IMF Warns about Adopting Crypto Assets as Legal Tender 0 40

The International Monetary Fund (IMF) has issued a warning against adopting crypto assets as legal tender. The IMF noted numerous costs and risks involved and does not believe that cryptocurrencies like Bitcoin can catch on as a national currency. On Monday, a blog post was published that discussed this topic. The title of the post was ‘Cryptoassets as National Currency? A Step Too Far. This was penned down by the financial director and counselor of the Monetary and Capital Markets Department of the IMF, Tobias Adrian, and a general counsel and director of the Legal Department of IMF, Rhoda Weeks-Brown.

There is no mention of the Central American country, El Salvador, which adopted Bitcoin recently as legal tender, along with the US dollar. The authors stated that there are substantial risks associated with these crypto-assets and they are a threat to financial integrity, macro-financial stability, the environment, and consumer protection. The IMF directors acknowledged the benefits of the underlying technologies of these digital currencies, but they insisted that it’s the governments that need to provide these services. They asserted that using cryptocurrencies as a national currency was a shortcut, an ill-advised one at that. Nevertheless, the directors don’t believe these crypto assets will be able to gain traction in countries with stable economies.

They will not have enough incentive to save in crypto assets, whereas less-stable economies would prefer adopting reserve currencies like the euro or the dollar, which are globally recognized. However, a cryptocurrency may catch on as a vehicle for payments used by unbanked people, but not for storing value. The two IMF directors said that these people would immediately exchange it into real currency as soon as they receive it. But, they did add that real currency is not always easily available, or transferable. Plus, some countries also have restrictions regarding payments in other forms of money, which would promote the use of these crypto-assets.

The authors went ahead and warned about the cost consequences of widespread crypto adoption. They said that rather than engaging in any productive activities, most businesses and households would spending significant time and resources in trying to choose which crypto to hold. They also added that the revenue of the government would also be exposed to exchange rate risk and monetary policy will also suffer because a foreign currency cannot be used by the Central Bank for setting interest rates. They warned that it would impair financial integrity and domestic prices would become unstable.

Furthermore, it was asserted that cryptocurrencies can also be used for funding terrorism, evading taxes, and laundering money. This would obviously put the country’s financial system at risk, along with fiscal balance and relationships with correspondent banks and foreign countries. Plus, there are also legal problems associated with the adoption of cryptocurrencies as legal tender. For a currency to be legal tender, it has to be widely available, but many countries don’t have the technology and internet access needed for using cryptocurrencies, which causes issues of financial inclusion and fairness.

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Absconding Directors of South African Crypto Fraud “Africrypt” Agree To Attend Court Hearing Virtually 0 15

After proceeding of trial against infamous Africrypt, it would be for the first time that the main accused will attend court hearing, although virtually. The Court, upon the request of Cajee brothers’ counsels has agreed to offer virtual hearing option and fixed the date of 19th & 20th October, 2021 for recording of their testimonies.

The Courts in every country have been insisted upon by legal experts to utilize innovation and technology for justice system. Litigants everywhere criticize that justice is delayed. Primarily in the Asian and African regions, often Courts are criticized for not being able to decide cases even after 5 to 10 years. Recording of evidence kept linger on because the witness are not available in the country. In the modern countries, usually the Courts have provided for virtual hearings, however, such option was hardly utilized by Asian and African regions.

However, due to pandemic, the courts, which never used virtual hearing option, are now conducting hearings virtually as well. The practice has finally made its way into the justice system of both these regions as well. This very option has recently been utilized in a high profile crypto fraud case of South Africa namely “Africrypt”.

According to the complaints of Africrypt, the firm Africrypt looted their money while the perpetrators fled with millions of dollars. They claimed that a crypto scam of “exit” nature was committed on them.

Meanwhile, when the founders/operators of Africrypt namely Amer and Raees Cajee were there, they said they claimed a hack occurred. But nobody believed and said that they were concocting a false story to hide their crime while the money was taken by them. However, the local authorities soon came to know that both brothers went into hiding. No one knew where they were taking shelter or why they opted to hide if they did not do anything wrong. But their counsels were representing them before the Court and told the Court that Cajee brothers were receiving life threatening warnings. They were threatened by certain people of dire consequences which may involve harming their family members as well. So they went into hiding, claimed their attorneys.

Now an opportunity has been offered by the South African court to Cajee brothers to plead their case virtually. It has been noticed in the press as well that the Cajee brothers have accepted Court’s offer of attending Court’s hearing virtually.

The virtual hearing date was fixed to take place in September. But the date was requested by Cajee brothers’ counsels to be fixed in the month of October for various reasons. The Court has accepted the request of the counsels and has re-fixed the case for 19th October, 2021. On the said date of hearing, it is anticipated that both the main accused with record their testimonies virtually.

60 Crypto Exchanges in South Korea to Shut Down their Services 0 13

This is the week of the deadline for crypto exchanges as well as wallet operators in South Korea to comply with the new regulatory requirements introduced in order to stay open. Up until now, only one exchange has been granted the license for continuing their operations in the country. It is expected that around 60 crypto exchanges will either shut down fully, or cut down on their services. According to the new ‘Act on the Reporting and Use of Special Financial Transaction Information (Special Act)’, all crypto exchanges in South Korea have to register with the Financial Intelligence Unit (FIU) in the country and get certification for Information Security Management System (ISMS).

The last day to be able to do is September 24th. Crypto exchanges that are unable to do either of these things will have to cease their operations fully. Local media reported that around 34 exchanges have not been granted ISMS certification, which means they will entirely shut down by the given date. Around 29 crypto exchanges do have ISMS certification, but only one of them has managed to register with the FIU successfully. This is part of the country’s top financial regulator, the Financial Services Commission (FSC). On Friday, the Financial Intelligence Unit (FIU) had had their first crypto business review meeting.

Their goal had been to check the report that was submitted by Dunamu Inc. that operates the largest crypto exchange in South Korea named Upbit. The report was accepted by the review committee, which made Upbit the first licensed crypto exchange operator. It was further revealed by the FIU that other than Upbit, there were four other exchanges that had also submitted a report, which included Coinone, Korbit, Korea Digital Exchange (Flybit) and Bithumb. Furthermore, a report was also submitted by Korea Digital Asset (KODA), which is a wallet operator.

The FSC had said back then that since there was only a week left till the deadline, virtual asset providers should file a report right away, if they haven’t already done so. Furthermore, registered crypto exchanges that are interested in offering trading in the Korean won are also required to partner with banks for providing users with accounts verified with their real names. Up until now, banking partnerships have only been secured by the country’s largest exchanges, such as Upbit, Korbit, Coinone and Bithumb. Banks are not willing to partner with smaller exchanges because they are concerned about risks like money laundering.

This means that of the 29 exchanges that have been ISMS-certified, only 25 of them will be crypto-only exchanges in case they register with the FIU successfully. By September 24th, they will have to cease offering trading services in Korean won and should have already notified their clients, as per the rules of the financial regulators. Huobi Korea, Hanbitco, Gdac and Gopax are four companies that said they were still working on securing partnerships with banks by the given deadline. This indicates that out of 63 exchanges, only the leading four will continue to operate normally in the country. 

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