a similar move has begun on Korean virtual asset exchanges.

Coredax (www.coredax.com), a Korean virtual asset exchange, announced on the 30th that it will completely suspend XRP transactions. The transaction suspension is on January 15, 2021, and members must withdraw all XRP in the exchange by February 1.

The reason is the lawsuit filed by the Securities and Exchange Commission (SEC) against Ripple. Foreign exchanges have also stopped trading XRP for the same reason.

The US Securities and Exchange Commission (SEC) filed a lawsuit against the issuer, Ripple, on the 22nd, seeing XRP as “unregistered securities”. Securities distribution requires compliance with federal securities laws, but the SEC claims that Ripple sold XRP without any action under the securities laws.

If XRP is defined as securities, XRP cannot be traded on general virtual asset exchanges in the United States. This is because most exchanges, including Coinbase, do not have a stock trading license. As a result, Bitstamp, one of the major exchanges, stopped trading XRP by US customers early on, and Coinbase stopped trading afterwards.

It is predicted that not only US exchanges but also non-US exchanges such as OKCoin will stop trading. Virtual asset influencer 'NekoZ' said, “All exchanges with US customers (not just US exchanges) will need to delist XRP. The lawsuit is a big issue.”

However, Korean virtual asset exchanges have very few US customers. This is because most exchanges have some restrictions on the use of foreign customers due to taxation issues.

Regardless of the number of customers, Coredax is in a position to proactively respond to risks. Yo-song Lim, CEO of Coredax, said, "SEC's movement has a symbolism that can have a great influence on the virtual asset trend in the future. We prepare for more than what is required by current Korean law, We are managing it in advance.”

Virtual Asset Industry ahead of the Enforcement of the Special Financial Information Act, Domestic VS Overseas 'Temperature Difference'

12/29/2020

With the revised Specific Financial Information Act (SFIA) that regulates virtual asset providers (VASP) coming into effect in March, there is a temperature difference between Korean virtual asset services and overseas services.

With the recent increase in Bitcoin (BTC) prices, overseas services are expanding their business, while services that disappear in Korea are appearing one by one.

◆Overseas exchanges that share order books with large exchanges... Domestic halted

The representative SFIA provision that caused the service interruption is “prohibition of sharing order books”. The Enforcement Decree of the SFIA announced last month contained the content that “by alliances with other virtual asset business operators, the act of allowing customers to trade virtual assets with customers of other virtual asset business entities is prohibited”. This means that order book sharing is prohibited.

Until now, some exchanges have shared order books with large overseas exchanges to secure insufficient liquidity. Binance KR and Huobi Korea, which are headquartered overseas, shared an order book with Binance and Huobi, respectively, and Aprobit also shared with Bitfinex.

However, with a ban on order book sharing, Binance KR decided to close its business. This is because the transaction volume is expected to be low if sharing is stopped. Aprobit also announced on the 28th that it will stop sharing the order book with Bitfinex.

Meanwhile, exchanges that share order books with Binance have begun to appear overseas. On the 23rd, Mandala (www.mandala.exchange), an exchange based on Binance Cloud, was launched.

Binance Cloud is a cloud that provides Binance's transaction liquidity and security system, allowing you to create an exchange based on it. The first exchange based on Binance Cloud was Binance KR, but Binance KR was closed and other exchanges started using Binance Cloud.

Accordingly, the possibility of Korean domestic investors escaping overseas has also increased. This is because foreign exchanges provide more liquidity.

Hwang Soon-ho, head of Dounamu External Cooperation Team, who attended a public hearing on the enforcement ordinance of the Special Special Law earlier this month, said, “If (order book) alliance is prohibited, investors will go to foreign exchanges.” I did.

◆De-Fi, which has been formed from overseas, is closed in Korea

The situation is similar for decentralized finance (De-fi) services. Overseas services poured out as a “de-fi boom” broke out throughout the market this year. On the other hand, 'Trinito' of Dunamu DXM, which was the first domestic De-Fi service, has ended.

DXM, a subsidiary of Dunamu, announced on the 23rd that it will end the Trinito service, a virtual asset deposit and loan service. All other functions except withdrawal and redemption have been terminated, and members must withdraw virtual assets by January 29, 2021.

Unlike exchanges, De-Fi services are not directly regulated by the SFIA. Therefore, Trinito also did not have a direct impact on the termination of operations. However, Dunamu explained that Trinito's profitability and service scalability were insufficient.

There is also a regulatory risk behind the difficult service expansion. Overseas De-Fi services have increased their profits by issuing their own tokens and giving token rewards to members. On the other hand, in Korea, it is difficult to take this method, the position of industry insiders.

Yoo Ju-Yong, DXM CSO (Chief Strategy Officer), also at the'Upbit Developers Conference (UDC 2020)' held earlier this month, saying, “There is uncertainty due to regulations in Korea. As the technology is not lagging behind overseas, if regulatory risks are resolved, Various De-Fi services will come out.”

DXM's services such as Upbit's staking service will continue to operate. An official from Dunamu said, “Other services of DXM will remain the same,” and “We are thinking about devising a better service.”

Korean government striving to industrialize blockchain.. Full support for fintech convergence technology

12/28/2020

The Korean government supports blockchain companies to enter the global market and establishes a dedicated organization in charge of establishing standards for blockchain services.

In addition, the government's support, which has been distinguishing between fintech and blockchain, will expand to the blockchain-fintech convergence industry, and improve the use of blockchain technology.

■KISA, helping to industrialize blockchain

According to related industries on the 28th, the Korea Internet & Security Agency (KISA) is recruiting for the service of'Establishing an Information Strategy Plan (ISP) for Building Blockchain and Fintech Technology Distribution Center' by the 30th. The successful bidders will take on the role of establishing a basic framework for actual business promotion, such as analyzing the environment and current status and establishing strategies for building the center by March next year.

KISA plans to expand the scope of support of the KISA Fintech Technology Support Center through the Blockchain Fintech Technology Spreading Center. Currently, KISA is planning to integrate and support the work divided into blockchain and fintech so that the fintech industry can use blockchain technology to create synergy.

The Blockchain Fintech Technology Dissemination Center is largely organized into four areas: △internalization of service security △support for service commercialization △training of experts and △demonstration test lab construction. In the technology diffusion center, the technology diffusion center takes the lead in items that are prominent in the current blockchain industry, such as Decentralized Identifier (DID), which is one of the leading popularization services based on blockchain technology, and decentralized finance (De-Fi) services based on blockchain that has exploded this year.

■Blockchain company IPO support

According to the announcement of the establishment of the Information Strategy Plan (ISP) disclosed by KISA, the 'Blockchain Fintech Technology Spreading Center' is a blockchain company specializing in technology evaluation for the listing of special exceptions, including consulting for blockchain companies and IPO. It plans to support commercialization of startups.

It also supports the advancement of DID (Decentralized Identifier) technology and the spread of services. KISA plans to support technologies and policies in both directions so that distributed authentication services using blockchain can resonate with users and settle in the market.

KISA said, "It means that we will not only look at the blockchain within fintech, but will support it to build the industrial foundation with our own technology that has its own value. Through the diffusion center, companies can actively use blockchain technology. We will provide a test environment that is in place."

On the other hand, the actual construction time of the blockchain and fintech technology diffusion center is expected to be around 2022. When the ISP project order-winning company submits a strategic plan for the technology diffusion center by March next year, KISA plans to review it and begin construction.

Upcoming Specific Financial Information Act impacts on Korean virtual assets industry.

12/28/2020

Aprobit (www.aprobit.com) stops sharing order book with Bitfinex (www.bitfinex.com) "To comply with SFIA (Specific Financial Information Act)."

Aprobit, a Korean virtual asset exchange, stops sharing order books with foreign exchanges Bitfinex. This is to comply with the revised Specific Financial Information Act, which will take effect in March next year.

The Enforcement Decree of the SFIA announced last month contained the content that “by alliances with other virtual asset business operators, the act of allowing customers to trade virtual assets with customers of other virtual asset business entities is prohibited”. This means that order book sharing is prohibited.

The Korean Financial Information Analysis Institute (KoFIU) announced that it has prohibited the sharing of order books in order to achieve the purpose of the Special Money Laundering Act. The reason is that if you share your books with overseas exchanges, you cannot properly understand the customers of virtual asset business operators (overseas exchanges) who have not reported.

Accordingly, Aprobit also decided to operate independently. In the meantime, Aprobit has operated the won market by itself, and other markets such as BTC market have been operated in conjunction with Bitfinex, but will stop linking in accordance with regulations. Currently, both BTC and USD market transactions have ended.

Aprobit said that although liquidity and transaction volume are expected to decrease due to the suspension of order book sharing, it will create an independent trading environment through other businesses. It also said that the partnership with Bitfinex will continue.

Aprobit CEO Kim Byeong-joon said, “Many exchanges will suffer realistic damage such as liquidity supply burden and transaction volume reduction due to the interruption of order book sharing.” It was not so I decided to stop sharing.” He added, “We will create a unique trading environment for Aprobit in the new year by following the guidelines for reporting virtual asset business operators under the SFIA.”

There are still cases where domestic exchanges are burdened by the prohibition of sharing the order book. On the 24th, Binance KR, which shared the order book with Binance headquarters, announced the suspension of the exchange. It is known that the company decided to close the business due to poor transaction volume when the order book sharing was stopped.

Virtual asset trading is entering the institutional sphere, but there are more and more regulations accordingly. So the industry's response is paying attention.

Coinplug's DID real name verification service was selected as an innovative financial service by Korea Financial Services Commission.

12/23/2020

The real name verification service using the decentralized identity authentication (DID) of the blockchain company Coinplug (www.coinplug.com) was selected as an innovative financial service by the Financial Services Commission.

According to Coinplug on the 23rd, the service is a digital real name verification service using Coinplug's DID platform 'MyKeypin'. In addition to blockchain DID technology, it has also been developed for ease of use by introducing artificial intelligence-based facial recognition technology.

The Financial Services Commission has given special cases so that the use of facial recognition technology that contrasts the photograph of the real name verification card and the face photographed screen instead of a video call for non-face-to-face real name verification. In addition, when presenting a digital real name verification certificate stored in a customer's mobile phone, it was allowed to acknowledge that a non-face-to-face real name verification was performed.

Therefore, users can encrypt and store the certificate issued by DID on their personal mobile terminal, and then selectively present information only when necessary. Through DID technology, the 'self-sovereign identity verification' is realized in which users have sovereignty over their information.

A Coinplug official said, "We expect to be able to further develop the DID business area by receiving temporary permission for the financial sector business by designating this innovative financial service."

It is expected that various decentralized identity authentication (DID) related services will be provided in the future.