Blog Posts - dongwonkwak

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.

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.