The Korean Government Could Get Sued by the Cryptocurrency Exchanges 0 226

There is not much time before the new rules introduced by the Financial Services Commission (FSC) of South Korea kick in for the cryptocurrency industry. It has been established by the entire cryptocurrency industry in South Korea that these rules may not prove beneficial and supportive to the crypto exchanges in the country.

Many small cryptocurrency exchanges are now living under the fear of strict regulatory bashing. These exchanges have already started losing their confidence and are now fearing that they will get closed soon.

These exchanges are very much fearful about their future in the country and see themselves being shut down forcefully.

One of the major points and conditions in the rule is for the cryptocurrency exchanges to reveal their real name when setting up an account at the banks. The reports reveal that it can be any bank operating in South Korea.

The rule states that the cryptocurrency exchanges need to follow the instructions and act upon them by September 24, 2021. This was also because the banks in South Korea are not okay with revealing themselves as entities dealing with cryptocurrency firms.

Following the announcement of the recent rulings, even the majority of the banks in South Korea have stopped providing services to cryptocurrency firms. So far, only the four major cryptocurrency exchanges in South Korea have proven to be operating with full compliance with the rules and regulations.

There are now rumors that the smaller cryptocurrency exchanges in South Korea are now planning to take very critical action. These exchanges are reportedly considering the option of going against the government of South Korea.

A report from one of the media sources from South Korea has reported that the smaller exchanges may sue the South Korean Government. They may be doing it alleging the government for showing negligence in taking the responsibility of remit of the regulatory bodies.

The new rule that the Financial Services Commission has introduced makes it mandatory for the commercial/local banks to deny/reject providing services to particular cryptocurrency exchanges groups. The particular group is the one that fails to provide a proper identification of their company as well as have suspicious activities taking place on their platforms.

According to the experienced industry officials, by doing this, the financial authorities and the government have deflected their responsibility onto the commercial banks. This way, the banks would have to take the guarantee of such firms when providing services to them.

Now, the banks are responsible for ensuring the information they are gathering from the customers/investors is used for the issuance of the real-name accounts.

However, several commercial lenders, as well as the Federation of Korean banks, have requested the Financial Services Commission to change the rules they expect to accept starting mid-June.

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IMF Says Russia and Iran May Use Crypto Mining for Monetizing Energy 0 41

The April 2022Global Financial Stability Report of the IMF has highlighted the consequences of the ongoing Russian invasion of Ukraine. The document said that the role of the US dollar was bound to be affected because of the conflict, as it would lead to the introduction of central bank digital currencies (CBDCs) and the global financial system’s resiliency would also be put to a test. The climate transition goals could also be put at risk because of the priorities associated with energy security. Another issue that would have to be dealt with in the coming years by lawmakers is the ‘cryptoization’ which is likely to occur because emerging markets are experiencing a widespread use of crypto.

IMF cited an increase in crypto trading volumes seen after the introduction of sanctions on Russia to back their statement. This included the financial penalties that had been imposed by Western nations on Russia because of its military invasion. The report said that such cross-border transactions were increasing in the long-term, which means that there would be challenges when it comes to imposing sanctions and managing capital flow. The IMF noted that crypto transactions have increased in both Russia and Ukraine because of the capital restrictions that have been imposed.

However, it is important to note that there has been a fall in liquidity in centralized exchanges where the hryvnia and ruble trading pairs are concerned. Therefore, using crypto exchanges for making large transfers has become rather impractical due to reduced liquidity. But, the IMF admitted that users do have the option of evading some measures via the crypto ecosystem because the identity verification requirements are quite lax in this industry. Hence, the international organization said that blocking new deposits of ruble and freezing crypto assets meant that users could have shifted to non-complying or less transparent crypto platforms and service providers.

Experts at IMF believe that both Russia and Iran could circumvent their respective sanctions via crypto mining. The nations could use their energy resources for generating revenue via crypto mining outside of the traditional financial system. Currently, the countries have a limited share of crypto mining activities, but there is a possibility that it could be increased, considering the size of the mining industry. The IMF quoted estimates showing that almost 11% of the mining revenues of bitcoin could have gone to Russia, which was around $1.4 billion per month, while Iran’s share had been 3%.

Bank of England Says Crypto Assets have Financial Stability Risks 0 80

On Thursday, the Financial Policy Committee of the Bank of England disclosed that they are working on developing a regulatory framework for digital assets. The central bank also made a reference to the sanctions that have been imposed because of the war between Russia and Ukraine in the statements. Bureaucrats and financial regulatory authorities all over the world have become increasingly concerned in recent times that Russia could take advantage of crypto assets to bypass the economic sanctions that have been imposed. The press statement of the BOE said that it was unlikely for crypto assets to provide Russia with a feasible way to get around sanctions at a large scale for now, but there was a possibility they could do so.

Therefore, it is a must to ensure that there are effective public policy frameworksthat can accompany innovation in crypto assets for maintaining the integrity and trust in the financial system. The crypto economy has been highly criticized by some members of the Bank of England for quite a while. Last year in mid-November, Andrew Bailey, the Governor of the Bank of England, had expressed his concerns about the adoption of bitcoin as legal tender in El Salvador. Sir Jon Cunliffe, the deputy governor for financial stability for the central bank, said in the following month that prices of crypto assets could drop to zero.

On Thursday, the report of the FPC talked about financial stability. The committee of the central bank noted that the FPC is assessing the risks to the financial system’s stability and it has concluded that these are currently limited. This is because their size remains limited for now and they are not that connected with the wider financial system. However, the FPC said that if they continue to grow at the same pace, and if they become interconnected with the overall financial system, then these crypto assets could pose a risk to the stability of the financial system.

Since the conflict between Russia and Ukraine began, politicians and lawmakers all over the globe have been discussing, developing, or even proposing laws aimed at regulating and researching digital currencies. The FPC’s statements on Thursday show that the BOE wants to classify crypto assets in the same category as it does traditional financial assets. Not only does the FPC plan on developing a regulatory framework that would govern digital assets, it has also mentioned stablecoins.

The FPC said that a major stablecoin that does not have a reliable deposit guarantee could turn out to be a risk to the UK’s financial system. According to the committee, if they introduce a systemic stablecoin, which is backed through a deposit mad with a commercial bank, it would result in significant risks to the stability of the financial system. All of this talk about crypto has been brought forward because of the Russian-Ukraine conflict and the possibility of the former using cryptocurrencies to evade the tough economic sanctions that have been imposed by Western nations due to its actions.

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