Japan and South Korea are the driving forces behind massive gambling in the cryptocurrencies. Hundreds of thousands of young people, who often have no job prospects, are trying to get rich quickly. This has resulted in numerous trading platforms that present themselves as “crypto exchanges”. At the moment, you can see that despite the hacker attack and more regulation, the big gambling in the cryptocurrencies can continue. We would like to comment on two important events.
We discussed the gigantic hacker attack on the trading platform “Coincheck” on Friday and yesterday. As a result, the uncertainty is naturally high. The 260,000 users apparently get the majority of their stolen cryptocurrencies (in this case “NEM”) refunded by Coincheck.
Coincheck has now published that the Japanese financial supervisory authorities have imposed requirements on the provider, which it has to implement. And when you read through these measures/requirements, you won’t find anything that will block or restrict the big gambling of the investors. These are guidelines such as identifying the background to the hacker attack, improving internal control systems, and implementing measures to prevent this from happening in the future. Quote Coincheck:
Coincheck, Inc. received an order to improve business operations from the Financial Services Agency based on the Payment Services Act defined in Article 63-16 in response to the illicit transfer of the cryptocurrency NEM following a breach of our platform. We earnestly accept the terms of the order and vow to re-examine our business practices while simultaneously striving to make all facts involved in this case clear, discover the root cause of the breach, safeguard our customers, and develop stronger and more effective measures for system risk management and prevention of similar events in the future.
I. Contents of Order to Improve Business Operations
1. Investigation of the facts and causes surrounding this case
2. Proper support of your customers
3. Strengthening of current measures to manage system risk
4. Creation of new measures for system risk management and prevention of similar events in the future in addition to making it clear where responsibility lies for different risks
5. A written report regarding items 1 though 4 to be turned in by Tuesday, February 13, 2018
So you can’t find anything here that would influence the customer trade itself. More technical security by platform providers can only be positive for customers. More security in this respect should attract even more gamblers.
Particularly in the case of South Korea as on of the crypto gaming hotspots, whether there is a total ban on cryptocurrencies or just a little more regulation, has always been in the daily talk in recent weeks. Last week, the Financial Supervisory Authority published its catalogue of measures, which comes into force today. No additional regulation was published in the last week. The authorities in South Korea don´t seem to care so much about protecting customers, because their protection is not really mentioned. The authorities appear to be primarily concerned with improving the tax administration’s access to trading profits.
Thus, the most important measure is that gamblers must be identified with their clear names. Banks are obliged to do so. Also,”conspicuous” transactions are to be reported in the sense of combating money laundering (AML policy) – something that is already the global standard for normal banking transactions. In its conclusion, with the desired effects of the measures, the South Korean financial supervisory authority writes quite clearly: It´s about combating crime, tax evasion and money laundering. There was no talk of more customer protection or restricting trading!
Some banks in South Korea have reported in recent weeks that they are completely withdrawing from the crypto business. But there was no nationwide bank boycott of crypto currencies. So the big gambling can basically continue in South Korea. Some gamblers in South Korea who have never heard of tax returns will probably have problems in the future.
A good thing on the long-term view for cryptocurrencies
Our opinion: Perhaps the crypto-hype in South Korea will slow down first, because a gigantic mass of gamblers will have to legitimize themselves. Perhaps some people will also lose their appetite for trading if their clear names are known. Who knows exactly. But in the long run, however, this regulation should give a lot more confidence to a wider range of gamblers in the trade with cryptocurrencies – even if this confidence is only a superficial feeling. In the long run, these annoying hacker attacks can become a much bigger problem as the regulation, if the attacks become more frequent. Online theft of crypto accounts seems to be a much more serious problem for traders than simple Government standard regulations in some countries!