Shinhan Bank, the second largest financial group in South Korea by assets, is redoubling its efforts to police accounts related to cryptocurrency exchanges, according to local press reports. The goal? To completely quash anonymous crypto transactions in the country.

The bank is reportedly planning to increase the number of staff scrutinizing such accounts, as well as continuing to develop systems dealing with potential fraud and monitoring transactions. It also said that it would be working to develop artificial intelligence systems to help it spot suspicious activity.

Because the news suggests a change in policy, it has generated some buzz in the country. But the July 1 move by the institution is little more than the latest step in the refinement of relevant processes and procedures, a development that has been ongoing for more than a year.

Crypto is not being locked out from the Korean banking system. The landscape is evolving with changes in the business and in the compliance environment.

Links between between commercial banks and cryptocurrency exchanges were dramatically altered in early 2018 when the Financial Services Commission (FSC), a regulator, issued a batch of rules. The cryptocurrency-related AML guideline requires traders of crypto on the exchanges to open real-name bank accounts at the same bank servicing the exchange itself.

In short, crypto traders could no longer be anonymous in South Korea.

The document also lays out a number of general anti-money laundering principles for crypto in the country. Suspicious transactions are defined. A bank checklist is mandated, with a line for a source-of-funds determination. And foreigners are prohibited from opening bank accounts for cryptocurrency trading.

What followed was a series of advances and retreats as the sector got comfortable with the regulations and as the regulators fine tuned the requirements.

The rules were updated in June 2018, with the FSC saying that the banks had to begin the constant monitoring of the relevant accounts. It had become concerned about commingling of funds and wanted to make sure the institutions were keeping customer money and deposits for company operations separate.

Late in 2018, the head of the FSC let the sector know that the regulators are accepting of crypto. He said, in no uncertain terms, that banks are permitted to take crypto-related deposits, as long the know-your-customer (KYC) principles outlined earlier in the year were followed.

Around the same time, Kookmin Bank and Nonghyup Bank (NH) came under the scrutiny of the FSC for failures in terms of implementing the anti-money laundering guidelines. The two banks plus Hana Bank were later inspected by the Financial Supervisory Service (FSS), another domestic regulator, for similar reasons.

The sector has come under additional pressure lately, as the Financial Action Task Force (FATF) will be requiring the sharing of customer information by cryptocurrency exchanges. It is likely that South Korea will closely adhere to the letter and spirit of what the FATF is demanding. Implementation of the 2018 guidelines will become more of a priority for the regulators.

The institutions themselves have been somewhat manic about the business.

Kookmin Bank, the country’s largest bank by assets, reportedly withdrew from offering cryptocurrency accounts for a time, but then in 2019 signed deals to enhance its capabilities in digital currency asset management. Due to the sudden closure of accounts by Kookmin, business gravitated toward Shinhan Bank in early 2018.

The Shinhan news did not seem to worry the exchanges themselves.

“The Korean government allowed Bithumb to use NH Bank only. Therefore, we have nothing to do with Shinhan Bank, and it is not relevant to our operations,” according to a source at Bithumb, which is controlled by Singapore’s Blockchain Exchange Alliance (BXA) and is by some measures the largest exchange in Korea.

Image via Shutterstock.

A consortium of Australia-based financial services companies have teamed up with IBM and shopping center operator Scentre Group to launch a pilot that puts retail lease bank guarantees on a private blockchain.

Lygon – launched with participation from ANZ, Commonwealth, and Westpac banks on July 3 – will collect and digitize data from a test group of Scentre Group lease holders across Australia.

The firms involve hope the Lygon platform will shorten the time it takes for banks to issue guarantees, reducing that time to a day. The same validation could take up to a month if being issued on paper, based on current practices.

Additionally, digitization reduces the risk of fraud and errors across the billions of dollars banks guarantee, the Lygon backers contend. All Australian retailers need a bank guarantee to secure such a lease and operate their stores.

Contingent on a successful pilot, Lygon will offer access to the platform to all bank issuers, lease applicants, and beneficiaries. The five founding members may also expand research into other industry uses.

IBM did not respond to request for comment.

The Lygon effort represents the latest blockchain-based system built specifically for bank guarantees. In 2017, the Belarussian Central Bank approved usage of blockchains for this kind of service, and in 2018 the multinational banking firm Standard Chartered partnered with manufacturing giant Siemens for a trade finance bank guarantee pilot.

A similar pilot involving IBM, Westpac, Scentre Group and ANZ was successfully concluded in 2017. At the time, the consortium concluded that in order to receive industry adoption, the project “needs to be scaled and discussed with a broader range of participants.”

Image Credit: Alex Cimbal / Shutterstock.com

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Bitcoin (BTC) looks set to close in the green on U.S. Independence Day for the fifth consecutive year, having recovered nearly 25 percent from recent lows.

The top cryptocurrency by market capitalization rose 1.17, 1.79, 3.35 and 1.67 percent on July 4 in 2018, 2017, 2016 and 2015, respectively, according to Bitstamp data.

BTC’s Independence Day performance in the years prior to 2015 is mixed. Prices saw little change in 2012, rose 3.16 percent in 2013 and suffered a 2.63 percent loss in 2014.

All-in-all, bitcoin, considered by some observers as an anti-establishment asset, has put on a good show on the U.S. Independence Day in five out of the last seven years.

The cryptocurrency now appears poised to extend the four-year winning trend, as the recovery from recent lows seems to be gathering traction and the short duration charts are now flashing bullish signals.

As of writing, BTC is changing hands at $11,600, representing 4 percent gains on a 24-hour basis, having hit a high of $12,061 earlier today. At that price, the cryptocurrency was up more than $2,400, or 25 percent, from the July 21 low of $9,614.

Hourly chart

BTC jumped 4 percent in 60 minutes late on Wednesday, confirming an upside break of the symmetrical triangle – a bullish continuation pattern – on the hourly chart.

Notably, the breakout was backed by a sharp rise in buy volumes (green bars). In fact, buy volume climbed to its highest since July 1, invalidating the bearish volume divergence represented by the falling trendline.

Therefore, the path of least resistance is on the higher side and prices could rise toward the bearish lower high of $12,448 created on June 26.

While the momentum has cooled somewhat in the last 10 hours, the minor price pullback seems to have taken the shape of a bull flag – a pause that often restarts with upwards momentum.

The probability of BTC posting daily gains with a UTC close above today’s opening price of $12,061 would drop if the price finds acceptance below $11,385 – the low of yesterday’s high-volume bullish candle (horizontal line).

That, however, looks unlikely, as the daily chart is reporting a bullish candlestick pattern.

Daily chart

BTC rose 10.5 percent on Wednesday, marking a strong follow-through to the dip demand highlighted by the preceding day’s bullish hammer candle.

The candlestick pattern indicates the pullback likely ended at $9,614 and thus prices could continue to rise toward the recent high of $13,880.

Disclosure: The author holds no cryptocurrency at the time of writing

Bitcoin image via Shutterstock; charts by TradingView

Fujitsu Laboratories has unveiled what it calls “digital identity exchange technology” aimed to increase the security of online transactions.

The tech, based on blockchain, makes it possible for individuals and businesses making online transactions to confirm the identity of other parties involved. More importantly, the identification system gauges the the “trustworthiness” of the other party’s credentials, the firm said in a press release.

According to Fujitsu Labs:

“The rapid advance of digitalization in recent years has been accompanied by a dramatic rise in the number of online transactions in which users cannot see one another face to face, making it difficult to judge the credibility of the other party and leading to heightened concerns around trust. With reports of fraud and instances of people falsifying personal credentials like work history and professional qualifications growing increasingly prevalent, ensuring the circulation of high-quality, reliable identification data poses an urgent challenge to users and businesses alike.”

The new ID tech addresses this by mutually evaluating the parties in a transaction and looking at past transaction data to analyse the relationships between the parties, as well as others who have transacted with them previously.

Effectively it determines a reputation and rating for each party and records these evaluations on a distributed ledger.

The firm explains:

“A trustworthiness score is attached to each user by weighting factors including how many trusted users evaluate them highly. Even if a user colludes with a third party to improperly raise their evaluation, the graph-structured relationships will reveal information such as the weakness of their relationships with other users, giving the system the potential to identify misrepresentations.”

Fujitsu said the technology will enable more secure online services, with the added advantage of “user-friendly” features such as graphics that provide visualizations of the relationships between users.

The Japanese tech firm has been working on numerous blockchain projects in recent years, from providing the underlying tech for inter-bank settlement, to launching a “ready to go” blockchain service that it said could provide a minimum viable product in just five days.

It’s also developed tech aimed to spot problems with smart contracts on ethereum platforms.

Fujitsu image via Shutterstock

When David Marcus said that he expected many Libra-supporting wallets to come to market to compete with Calibra, perhaps he wasn’t expecting such a quick response.

The developers at ZenGo, an Israeli startup that recently released a keyless, non-custodial retail wallet, just published open source code for Libra’s first non-custodial wallet, just two weeks after Facebook’s announcement.

This is the first alternative to the Calibra wallet, a proposed custodial wallet that will maintain oversight of user’s funds. A Facebook subsidiary of the same name will develop the Calibra wallet and other financial services for the Libra currency.

ZenGo’s product – currently available only on the Libra testnet, without a user interface – will instead ensure complete user control over funds. Additionally, by drawing on a Threshold Signatures Scheme (TSS), the wallet will be keyless.

In a note published today on Facebook, Marcus attempted to respond to some of the criticism Libra has seen. He said, “You’ll be able to use a range of custodial and non-custodial wallets that will have full interoperability with one another, meaning you’ll be able to pay and receive payments across wallets from different companies, or use a software wallet you’d operate on your own.”

To some extent, ZenGo’s announcement confirms this claim. Though Marcus also said, “Facebook won’t have any special responsibility over the Libra Network. But we hope that people will respond favorably to the Calibra wallet.”

Threshold signatures are a sub-domain of multi-party computation, which addresses key management issues by creating a modular lock that allows for several different non-trusting computers to anonymously bring together individual fragments of a complete key.

Instead of having users maintain control over their private key (an extreme reaction against custodianship), which opens up the potential for loss or theft, ZenGo acts as a co-signer with the user, bringing together constituent parts of a fully secured cryptographic key.

TSS maintains user’s authority because transactions can only be initiated by the user, and can never be modified by the co-signer.

“The idea here is to offload the burden of key management from the user. If Libra is going to become a widely adopted coin there is no way a mainstream audience will know how to deal with back-up and key recovery, or even multi signature set up,” said ZenGo CEO Ouriel Ohayon. “By providing a TSS based wallet users will enjoy a custodian grade experience but without the complexities of Self Custodian Wallet.”

While it has not been released yet, the Calibra wallet will likely be password protected, subject to strict KYC regulations, and subject to Facebook’s proprietary orders. For now the Financial Crimes Enforcement Network has ruled non-custodial wallets do not qualify as money services businesses and therefore do not require KYC protocols.

The wallet will be integrated into ZenGo’s existing platform and will be capable of holding multiple assets. Ohayon also said it will support “t out of n” co-signers to further decentralize key ownership and increase wallet security.

Speaking to the quick turnaround, Ohayon said ZenGo spent a lot of time making their TSS compatible and reusable for different kinds of blockchains, including ether and bitcoin, and that it was “pretty trivial” to build support for the edDSA elliptic curve Libra runs on.

“Libra code is extremely sophisticated and well documented… Of course there are limitations and some unknown imperfections. They will have to strive for more decentralization and more privacy. We believe this will be possible to contribute in that direction. That’s why we chose to build from day one on it,” Ohayon said.

Kevin Weil, co-creator of Libra, and VP of Products at Calibra tweeted:

Wallet image via CoinDesk archives