Kookmin Bank, one of the largest financial institutions in South Korea, has joined the long list of banks opening their services to the cryptocurrency industry. Recently, the bank announced that it had partnered with blockchain venture fund Hashed and local crypto trading platform Cumberland Korea to establish a custody service that will cater to investors who have digital assets in their portfolios.
A Play for the Future
According to a company blog post, Jin Kang, Hashed’s Chief Legal Compliance Officer, explained that the three firms’ collaboration would help manage and store digital assets. They also hope to advocate for better regulatory conditions and being a new age of transformation to the traditional financial space.
The companies added that they had seen a necessary shift in the market, and these caused them to consider focusing on more blockchain-focused business models. Simon Kim, the chief executive of Hashed, explained in the post:
“Combining our insight in the blockchain industry and providing both technical and commercial consultations will inevitably open new doors to consumers as well as to the country in ushering the new era of digital transformation.”
The move is following Koomkim Bank’s filing for a trademark on “Kbdac,” a digital custody platform, with the Korean Intellectual Property Office earlier in the year. At the time, the bank reportedly filed for the trademark to cover over 20 crypto-related business aspects. Many immediately began speculating that the bank had plans to issue a custody service.
Kookmin Bank reportedly sees a future where the digital asset industry outgrows just traditional cryptocurrencies. The bank is hoping to corner the market on storing security tokens and other digital tokens that cover various assets. So, while they will be using the custody service to focus on traditional cryptocurrencies in the long term, they’re working with a broader scope and placing themselves in the perfect position to corner a growing industry.
South Korea’s Tech-Driven Banking Sector
The commercial bank’s decision is also coming when more financial institutions appear to be exploring the potential of allowing crypto custody. In July, NongHyup Bank, one of Kookmin Bank’s top rivals, reportedly confirmed that it would like to create a custodial service for cryptocurrencies. However, the bank appears more focused on institutional investors.
South Korea’s public and private financial institutions have so far been more open to innovating with cryptocurrencies. Apart from the banks, the government has also turned its attention towards the asset class and is looking to keep more of a keen eye on it.
Last month, local news reported that the Bank of Korea had chosen to establish a “Digital Innovation Department” as part of an organizational reform effort. The effort, which will take place in the second half of the year, will include departments focused on various technological innovations — including artificial intelligence and blockchain.
Per the reports, the department will perform tasks such as implementing policies to govern the use of these technologies and expanding the current digital infrastructure. An official from the Bank added that the objective is to improve working efficiency at all levels. From adopting minutes of meetings to examining economic trends and conducting foreign exchange audits, this department will look into optimizing the Bank’s entire operation.
Venezuela Creates a “Digital Mining Pool” to Control All of the Country’s Hash Power
The Mining industry in Venezuela now has its own regulatory framework. The National Superintendence of Cryptoactives and other Related Activities published on Monday the “Providence that regulates the activities related to the use, import, commercialization of Digital Mining equipment.”
The legal instrument appeared in Official Gazette No. 41,969 and is already in effect. It would be the first law specifically created to regulate the cryptocurrency mining sector in a country… But not everything is as good as it looks.
One Point for Extreme Centralization of a Decentralized Project
The legal instrument mandates all miners, assemblers, or providers of mining services to join a Special Registry of Miners. This is a fundamental requirement for obtaining the necessary licenses to carry out the activity legally.
Also, a “National Digital Mining Pool” is created by law to bring together all the independent miners who live in the country. Venezuela is currently the Latin American country with the most hash power, the most adoption, and the most trading activity. The law also says that the Venezuelan government may grant benefits, incentives, and propose exemptions to encourage digital miners to join the national pool.
However, the coin has an ugly side —a very ugly one. Every Venezuelan who engages in the activity is unable to choose which pool to join since from today onwards, they must mine for the government’s pool unless they are willing to pay hefty fines:
Article 19. Users who engage in digital mining without being connected to the National Digital Mining Pool will be subject to the measures, infractions, and sanctions set by the Constituent Decree on the Integral Cryptoactive System.
Similarly, the document now establishes that the creation of mining farms will be done “under the technical and professional supervision of its personnel.” In this way, Sunacrip officials could have greater personal control over new mining ventures.
Venezuela Always Sparks Debate with its Decisions
The news sparked controversial reactions from experts in the field. Venezuela is one of the most corrupt countries in the world, and giving the state control over mining activity and “profit distribution ” generated by it could potentially harm all Venezuelan miners whose earnings would now be controlled by a government entity.
However, there is a positive side: Although crypto mining was never illegal – as some media say – the truth is that it has been persecuted for a long time. Perhaps this new legal order will put an end to this period of uncertainty for the industry… That is, assuming that the miners feel comfortable with giving control of their business to the Venezuelan government.
No Compensation for MakerDAO Vault Owners After Governance Vote
MakerDAO vault holders who lost about $2.5 million during Black Thursday will not receive any compensation following a governance vote that ended on Tuesday. While decentralized finance (DeFi) continues to garner attention, issues like the type suffered by the MakerDAO project earlier in the year continue to plague the market as a whole.
MKR Holders Vote Against Compensating Affected Vault Owners
Following the conclusion of voting on the revised MakerDAO governance poll, vault owners affected during the Black Thursday crash of mid-March will not receive any compensation. This outcome is due to the fact that 65% of the participants voted against compensating the $2.5 million losses incurred by vault owners.
Postmortem on the @MakerDAO vault compensation poll 💀
Short recap, and my take on how we ended up with this result 🎬
— monetsupply.eth (@MonetSupply) September 22, 2020
Some reactions to the news on social media say the decision to not compensate vault owners sets a not so ideal precedent. With Maker (MKR) token holders unaffected by the forced liquidations of March 12, 2020, it appears only vault owners were the real losers.
Amid the Black Thursday panic, the crypto arena saw a massive sell-off of tokens leading to a sharp decline in price across the market. The situation mirrored the events seen in the larger investment scene as fear over the coronavirus pandemic saw investors electing to liquidate their assets for cash.
A Black Swan Event
For the MakerDAO project, Black Thursday turned out to be a ‘black swan’ event. As the price of Ethereum (ETH) fell on that fateful Thursday, the network suffered massive congestion which prevented price oracles from updating ETH/USD price in real-time.
With the price oracles failing, undercollateralized vault owners suffered forced liquidations. Some users took advantage of the situation to launch opportunistic profiteering attacks with zero bid and half bids. These rogue actors were able to liquidate ETH from vault owners with little or no DAI given in collateral.
MakerDAO lost $6.65 million in DAI stablecoin during the incident with $4 million of this shortfall being actual “bad debt” for the project. The DeFi lending project was able to service the bad debt via debt auction a few weeks later.
In the aftermath of the forced liquidations on Black Thursday, some affected vault owners sued the Maker Foundation for not providing adequate information about the risks involved in holding collateralized debt positions (CDP).
Market Watch: Bitcoin Tumbles to $10,130 as Equity Markets Finish in Deep Red
After reclaiming some ground yesterday, Bitcoin has returned to its recent bearish trend by dropping below $10,300. Most altcoins follow with some notable price dips, resulting in a near $10 billion evaporated from the total market cap.
Bitcoin Dips Below $10,300
As reported yesterday, the primary cryptocurrency recovered some of the recent losses and traded around the previous 2020 high from February at $10,500. However, the asset couldn’t maintain its position and began free-falling once again.
In just a few hours, BTC went from its daily high of above $10,500 to its intraday bottom of $10,130 (on Binance). Since then, the digital asset has recovered some ground and is trading now just around $10,300.
Bitcoin’s current position places it close to the support level at $10,290. If BTC further breaks below, it could head towards $10,200 and the psychological $10,000.
Adverse price developments are evident among most financial markets. Gold, which typically performs similarly to Bitcoin, dipped from its high of $1,900 per ounce to about $1,850.
The most prominent Wall Street stock market indexes also closed in the red yesterday’s trading session. The S&P 500 went down by 2.4%, the Dow Jones Industrial Average by 2%, and Nasdaq lost the most value (-3%).
Red Dominates The Altcoin Market
Most alts bleed out today. Ethereum has declined by nearly 4% and it trades at $325. Ripple (-3%) fights to stay above $0.22. Bitcoin Cash, Binance Coin, Crypto.com Coin, and Litecoin have also dropped by about 3%.
Some lower-cap alts have decreased by double-digit percentages. DigiByte (-18%), Ren (-15%), Orchid (-13%), Reserve Rights (-12%), UMA (-12), OMG Network (-10.5), and Algorand (-10%) lead the way.
A few coins trade in the green as well. Helium has surged by 40% after being listed on the leading cryptocurrency exchange Binance. Uniswap (13%) and HedgeTrade (10%) follow.
Ultimately, though, the crypto market cap has dropped from yesterday’s peak at $332 billion to $325 billion.
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