The Chilean finance minister told local media that the government is making progress on clear crypto legislation.
Chile’s Minister of Finance Felipe Larrain claims that a group of state institutions “is making progress” in developing crypto regulation, local daily newspaper La Tercera reports Friday, Dec. 7.
According to Larrain, the Ministry of Finance is working with Chile’s central bank and Financial Stability Board to provide a balanced legal framework for the crypto industry. He noted that crypto regulations are but one aspect of a wider project to provide legal definitions for the fintech sector. Larrain noted that crypto regulation might take time:
“We are aware that it is important to move in this direction. But all countries in the world are facing similar problems [with crypto regulation], and there is no magic wand to solve them. We are exploring the best solutions to see how to regulate this brand new phenomenon.”
In March, following the closure of crypto-business accounts in major Chilean banks, Larrain promised to develop a legal framework to normalize the situation. Nine months on however, no such legislation has come forward, although the Chilean parliament has made some forays into regulating blockchain technology.
Larrain’s recent statement comes shortly after a Chilean Supreme Court decision, annulled a previous ruling by an anti-monopoly court to protect local crypto exchange Orionx and to reopen its banking accounts. In the decision, a judge claimed that cryptocurrencies “have no physical manifestation and no intrinsic value.”
Despite the alarming publications in local media, Chile’s crypto entrepreneurs told Cointelegraph that the new decision has nothing to do with prohibiting crypto exchanges. Both Orionx and Buda.com, which have been involved in a legal battle since March, assure that their banking accounts will not be affected, as the anti-monopoly court’s decision is still in force.
U.S.-based crypto exchange Coinbase “explores” adding support for 31 cryptocurrencies, including major coins such as XRP, EOS, ADA.
Major United States-based crypto exchange Coinbase is “exploring” the possibility of providing trading support for over 30 cryptocurrencies. Potential new additions include Ripple (XRP), EOS and Cardano (ADA), according to a press release published Friday, Dec. 7.
The company has revealed a list of 31 cryptocurrencies, including the aforementioned three, as well as NEO, Tezos (XTZ), and others. Coinbase states that it “will be working with local banks and regulators to add them in as many jurisdictions as possible.”
List of cryptocurrencies Coinbase is considering to add. Source: blog.coinbase.com
Coinbase added that a cryptocurrency being present in the list is not a guarantee that it will ultimately be added, as any coins could face some restrictions or might not be listed at all, after their evaluation is finished:
“Adding new assets requires significant exploratory work from both a technical and compliance standpoint, and we cannot guarantee that all the assets we are evaluating will ultimately be listed for trading. Furthermore, our listing process may result in some of these assets being listed solely for customers to buy and sell, without the ability to send or receive using a local wallet.”
Back in September, Coinbase announced a new listing process that would allow it to add digital assets faster than before. However, the crypto exchange has pointed out that the new procedure only applied to digital assets that were compliant with their local regulations. Thus, certain assets listed by Coinbase might only be available to customers in particular jurisdictions.
A recent report by CryptoCompare shows that South Korean crypto exchanges saw $200 million more in average daily trade volumes than their Maltese competitors.
Cryptocurrency exchanges registered in South Korea have overtaken their Maltese-registered counterparts by average daily trade volume in November. This is according to a report by cryptocurrency market data provider CryptoCompare, published Thursday, Dec. 6.
The November edition of CCCAGG, a monthly crypto exchange review published by CryptoCompare, shows that South Korean exchanges, including Bithumb, Coinone, Korbit and Upbit among others, registered a combined $1.4 billion of average daily trade volume. In the meantime, their competitors in Malta had only achieved $1.2 billion.
This is a significant change when compared to the October’s CCCAGG. According to CryptoCompare, back then the combined average daily trade volume of Maltese exchanges was at $1.4 billion, whereas South Korea was lagging behind with only $840 million, followed by Hong Kong’s $560 million.
The reason behind the switch might be that in November, Bithumb — a major South Korean exchange — allegedly overtook Binance as the top exchange in terms of daily trade volume. According to CryptoCompare, Bithumb averaged at $1.24 billion last month, while Binance has only reached $641 million.
It is important to note that while Bithumb’s daily trade volume has increased significantly in November, the number of its daily visitors has visibly decreased, as per CCCAGG. CryptoCompare’s own analysts have suggested that this could point to the adoption by the exchange of some incentive programs, such as “competitions, trans-fee mining, [and] rebate programs.”
In late October, South Korea’s main financial regulator, Financial Services Commission (FSC), officially allowed banks to service crypto exchanges, provided they implement adequate Anti-Money Laundering (AML) safeguards and apply Know Your Customer (KYC) checks.
As Cointelegraph reported later, the adoption of this stance by the FSC could provide an impetus to the development of the crypto industry in South Korea.
November in South Korea was also marked by the shutting down of a local crypto exchange Zeniex. A joint project by South Korea and China operating since May 2018, the exchange was mentioned in the FSC’s warning about investing in unauthorized crypto exchanges and Initial Coin Offerings (ICOs).
The prerequisites and aftermath of the Supreme Court decision regarding crypto exchanges accounts.
On Monday, Dec. 4, the Chilean Supreme Court welcomed the decision of state-owned Banco del Estado to close the accounts of local cryptocurrency exchange Orionx. The new phase in the legal battle between the banks and several crypto exchanges — including Buda.com and CryptoMarket (CryptoMKT), which had appealed against the denial of services — may look somewhat sinister from the outside. But the main players of the Chilean crypto market assured Cointelegraph that the recent decision could not prevent them from operating in the country.
Exchanges vs. banks — a brief outline of the confrontation
In March, two crypto exchanges — Buda and CryptoMKT — came out with a joint statement, claiming that some banks in Chile had closed their accounts. “We are killing the whole industry long before exploring it and understanding its approach,” the release read. CryptoMKT also claimed that another bank received instructions not to deal with anyone who is related to cryptocurrencies. Both crypto businesses then urged the Chilean Association of Banks (ABIF), which coordinates all the private and foreign financial institutions in the country, to intervene — or at least clear up its stance on cryptocurrencies.
A response was given within a few days of the statement: The president of ABIF, Segismundo Schulin-Zeuthen, told Chilean business outlet Diario Financiero that the banks were free to moderate relations with their clients. Schulin-Zeuthen also criticized Buda and CryptoMKT for “[generating] false judgments about the institutional role of the ABIF,” while the association’s role consisted of discussing and analyzing existing regulation in the finance sector.
The bank that closed the crypto exchanges’ accounts was soon revealed to be Itau Corpbanca, the fifth-largest bank in Chile, along with a branch of Latin American banking giant Itau Unibanco and Scotiabank Chile, a branch of a Canadian banking group by the same name. They were soon joined by Banco del Estado — the only public bank in the country managing up to $52 billion in assets, as of 2017.
Later in April, Itau Corpbanca opposed the crypto industry’s stance that the move was illegal and insisted that the closure of accounts result in an internal investigation. According to Itau, Buda had failed to comply with their Anti-Money Laundering (AML) policy. Moreover, the bank accused the exchange of failing to verify the users’ data, as Buda’s website only requested basic information during the registration and did not verify the identities of its clients.
The whole story, including the media coverage and official responses, fueled a huge backlash on social media. As Cointelegraph reported in April 2018, crypto enthusiasts blamed financial institutions for “a huge negative blow to Chile’s reputation as a rational, innovation-friendly, free market economy,” stating that those actions “stifle innovation.” Twitter users created a hashtag #ChileQuiereCrypto (Chile wants crypto), urging the government to resolve the problem with crypto exchanges.
In mid-April, the Chilean crypto exchanges decided to fight for their rights and started a legal battle, applying to Tribunal de Defensa de la Libre Competencia (TDLC) — an independent, anti-monopoly institution established to ensure that free competition rules are not violated. Buda and CryptoMkt, joined by Orionx (whose accounts had also been closed), had filed a petition against several banks, including Itau Corpbanca, Scotiabank and Banco del Estado.
Guillermo Torrealba, Buda’s co-founder and CEO, summed up the whole turmoil in an comment for Cointelegraph:
“There hasn’t been one regulator, legislator or government official saying that cryptocurrencies aren’t legal, it was just the decision of a very powerful sector of the economy: the banking industry.”
Blockchain regulation instead of crypto promises
Only a few weeks after the first complaint, TDLC ruled against Banco del Estado and Itau Corpbanca, forcing them to re-open Buda’s accounts.
Later in June, the same decision was made in favor of Orionx. As the company wrote on its official Facebook page, the anti-monopoly court ordered Banco del Estado and Banco de Chile — another major bank in the country that was mentioned in the initial lawsuit — to reopen Orionx’s accounts within three days.
It would be logical to assume that the long-term battle would force Chilean authorities to introduce relevant legislation on cryptocurrencies to prevent such situations in the future.
In late March, following the first news of the closure of the crypto accounts, Diario Financiero spoke to Chile’s Minister of Finance Felipe Larrain. He was reassured that both the Ministry and the Central Bank of Chile had started exploring the possibility of crypto regulation to normalize the situation:
“Technical progress and the digital economy bring people new services; we have to consider this fact. But when the regulation issues arise […], we have to avoid situations that could affect the normal development of markets and healthy competition.”
Chile’s central bank reaffirmed that intention in May. Mario Marcel, the president of the institution, proposed incorporating the crypto regulation in order “to allow having a registry of participants in these activities and thus have information to monitor the associated risks.” Marcel also stated that the industry needed more transparency and consumer protection — as cryptocurrencies could possibly be involved in illicit activities, such as money laundering and the financing of terrorists.
Six months after the recent claim, there is still no sign of a legal framework for cryptocurrencies in Chile. In October, local deputies instead introduced a resolution on blockchain adoption to the lower house of the country’s parliament. Miguel Angel Calisto and Giorgio Jackson — along with eight other MPs — urged Chile’s President Sebastian Pinera to implement blockchain in all the country’s public areas, along with carrying out studies on the advantages of decentralized security and energy solutions.
The Supreme Court comes into play
A new, unexpected chapter began on Dec. 4, when the Chilean Supreme Court published its resolution in favor of Banco del Estado. As cited by major Chilean newspaper El Mercurio, the document reads:
“The resolution taken July 11, 2018, is revoked. It is declared in its place that the protection appeal filed by Orionx SPA against the Banco del Estado is rejected.”
The Supreme Court further explained that the actions conducted by Banco del Estado were not “unjustified” or “illegal,” as the bank acted correctly and did not violate any rules of the Chilean constitution. Moreover, the top court stated that the cryptocurrencies “have no physical manifestation and no intrinsic value.” The document also proclaimed that they are controlled neither by a government nor by a corporation, citing the characteristics of crypto as reasons for letting banks refuse services to the exchange.
No pasaran: How Chilean crypto exchanges treat the highest court’s decision
Despite the apparent harshness of the Supreme Court’s decision, Chilean crypto exchanges believe it will have no bearing on the case. Reacting to the aforementioned resolution, Orionx published a statement on their official Facebook page:
“Orionx wants to clarify that this ruling does not imply the closure of the company’s current bank accounts. [D]ue to the fact there is a current precautionary measure issued by TDLC, which prevents banks from closing the mentioned accounts.”
Moreover, Orionx emphasizes that it disagrees with the arguments provided by the Supreme Court and regrets the latest ruling.
Buda shares the same stance, also citing the ruling of the anti-monopoly court in its official statement:
“The valid ruling in our favor pronounced by TDLC assures that our bank accounts will be maintained during the trial that is held in the mentioned court.”
Moreover, the firm insists that the Supreme Court’s resolution on Orionx has nothing to do with their company. Speaking to Cointelegraph, Buda’s co-founder Agustin Feuerhake said:
“The situation with Buda.com has been slightly different. Since [the] very beginning[,] we had a relevant KYC [Know Your Customer] policy. We also tackle money laundering and terrorism financing, so the bank’s argument to close an account does not apply to our case. There are no anonymous users on Buda.com.”
Feuerhake further added that the Chilean courts are not evaluating the ban on crypto exchanges, but rather seek ways to “condemn banks for abusive behavior” toward them.
As the decision of the Supreme Court did not mention Buda and CryptoMKT, it might be a turning point in the plot. The legal framework for crypto, if introduced, could side with crypto exchanges or stand with the banks.
A security researcher claims that the number of MikroTik routers affected by cryptojacking malware has doubled since August 2018.
They revealed that routers by Mikrotik, a Latvian manufacturer of network equipment, were compromised by at least 16 different types of malware including Coinhive, a cryptojacking software mining privacy-oriented cryptocurrency Monero (XMR).
By September the estimated number of compromised routers surpassed 280,000, according to Bad Packets. In the recent tweet VriesHd explains that he has only checked three possible ways to abuse MikroTik, although there may be several more. VriesHd’s review, which is only based on preliminary projections, shows 415,000 routers affected.
As VriesHd told tech news outlet The Next Web, the attackers have recently switched from Coinhive to other mining software, such as Omine and CoinImp. He also noted that the exact number might be slightly off, as the data only reflects IP addresses infected. However, he believes the number is still high. “It wouldn’t surprise me if the actual number […] would be somewhere around 350,000 to 400,000,” VriesHd said.
As Cointelegraph previously reported, Brazil is the most affected by cryptojacking. According to research by Iran’s cybersecurity authority, Brazil was hit over 81,000 times by Coinhive in October alone. India came in second with around 29,000 incidents, followed by Indonesia with more than 23,000. Iran itself experienced around 11,000.
According to a Bloomberg report, the total number of crypto mining malware infections increased 500 percent this year after hackers allegedly stolen a code targeting Microsoft Systems from the U.S. National Security Agency (NSA).
Another report by network and enterprise security company Palo Alto Networks found that around 5 percent of all Monero in circulation was mined through cryptojacking.