South Korea Grants Central Bank More Power Over Crypto

The Bank of Korea (BoK) has been granted increased power to investigate cryptocurrency service providers and issuers, as discussions on virtual asset legislation continue in South Korea. According to a report by The Korea Herald, the BoK will now have the right to scrutinize cryptocurrency-related businesses and request transaction data from digital currency operators.

The BoK has been in competition with the country’s financial regulator, the Financial Services Commission (FSC), over who should govern the regulation of the digital asset sector. While the BoK has expressed concerns over the financial stability risks associated with stablecoins, the FSC has warned that if the central bank governs crypto, it will send the message that digital assets have the same standing as traditional finance.

Despite the ongoing debate, the BoK’s right to request data from crypto exchanges has been confirmed by an official from the National Assembly’s Political Affairs Committee. The FSC will express its official position at a subcommittee meeting on April 25, which is expected to accelerate the rollout of South Korea’s virtual asset laws.

The South Korean government has been trying to push forward crypto legislation, but there have been arguments between the central bank and the FSC over who should control it. Democratic Party lawmaker Kim Han-gyu, who proposed the Crypto Assets Act, said that while the FSC admits it is necessary for the BoK to have the right to request data, it is refusing to include it in the bill.

The latest development means that both the South Korean central bank and its financial regulator will have increased power to investigate crypto operators and have full access to transaction data. This move follows several years of disagreement between the two institutions over crypto regulations.

The FSC has been active recently with enforcement actions against crypto companies and takes the same position as the United States Securities and Exchange Commission in that it considers crypto assets securities. South Korea’s Financial Supervisory Service, which operates under the FSC, announced the creation of an investigative body called the Digital Assets Committee in mid-2022.

In conclusion, the South Korean government is continuing its efforts to regulate the cryptocurrency sector. The Bank of Korea has been granted more power to investigate cryptocurrency-related businesses, and the Financial Services Commission is expected to accelerate the rollout of South Korea’s virtual asset laws. Despite disagreements between the two institutions, both will now have full access to transaction data and be able to investigate crypto operators.

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Asia Crucial to Web3 Gaming Industry

According to a recent report by DappRadar, Asia is a crucial region for the Web3 gaming industry, given its majority share of gamers and gaming revenue, as well as its high interest in blockchain technology. The report highlighted that the Asian market boasts over 1.7 billion video game players, accounting for 55% of the world’s total. In addition, Asia houses over half of the global gaming revenue and has long been “the driving force” behind the global gaming industry.

DappRadar claims that due to these factors, the Asia region “plays a crucial role in the adoption of blockchain gaming.” However, while China, Japan, and South Korea dominate the gaming industry in Asia, they have varying attitudes towards blockchain technology.

China, for instance, has banned crypto and prohibits gaming companies from integrating blockchain technology into their games. On the other hand, gaming companies in Japan and South Korea are “leading the way in the adoption of blockchain technology in gaming,” the report says. It points to Sony’s recent NFT-related patents and gaming firm Sega’s announcement of its upcoming blockchain game as evidence of this trend.

A survey of 1,030 Japanese men and women ranging in age from their 20s to 70s cited in the report revealed a promising outlook for the Japanese blockchain gaming industry. It revealed just over 40% of respondents were familiar with blockchain games, and over half of those familiar had a favorable impression of them.

The report also addressed the Web3 industry on a global scale, highlighting that “visual quality and game experience” are “slightly” more important factors for gamers when evaluating a new game over other aspects such as entry price, the number of active users, and game economies. The report also emphasized the significance of airdrops in motivating gamers to try out new games. It was stated that airdrops are considered “an essential factor,” with gamers still expecting to receive them before starting a new game.

It is clear that Asia will play a crucial role in the adoption of blockchain gaming in the coming years. While China’s attitude towards blockchain technology remains unclear, Japan and South Korea have already begun leading the way in adopting blockchain technology in gaming. As the gaming industry continues to evolve, it is likely that blockchain technology will become an increasingly important factor for gamers and game developers alike.

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South Korean Court Denies Arrest Warrant for Terraform Labs Co-Founder

A South Korean court has denied a request for an arrest warrant for Terraform Labs co-founder, Shin Hyun-Seong, also known as Daniel Shin. This marks the second attempt by South Korean authorities to bring Shin in for questioning, following the recent arrest of Terraform Labs’ other co-founder, Do Kwon.

Kwon was arrested at Podgorica airport in Montenegro on March 23 while attempting to use fake documents to travel abroad. The Seoul Southern District Prosecutors Office took advantage of this situation and requested an arrest warrant for Shin on March 27, citing his involvement in cashing in illicit profits from Terra (LUNA) and TerraUSD (UST) sales.

However, the Seoul Southern District Court denied the request, citing unconfirmed allegations and the unlikelihood of Shin being a flight risk or destroying evidence, according to local media Yonhap.

Shin currently faces multiple fraud charges, specifically in relation to allegedly hiding risks associated with investing in Terraform Labs’ in-house tokens. The denial of the arrest warrant is a setback for South Korean authorities attempting to bring Shin to justice.

Following Kwon’s arrest in Montenegro, authorities from both the United States and South Korea have attempted to extradite the entrepreneur. However, determining to which state he will be extradited is based on several factors, according to Montenegro’s Minister of Justice, Zoran Kovač.

“In the case when we receive several extradition requests, I would like to say that determining to which state they will be extradited is based on several factors like the severity of the committed criminal offense, the location and time when the criminal offense has been committed, the order in which we have received the request for extradition and several other factors,” said Kovač through an interpreter.

Terraform Labs is a blockchain company that has gained popularity for its decentralized stablecoin, UST, which is built on the Terra blockchain. The company has been involved in several high-profile partnerships, including with Binance, OKEx, and Huobi. However, the recent arrests of both of its co-founders have raised concerns about the company’s future and the integrity of its operations.

Terraform Labs has stated that it is cooperating with authorities and is committed to maintaining the highest standards of compliance and transparency. The company has also emphasized that its products and services remain unaffected by the ongoing legal proceedings.

The denial of the arrest warrant for Shin is likely to result in further scrutiny of Terraform Labs’ operations by regulatory authorities in South Korea and other countries. As the blockchain industry continues to grow and mature, incidents of fraud and non-compliance are likely to come under increasing scrutiny, and companies will need to be proactive in demonstrating their commitment to legal and ethical standards.

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South Korea Invests in Metaverse Fund for Economic Growth

South Korea has been making significant investments in the metaverse, seeing it as a potential new economic growth engine. The country’s Ministry of Science and ICT recently announced a major investment in a fund dedicated to driving metaverse initiatives, with the goal of supporting the mergers and acquisitions of various firms in the metaverse ecosystem and helping domestic metaverse-related companies compete with global players.

The South Korean government has invested 24 billion Korean won ($18.1 million) to create a fund of more than 40 billion Korean won ($30.2 million) for metaverse development. The fund, called the Metaverse Fund, aims to help local players raise capital and compete with major tech companies, which have shown increasing interest in the metaverse.

The government recognizes that it can be difficult for local players to raise capital through private investments due to the underlying investment risks. As a result, the Metaverse Fund will provide a new avenue for investment and support to local companies looking to expand their metaverse-related offerings.

In addition to investing in the Metaverse Fund, South Korea also plans to actively support local metaverse-related companies. The country aims to help these firms compete with global players and plans to assist in their growth and development.

However, while South Korea is investing heavily in the metaverse, the country is still cautious about potential cross-border threats. In February, the country announced independent sanctions related to cryptocurrency thefts and cyberattacks against specific North Korean groups and individuals. This move demonstrates South Korea’s commitment to maintaining checks and balances on potential threats in the physical world.

Overall, South Korea’s investments in the metaverse reflect the country’s commitment to exploring new opportunities for economic growth. By supporting local companies and investing in the development of the metaverse ecosystem, South Korea is positioning itself to be a leader in this emerging field.

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South Koreans transacted $4.3 billion through illegal crypto exchanges

South Korea has been tightening its regulatory regime towards crypto exchanges, but it seems that some citizens are still engaging in illegal transactions. According to local sources, South Koreans transacted 5.6 trillion Korean won ($4.3 billion) through illegal crypto exchanges in 2022, a significant increase from the previous year. The Korea Customs Service provided the numbers, indicating that the overall amount of funds caught in economic crimes increased from 3.2 trillion won ($2.5 billion) in 2021 to 8.2 trillion won ($6.2 billion) last year.

Out of all the illicit money traffic captured by officers, crypto transactions comprised almost 70%. However, the total amount of intercepted digital assets ($4.3 billion) only accrues for 15 transactions. These transactions were aimed at purchasing foreign virtual assets with the intention of selling them in the country later. This is because the South Korean regulatory regime isolates the local market and makes the prices of foreign crypto higher for customers.

The government has been cracking down on illegal crypto exchanges since 2017, when the Foreign Exchange Transactions Act required entities involved in crypto transactions to get regulatory approval from the Financial Services Commission. Hence, the attempts to participate in the global crypto trade, from foreign players coming to the Korean market or domestic investors seeking a better exchange course abroad, are labeled “illegal.”

In August 2022, the Korea Financial Intelligence Unit took action against 16 foreign-based crypto firms, including KuCoin, Poloniex, and Phemex. All 16 exchanges have purportedly engaged in business activities targeting domestic consumers by offering Korean-language websites, running promotional events targeting Korean consumers, and providing credit card payment options for cryptocurrency purchases. These activities all fall under the Financial Transactions Report Act.

The Korean customs also reported detaining 16 individuals involved in illegal foreign exchange transactions connected to crypto assets worth roughly $2 billion. These cases demonstrate the government’s determination to crack down on illegal crypto transactions and to promote a safe and regulated crypto market.

However, some critics argue that the South Korean government’s regulatory regime is too strict, which has led to the country missing out on potential economic benefits. They suggest that a more balanced approach should be taken to ensure that the country can benefit from the growing crypto market while still maintaining a safe and regulated environment. Regardless, it is clear that illegal crypto exchanges are still a significant issue in South Korea, and the government will continue to take action to address this problem.

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Crypto Staking in South Korea: Balancing Innovation and Regulation

The examination into crypto staking services supplied by South Korean exchanges that was conducted by the Financial Supervisory Service (FSS) has brought to light the difficulty of striking a balance between innovation and regulation in the quickly developing cryptocurrency market. Even while staking has become a popular method for investors to make passive income on their cryptocurrency holdings, authorities are worried about the possible threats that might be posed to consumers as well as the stability of the market.

The question of whether or not “staking” may be legally understood as a type of trading in “securities” is one of the most important questions for regulators to answer. Domestic exchanges have asserted that they do not use customer funds to pay out staking earnings and that they keep exchanges’ own tokens separate from those belonging to customers. However, regulators want to make sure that customers are fully informed about the risks that are involved in using domestic exchanges.

On the other hand, there is a possibility that restrictions that are too onerous would hinder innovation and cause enterprises that are tied to cryptocurrencies to leave South Korea. The nation is home to a burgeoning cryptocurrency economy, as seen by the presence of a number of cryptocurrency exchanges and blockchain firms. These businesses have been essential in South Korea’s job creation and economic expansion, and government authorities will need to carefully evaluate the effects that any new restrictions would have on this industry before imposing such regulations.

The creation of a regulatory sandbox for crypto staking, which would allow for the testing of new goods and services by businesses in a regulated setting, is one of the possible solutions to this problem. This would make it possible for authorities to monitor the risks involved with staking, making it possible for them to safeguard consumers while still encouraging innovation in the area.

The continuing expansion and prosperity of South Korea’s cryptocurrency economy will ultimately depend on the country’s ability to strike the appropriate balance between decentralized innovation and government oversight. In this fast developing industry, it is essential to foster an environment conducive to entrepreneurial endeavors as well as innovation. This goes hand in hand with the need to safeguard consumers and preserve market equilibrium.

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South Korea Regulator Probes Crypto Staking Services

The Financial Supervisory Service (FSS) of South Korea has begun an inquiry into the cryptocurrency staking services provided by local exchanges such as Upbit, Bithumb, Korbit, and Coinone. The regulator has sought data from these exchanges that is connected to staking, which has led to worries over the possibility of new laws that are related to staking. On the other hand, a spokeswoman for the FSS has indicated that there are not presently any plans to completely prohibit domestic stakestaking.

Following a similar step by US authorities, which only recently initiated a legal fight against stake providers, the FSS has opened an investigation into the matter. The Chief Executive Officer of Coinbase, Brian Armstrong, has made the assertion that the Securities and Exchange Commission of the United States (SEC) is attempting to “get rid of crypto staking in the US.” The Financial Stability Service (FSS) has responded to this by stating that it wants to make certain that domestic staking providers adhere to the letter of the legislation.

Despite the fact that South Korean exchanges have asserted that they do not use customer funds to pay out staking earnings and that they store the exchanges’ own tokens in a separate location from the tokens that belong to customers, South Korean regulators are interested in finding an answer to the question of whether or not staking services can be legally construed as a form of “security” trading.

The result of legal disputes in South Korea might be affected by further developments in the United States over the question of whether or not some cryptocurrencies can be considered securities. The latest action taken by the SEC against Terraform Labs and its CEO Do Kwon is being hailed as a “good step” by the prosecuting authorities in South Korea. The SEC has leveled allegations of “securities” breaches against Kwon and other corporate leaders, and the agency is now waiting for a response from the US judicial system.

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Kimchi premium refers to when the price of BTC cheaper

The “Kimchi premium” in South Korea has switched back to a discount, which means that it is again possible to acquire cryptocurrencies such as Bitcoin at a lower price on exchanges located in South Korea.

Kimchi, a traditional food from Korea, inspired the naming of this occurrence. The term “Kimchi premium” refers to the phenomenon in which the price of Bitcoin (BTC) trades at a premium on exchanges located in South Korea relative to prices found on other marketplaces.

The data that was provided by the blockchain analytics service CryptoQuant indicates that between February 17 and 19, the Korea Premium index fluctuated within a range of -0.24 and 0.01 points.

CoinMarketCap said that BTC was trading at $24,464 on Coinbase and $24,487 on Binance at the time this article was written.

In contrast, the price was quoted at $24,386 on the Korean market Bithumb, while the price at which Bitcoin was being traded on Upbit, one of the main exchanges in South Korea, was $24,405.

The scenario is the same for the cryptocurrency with the second-largest market capitalization, Ether (ETH).

At the time this article was written, the statistics on CoinMarketCap revealed that ETH was trading for $1,687 on Coinbase and $1,691 on Binance. On Bithumb and Upbit, however, ETH was changing hands for $1,682 and $1,683, respectively.

According to Doo Wan Nam, chief operating officer of node validator and venture capital firm Stablenode, the change from a premium to a discount for kimchi reflects a decrease in interest from retail investors in Korea.

“Generally speaking, it signals a dip in interest in cryptocurrency from the retail sector in Korea,” he added. “This is paradoxically a better time to purchase since you know you can always sell yours to Korean gamblers for 20% premium later when they FOMO.”

Arbitrage refers to the process wherein some traders attempt to make a profit by trading the price disparities that exist between several exchanges.

In the past, the extent of the Kimchi premium has been linked to the news, with large drops in price reported at periods when negative news about South Korean cryptocurrency exchanges broke.

The premium vanished in the beginning of 2018, shortly after the government of South Korea stated its intention to take regulatory action against cryptocurrency trading.

According to research published by the University of Calgary in 2019, the Kimchi Premium emerged for the first time in 2016.

According to the findings of the study, throughout the period beginning in January 2016 and ending in February 2018, Bitcoin exchanges in South Korea charged an average of 4.73% more than their counterparts in the United States.

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Kimchi premium refers to when the price of BTC cheaper

The “Kimchi premium” in South Korea has switched back to a discount, which means that it is again possible to acquire cryptocurrencies such as Bitcoin at a lower price on exchanges located in South Korea.

Kimchi, a traditional food from Korea, inspired the naming of this occurrence. The term “Kimchi premium” refers to the phenomenon in which the price of Bitcoin (BTC) trades at a premium on exchanges located in South Korea relative to prices found on other marketplaces.

The data that was provided by the blockchain analytics service CryptoQuant indicates that between February 17 and 19, the Korea Premium index fluctuated within a range of -0.24 and 0.01 points.

CoinMarketCap said that BTC was trading at $24,464 on Coinbase and $24,487 on Binance at the time this article was written.

In contrast, the price was quoted at $24,386 on the Korean market Bithumb, while the price at which Bitcoin was being traded on Upbit, one of the main exchanges in South Korea, was $24,405.

The scenario is the same for the cryptocurrency with the second-largest market capitalization, Ether (ETH).

At the time this article was written, the statistics on CoinMarketCap revealed that ETH was trading for $1,687 on Coinbase and $1,691 on Binance. On Bithumb and Upbit, however, ETH was changing hands for $1,682 and $1,683, respectively.

According to Doo Wan Nam, chief operating officer of node validator and venture capital firm Stablenode, the change from a premium to a discount for kimchi reflects a decrease in interest from retail investors in Korea.

“Generally speaking, it signals a dip in interest in cryptocurrency from the retail sector in Korea,” he added. “This is paradoxically a better time to purchase since you know you can always sell yours to Korean gamblers for 20% premium later when they FOMO.”

Arbitrage refers to the process wherein some traders attempt to make a profit by trading the price disparities that exist between several exchanges.

In the past, the extent of the Kimchi premium has been linked to the news, with large drops in price reported at periods when negative news about South Korean cryptocurrency exchanges broke.

The premium vanished in the beginning of 2018, shortly after the government of South Korea stated its intention to take regulatory action against cryptocurrency trading.

According to research published by the University of Calgary in 2019, the Kimchi Premium emerged for the first time in 2016.

According to the findings of the study, throughout the period beginning in January 2016 and ending in February 2018, Bitcoin exchanges in South Korea charged an average of 4.73% more than their counterparts in the United States.

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Former Tmon CEO faces arrest for taking bribes to promote Terra Classic

After the former CEO of Tmon, a Korean e-commerce platform, was accused of taking billions of won worth of Terra (LUNA), which is now known as Terra Classic (LUNC), in exchange for promoting Terra as a straightforward payment gateway, prosecutors in South Korea have asked for an arrest warrant to be issued for the individual.

According to a report by the Dong-A Ilbo media outlet, the head of the financial and securities joint investigation team at the Seoul Southern District Prosecutor’s Office requested an arrest warrant for bribery charges to be brought against the former CEO of Tmon, referred to as “Mr. A,” as well as a person referred to as “broker B,” who worked on lobbying in the financial sector in favor of Terra.

According to the allegations, Mr. A was given LUNC tokens by Shin Hyun-Seong, who is also known as Daniel Shin, the co-founder of Terra. Shin urged Mr. A to actively promote Terra as a straightforward method of payment. Following this event, Tmon began promoting LUNC and spreading the word that the token is a reliable investment. The investigators believe that the advertising were responsible for the price growth of the token since they raised the expectations of investors.

It is speculated that the former CEO of Tmon has profited billions of won from the sale of the LUNC tokens that were obtained in return for the marketing. In addition, the investigation emphasized that in spite of warnings from financial regulators, Shin has apparently contributed money to other businesses such as Tmon to promote LUNC as a secure payment mechanism. This was one of the points that was underlined in the research.

On November 14, prosecutors in South Korea made an official request for Shin to assist with the investigation into the collapse of the Terra. The police said that Shin had been in possession of LUNC tokens without the knowledge of the investors and had made illicit transactions totaling more than 105 million dollars prior to the collapse of the firm.

The prosecutors who are in charge of the case have been continually broadening the scope of their investigations and focusing their attention on additional individuals implicated. On the 30th of November in the year 2022, the authorities in South Korea issued an arrest order for Shin, along with three investors in Terra and four engineers responsible for the project.

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Bitcoin (BTC) $ 26,835.19 1.08%
Ethereum (ETH) $ 1,869.16 0.34%
Litecoin (LTC) $ 94.52 3.41%
Bitcoin Cash (BCH) $ 113.56 0.23%