Regulation
South Korea Crypto Exchanges Under Probe For Fee Hikes Post New Regulation
The Financial Supervisory Service (FSS) of South Korea has summoned five leading crypto exchanges in the wake of just implemented crypto laws, signaling heightened scrutiny of industry practices. This move comes in the wake of aggressive fee hikes by major players in the market, sparking concerns about fair competition and user protection.
South Korea Crypto Exchanges Under Scrutiny
South Korea’s Financial Supervisory Service (FSS) has summoned the country’s five major crypto exchanges which are, Upbit, Bithumb, Coinone, Korbit, and Gopax to address the ongoing controversy surrounding deposit usage fees. This urgent meeting, held on July 24, 2024, comes in the wake of intensifying competition among exchanges to increase their fee rates following the implementation of the Virtual Asset User Protection Act.
The FSS intervention was triggered by Bithumb’s announcement on July 23 to raise its usage fee rate from 2.2% to 4.0% per annum, a decision that was later withdrawn. This move came after a series of fee hikes by various exchanges since the Act’s implementation on July 19-20, with Upbit increasing its rate from 1.3% to 2.1%, and Korbit following suit with an increase to 2.5%.
Financial authorities deemed Bithumb’s 4% rate as potentially unreasonable, citing Article 5 of the Virtual Asset Industry Supervision Regulations. This article mandates that deposit usage fees must be “reasonably calculated” based on operating income and incurred expenses.
During the meeting, the FSS aimed to re-examine the calculation methods for deposit usage fees and address disagreements among exchanges regarding reasonable fee levels. South Korea Crypto Exchanges were required to provide detailed information on their deposit management practices and fee calculation methods.
Also Read: Bitwise CIO Teases More Crypto ETFs After Ethereum Success, Solana & XRP Next?
Broader Regulatory Landscape and Future Implications
The deposit fee controversy is part of a larger regulatory shift in South Korea crypto market. The FSS had previously announced plans for a system to monitor unusual crypto trading activity, requiring exchanges to provide detailed data. This aligns with the newly implemented Virtual Asset User Protection Act.
Simultaneously, the Digital Asset Exchange Alliance (DAXA) has initiated a comprehensive review of over 1,300 digital assets to ensure compliance with new legislation. This review, while not a mass delisting effort, could pose challenges for altcoins struggling to meet regulatory standards.
The FSS guidelines have set clear parameters for identifying suspicious trading activities, including abnormal volume and price ranges, large transactions, and slow execution. Non-compliance could result in severe penalties, signaling a new era of stringent oversight in South Korea crypto market.
Also Read: Bitcoin ETFs End Inflow Streak Amid High Odds Of Kamala Harris At Bitcoin Conference
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Democratic Senator Elizabeth Warren secured her third Senate term on Tuesday, defeating Republican candidate and cryptocurrency advocate John Deaton in Massachusetts.
CoinGape has confirmed Elizabeth Warren’s victory, which maintains her position as one of the Senate’s leading voices on financial oversight and cryptocurrency regulation. Warren, a prominent critic of the cryptocurrency industry, overcame Deaton, who campaigned with support from influential figures within the crypto sector.
Elizabeth Warren Wins Senate Term Over John Deaton
Throughout her political career, Warren has taken a firm stance against the cryptocurrency industry, citing concerns about its potential for financial crime and regulatory evasion. She has been active in pushing legislation to increase oversight on digital assets.
Notably, Warren has championed an anti-money laundering bill that seeks to extend Bank Secrecy Act (BSA) requirements, including know-your-customer (KYC) rules, to entities in the crypto space, such as miners, validators, and wallet providers. This regulatory push aims to bring the crypto industry in line with traditional financial sectors, a point she has reiterated in debates and public appearances.
During an October debate, Warren highlighted Deaton’s ties to the crypto industry, stating, “He’s saying he has really made crypto folks mad, so mad that they came here to Massachusetts and are funding 90% of his campaign to try to take back this Senate seat to take it away from me.” Subsequently, Elizabeth Warren used her opponent’s connections to the industry to emphasize her stance that crypto must follow established financial rules.
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Kelvin Munene Murithi
Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
The US Securities and Exchange Commission (SEC) has published Grayscale’s 19b-4 filing for its Digital Large Cap Fund in the Federal Register. This significant development has officially kickstarted the US SEC’s review process for the asset manager’s application to convert this fund into an ETF.
US SEC Publishes Grayscale’s Filing In Federal Register
Grayscale announced in a press release that the US SEC has published the NYSE’s 19b-4 filing to list and trade its Digital Large Cap Fund as an Exchange-Traded Product (ETP) in the Federal Register.
This formally initiates the review process for the Commission to review and possibly approve the application. As noted in the press release, this review process can take up to 240 days before the regulator must decide whether to approve or deny the application.
If the US SEC approves the NYSE’s proposed rule change, it would be the first time a national securities exchange would list and trade shares of multi-crypto asset ETPs. The SEC’s acknowledgment of the 19b-4 filing just comes around two weeks after the asset manager filed to convert the Digital Large Cap Fund into an ETF.
According to Grayscale, as of November 1, the GDLC currently holds over $530 million in assets under management (AuM) for the fund. The fund holds Bitcoin, Ethereum, Solana, XRP, and Avalance, which are weighted according to their respective market caps.
Boluwatife Adeyemi
Boluwatife Adeyemi is a well-experienced crypto news writer and editor who has covered topics that cut across DeFi, NFTs, smart contracts, and blockchain interoperability, among others. Boluwatife has a knack for simplifying the most technical concepts and making it easy for crypto newbies to understand. Away from writing, He is an avid basketball lover and a part-time degen.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Former SEC official Marc Fagel has voiced concerns over the Securities and Exchange Commission’s recent issuance of a Wells Notice to Immutable, an Ethereum-based Web3 gaming company. Immutable claims that the Wells Notice arrived with limited prior communication or explanation, marking a sharp departure from what is typically a more extensive investigative process.
Fagel commented that it is unusual for the SEC to issue such notices without first conducting a thorough investigation, suggesting that this approach could be “risky.”
Former SEC Official Questions Rapid Wells Notice Issued to Immutable
Immutable announced it had received a sudden Wells Notice from the U.S. Securities and Exchange Commission (SEC). The notice, which serves as a formal alert for potential enforcement action, cited alleged securities law violations related to private IMX token sales in 2021. However, the specifics of these alleged violations were minimally detailed in the notice, sparking questions about the SEC’s procedural approach.
Former SEC Official Marc Fagel commented on the surprise issuance, noting that it’s uncommon for the agency to send such a notice without preliminary investigation. In typical cases, companies expect several months of interviews or exchanges before receiving a Wells Notice, and Fagel stated that deviating from this standard practice could be seen as “risky.”
In a heated discussion on the X platform, the former SEC official added,
“BTW, it’s hard to believe the SEC would Wells without conducting sufficient investigation to support the claims; way too risky outside the TRO scenario. That said, I’ve heard plenty of anecdotes about the crypto unit dropping a Wells out of the blue, which is kinda scuzzy.”
Wells Notice Reflects SEC’s “Regulation by Enforcement” Strategy
The crypto sector has witnessed similar actions, with companies such as Coinbase, Consensys, and Crypto.com also receiving Wells Notices. The sudden notice aligns with a broader trend criticized as “regulation by enforcement.” Here, the agency proceeds with legal action rather than establishing clear compliance guidelines.
Immutable pointed out that its interaction with the SEC was exceptionally brief before the Wells Notice was issued. More so, they noted that it lacked meaningful explanation, containing fewer than 20 words specifying the alleged securities violations.
The Securities and Exchange Commission approach has caused considerable frustration within the crypto community. Fagel highlighted that the SEC’s surprising strategy of issuing Wells Notices abruptly in the crypto sector has become increasingly common.
ConsenSys Responds to SEC Claims on MetaMask
In parallel, blockchain company ConsenSys recently filed a response to the SEC’s claims regarding alleged securities violations by MetaMask. ConsenSys disputed the allegations, stating that MetaMask’s product embodies essential blockchain principles. It allows users to interact in a decentralized way. The company also reinforced its commitment to defending its product and technology within the legal framework.
Notably, under SEC Chair Gary Gensler, crypto firms have reported heightened compliance burdens. Regulatory enforcement actions have cost the industry an estimated $400 million, according to the Blockchain Association. These reports aligns with what the former SEC official, Marc Fagel, terms as “scuzzy”.
Ronny Mugendi
Ronny Mugendi is a seasoned crypto journalist with four years of professional experience, having contributed significantly to various media outlets on cryptocurrency trends and technologies. With over 4000 published articles across various media outlets, he aims to inform, educate and introduce more people to the Blockchain and DeFi world. Outside of his journalism career, Ronny enjoys the thrill of bike riding, exploring new trails and landscapes.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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