Zipmex Receives Digital Asset Exchange License from Thailand’s Authorities

Asia’s popular cryptocurrency exchange Zipmex, which currently operates in Singapore, Indonesia and Australia, is the first exchange in 2020 to receive a coveted digital assets exchange license from Thailand’s regulatory authority.

According to the official press release on January 20, Zipmex became the first exchange of this year to have been granted a license from the nation’s Ministry of Finance and the Securities and Exchange Commission (SEC).

Following the news, Zipmex told the press that the process of securing the license hadn’t been easy as the firm had to comply with numerous rigorous conditions such as proving they had robust finances, with a shareholder equity worth over 50 million baht ($1.6 million) as well as proving to operate at a high standard in their IT and cybersecurity systems.

In addition to that, licensed digital assets operators that are granted a license are – under the current Thai law – classified as financial institutions and must comply with Anti Money Laundering reporting obligations.

Akalarp Yimwilai, co-founder and CEO of Zipmex, remarked excitedly that it took about twelve months to receive the much-awaited approval from the SEC.

“Being licensed and regulated by the SEC was always our main priority as we believe that being a regulated entity will help provide trust to newcomers looking to enter the digital assets market,” Yimwilai said in a statement.

Zipmex is yet to go live with services in Thailand. Yimwilai stated that the exchange is currently awaiting activation, and will launch the platform within the first quarter of 2020.

In the meantime, so far around twenty crypto firms have applied for approval from the SEC, and only four have been granted the license, including Bitkub Online, Bitcoin Exchange, Coins TH Co., and Satang Corporation. The SEC cited insufficient and inconsistent Know-Your-Customer procedures as the reason for rejecting the other firms.

Thailand’s SEC regulates crypto firms under the “Emergency Decree on Digital Asset Businesses B.E. 2561,” which was issued in 2018. Huobi Thailand also recently obtained a license but is yet to start operations.

The license follows Zipmex’s $3 million pre-Series A funding round last September. The round was led by Infinity Blockchain Holdings. Zipmex has raised a total of $5 million to date, and its current valuation stands at $18 million, according to the exchange.

The Singapore-based exchange is one of the most preferred cryptocurrency exchanges of the Asia Pacific region, as the platform managed to handle trades worth 67 billion Indonesian Rupiah within one month of its launch in Indonesia. Since then, it has witnessed an exponential rise in its trade volumes and charted its expansion plan to the tee. As to what lays ahead, Yimwilai revealed that it has its eye on Vietnam for its next expansion.

Cryptocurrency Exchange Bithumb Files to Have Their Tax Bill Annulled

South Korea’s leading cryptocurrency exchange Bithumb has just filed a complaint against the National Tax Service (NTS) regarding the recent groundless tax fee of around $69 million the agency imposed last November.

According to local news, the exchange has filed a complaint with the Tax Tribunal, claiming the tax fee, imposed in November 2019, to be groundless as digital currencies are not legally recognized as currencies and therefore the agency lacks the authority to impose a tax on any kind on their assets.

The article quoted an anonymous Bithumb official, who commented on the issue:

“We paid the full amount and have since been preparing for arguments. We believe we will be given a chance to clarify our stance in court.”

Concurrently, the agency stated it had imposed a withholding tax of over $69 million on Bithumb’s foreign customers’ income last November. Mostly applied to employment income, a withholding tax – also known as a retention tax – is an income tax paid to the government by the payer of the income rather than by its recipient.

The agency then claimed that gains withdrawn in Korean won from accounts held by foreigners are taxable income. In other words, the NTS classified the exchange’s cryptocurrency trading of foreigners as miscellaneous income, recognizing capital gains as assets.

Choi Hwoa-in, an adviser to Korea’s financial regulator, the Financial Supervisory Service, refuted this by arguing that cryptocurrencies are not considered an asset under the current law of the country, and therefore, it is not taxable.

“The Ministry of Economy and Finance already made that clear. The NTS pushing ahead with the tax imposition is baseless and groundless, especially since it is still awaiting the ministry opinion on the same matter it sought again.”

Furthermore, Choi noted that the exchange „filing a suit after paying the full amount in that sense is a calculated move expecting partial to full return of the amount paid.“

The Tax Tribunal will have 90 days to determine whether to grant or dismiss Bithumb’s motion seeking to nullify the 80.3 billion won ($69.1 million) in withholding tax the NTS imposed last November.

An anonymous NTS official told The Korea Times that as the matter is ongoing, they cannot comment.

Meanwhile, the dispute coincides with ongoing efforts to impose tax on the new form of digital currency, which has long been criticized for its use as a means of speculation among seekers of short-term windfall gains. It also follows the growing public protests that demand fair taxation based on the principle that “where there is an income there should be a tax.”

Bitstamp and Silvergate Partner Up to Offer Leveraged Trading Options

California state-chartered Silvergate Bank has announced today the launch of a new product in collaboration with Luxembourg-based crypto exchange Bitstamp.

The new product, called the SEN Leverage, was created by Silvergate in order to provide its customers with the opportunity to obtain U.S. dollar loans collateralized by Bitcoin (BTC) with leverage provided by the Silvergate Exchange Network (SEN) platform.

According to a press release, the product will use the platform to fund loans and process repayments in real-time, with deposits and withdrawal of U.S. dollars available around the clock. Notably, the bank will first roll out a pilot version of the product which will be offered only to some selected institutional clients.

First established in 2017, the Bank’s API-based SEN has seen rapid adoption with over $10 billion in USD transactions taking place during just the third quarter of 2019 alone. In addition to that, the network has also attracted a series of big-name exchanges, including Kraken in November and Gemini in August.

On the other side of this launch partnership is Bitstamp Ltd., a major digital currency exchange founded in 2011.  As stated in the announcement, Bitstamp’s role as Silvergate’s first partner will be to provide custody services and manage the Bitcoins used as collateral. The exchanhe has previously worked with the bank during SEN Leverage’s development phase.

Currently, Bitstamp actively supports five cryptocurrencies for trading (BTC, ETH, LTC, XRP, BCH) and saw an average daily trading volume of around $113 million in 2019.

Upon the announcement, Miha Grcar, Head of Business Development at Bitstamp stated:

 “We see growing demand from our institutional customers to access greater trading capital. […] We already use SEN to enable withdrawals and deposits to Bitstamp accounts within minutes at any time and look forward to offering our clients additional flexibility to manage their bitcoin positions through SEN Leverage.”

On the other hand, Alan Lane, Chief Executive Officer of Silvergate explained in his statement that this new product came to be as their digital currency customers have asked the institution to help them create greater capital efficiency.

He further said that “we are excited to be working closely with Bitstamp to solve this problem for them. The integration and work that our collective teams have put into this over the past six months is a testament to the conviction we have to serve our customers.”

Silvergate’s existing presence in the crypto space is significant, based on the number of industry clients it maintains. Founded in 1988, Silvergate has changed its business models over the years in order to accommodate the ever changing industry.

Most recently, it has switched its focus towards crypto businesses by providing banking services to the crypto firms, and therefore filling the gap between the hostile banking sector and the digital asset industry.

Silvergate revealed that it is providing banking services to 756 crypto clients till last September, according to a filing with the U.S. Securities and Exchange Commission (SEC) last year. Furthermore, it also tapped major clients including Coinbase, Bitstamp, Genesis Trading, Blocktower Capital, Polychain Capital, and Xapo.

CME Group Launches Highly Anticipated Bitcoin Futures Options

The Chicago Mercantile Exchange (CME) – the world’s largest futures exchange – has announced the launch of its new Bitcoin (BTC) futures options.

After having been granted the necessary regulatory approval, the new BTC futures options is as of January 13 live on the company’s official website. The news follows the company’s initial plans , which were first announced in November 2019. Accordingly, the new product came to be in response to the growing interest in digital assets as well as customer demand for tools to manage BTC exposure.

The new BTC futures options will be added to the exchange’s repertoire and hopefully appease the growing interest of the investors on the platform. Due to the increased demand, CME had also filed to double its monthly BTC futures open positions limit to 10,000 BTC in September of last year.

In the meantime, the new product will allow traders to use alternate strategies as well as allowing them to save on margins by using margin offsets. The options will have a tick size of $5 per BTC and therefore, given that the contracts are 5 BTC, the options will move in increments of $25.

Furthermore, CME said that the fees for options on BTC futures will match the BTC futures according to the CME Fee Schedule. In addition to that, the firm plans to introduce a market maker program to support the on-screen market development of BTC futures options.

Tim McCourt, global head of equity index and alternative investment products at CME Group, stated that options had been a product that’s been in high demand from customers ever since they launched futures back in December 2017.

Upon the announcement of the new product, McCourt expressed excitement at having brought this new risk management tool to the market. He further explained that a lot of companies who use futures contracts, look to use strategies unique to option trading.

“It allows people to precisely manage the price risk associated with Bitcoin. You can deploy overriding strategies by selling calls, you can buy downside protection. These are things you can’t necessarily do with a linear one delta future,” said McCourt.

He further noted that lots of people are looking to deploy similar benefits and use cases for Bitcoin that they’re doing for other asset classes.

Meanwhile, the announcement comes amidst BTC futures traders reportedly generating at least $20 billion in daily volume last week. According to data from analyst Skew Markets, global futures trading volume alone exceeded $20 billion on January 8th.

CME is the third global derivatives exchange to launch trading for options on Bitcoin futures. Digital assest platform Bakkt – backed by the Intercontinental Exchange (ICE) – was the first exchange to launch Bitcoin options in the United States. Bakkt was then followed by cryptocurrency derivatives exchange FTX that quietly launched Bitcoin options trading on January 11.

New Anti-Money Laundering Directive Prompts Deribit to Move Operations Overseas

Prominent Cryptocurrency Futures and Options Exchange, Deribit has announced that it will be moving its operations to Panama.

The derivatives platform announced it is leaving the Netherlands to avoid strict regulations of the Fifth Anti-Money Laundering Directive (5AMLD) that is set to come into force in 2020.

Deribit informed through a blog post that from 10 February 2020 the platform will be operated by DRB Panama Inc., a 100% subsidiary of the Dutch entity.

The latest regulations become effective on January 10, with European countries encouraged to start the implementation of know-your-customer measures for cryptocurrency companies. Cryptocurrency firms will be directed to register with local authorities and obtain information about the source of funds from their users.

European nations are expected to follow the baseline measures of 5AMLD, but every country can individually go above and beyond if desired.

The company claimed the Netherlands’ adoption of “very strict” anti-money laundering (AML) regulations applied to cryptocurrency firms spurred the decision to move elsewhere.

“If Deribit falls under these new regulations, this would mean that we have to demand an extensive amount of information from our current and future customers,” according to the blog post. 

Several cryptocurrency companies decided to close down, citing issues of customer privacy. Deribit, motivated to continue providing their service chose to move their operations.

While the user experience will remain the same, the servers will be moved to London, and all client positions, holdings, equity, trade history, fees, rate limits, wallets, portfolio margin arrangements and other systems will be transferred from the Dutch Deribit B.V. to the Panama subsidiary.

“We believe that crypto markets should be freely available to most, and the new regulations would put too high barriers for the majority of traders, both – regulatory and cost-wise,” said the company.

Additionally, Deribit will also be introducing its know-your-customer (KYC) system. This will be implemented with the help of software firm Chainalysis and verification and payment company Jumio. The KYC requirement will be enforced for traders that want to withdraw amounts higher than 1 BTC per day.

At the same time, U.S. customers will remain barred from operating on its platform.