Category Archives: (FIU)

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Estonia’s Own Private Bull Run Boasts 900 Crypto Firms in Less Than a Year

Bitcoin News has been following Estonia’s cryptocurrency march with some interest this year, and with over 900 licenses granted within the first year of the regulator’s initial registration ruling in that country, there seems to be no stopping its enthusiasm for the enterprise.

Estonia was one of the first jurisdictions in the EU to legislate cryptocurrencies and many companies are now doing business there. The Baltic region is fast becoming a northern crypto-paradise with Lithuania, Latvia, and Estonia all experiencing a recent economic boom. This has made Estonia a breeding ground for new startups.

Even its neighbor Latvia, though behind Estonia in cryptocurrency adoption, is beginning to make real inroads into developing a positive input to the industry. In March 2018, Latvia hosted an international discussion between industry experts on the future of fintech in the Baltics and the overall EU, which featured the vice-president of the European Commission Valdis Dombrovskis as keynote speaker.

But it’s Estonia breaking the records at present due to a progressive approach to cryptocurrency, despite the country abandoning its plans to introduce its own cryptocurrency after being warned by President of the European Central Bank Mario Draghi earlier this year.

500 licenses have been issued to date with over 400 wallet providers also being issued permission to operate. It appears that obtaining a license to operate a platform in Estonia is relatively simple according to Nikolay Demchuk from the law firm Njord which works in the sector. As Estonia operates under EU rules, the main emphasis on obtaining accreditation is complying with local and EU rules. Businesses applying also need to prove that they can operate with adequate KYC and AML protection.

Approval only takes about two weeks and are issued by the local regulator, the Estonian Financial Intelligence Unit (FIU), but companies must begin operating within six months of receiving their licenses under the pressure of losing them.

The biggest drawback in Estonia concerns banking as there is still a reluctance among the country’s banking community to provide services to cryptocurrency exchanges. However, the e-residency program, introduced in 2014, allows non-Estonians access to Estonian services such as company formation, banking, payment processing, and taxation. The program also allows anyone in the world to apply for a digital ID card and gain access to Estonian e-services when planning to start a company in the country.

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South Korean Regulators Move to Tighten Rules After Exchange Hacks

In response to two major hacks this year, including the Bithumb exchange attack this week, the South Korean government has acted quickly with a new bill aimed at tightening regulations for cryptocurrency exchanges.

Choi Jong-ku, chairman of the country’s top financial regulator, the Financial Services Commissions (FSC), responded to the most recent attack on Bithumb, suggesting that the cryptocurrency system needs more stability and strengthened protection.

Korean source Newspim accuses Korean regulators of allowing cryptocurrencies to be in a “blind spot”, suggesting that a reporting system would block certain cryptocurrency crimes such as money laundering and ensure scrutiny of banks with more care, ensuring virtual accounts are more closely monitored.

According to the government, the new bill introduced in response to the more frequent attacks on South Korean exchanges and “will define a virtual currency exchange as a virtual currency handling business” with a focus on money laundering, adding:

“If the bill passes the National Assembly, a virtual currency exchange must be obliged to report to the Financial Intelligence Unit (FIU) as a virtual currency handling business and be regularly supervised by the FIU.”

Any obvious transgression of current regulations will then be immediately investigated by Financial Supervisory Service (FSS) and the FIU. The Act on Reporting and Using Specified Financial Transaction Information has already been submitted to the National Assembly in order to achieve these outcomes and tighten up government monitoring of South Korean exchanges.

Other amendments to current legislation under the proposed bill will require companies to store data for five years relating to any financial transactions conducted, and heavy fines of KRW 30 million (USD 27,000) have been suggested for illegal activity. Sanctions are also favored in response to exchanges failing to comply with the regulators, including dismissal of executive staff and suspending businesses.

Currently, in South Korea anyone with USD 30 can launch a cryptocurrency trading platform and, until these recent changes, government agencies and financial authorities have not been permitted to strictly oversee digital asset businesses, according to Yahoo.

Park Yong-kin, a National Assembly Committee member commented at the end of last year that the government shouldn’t leave exchanges unregulated as it would worsen the cryptocurrency sector. It appears that his sentiments have now filtered through to the government after the recent spate of attacks on South Korea’s exchanges.

 

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