YM Lee

High-ranking Iranian military leaders have been killed in an Israeli airstrike. According to a CNN report on the 13th (local time), Hossein Salami, the Commander-in-Chief of the Revolutionary Guard, Mohammad Bagheri, and other senior officials were confirmed dead. In response, Iranian military spokesperson Abolfazl Shekarchi emphasized, "Both Israel and the United States will pay a heavy price and suffer tremendous blows." Currently, Iran has suffered significant damage to residential areas outside of nuclear facilities due to the airstrike, and the intensification of Middle East conflict has caused a steep decline in both the Asian securities market and the virtual asset (cryptocurrency) market.

Caroline Pham, Acting Chair of the Commodity Futures Trading Commission (CFTC), emphasized that the Trump administration's cryptocurrency policy does not signify unconditional regulatory easing. According to a Cointelegraph report on the 13th (local time), Caroline Pham stated at the Coinbase Summit, "Although the Trump administration is showing a lenient stance towards cryptocurrencies, that does not mean regulations will be unconditionally relaxed. No one has an easy path," she said. She criticized the previous policies under the Biden administration. Pham remarked, "Biden's past laws and regulations have harmed not only cryptocurrencies but also the existing derivatives market. If you start arbitrarily changing the rules of the existing global derivatives market, targeting cryptocurrencies you deem problematic, it's the same as collapsing the market structure itself," she said.

Internet-only bank K Bank announced on the 13th that it has become a member of the Open Blockchain & DID Association (OBDIA). OBDIA is a non-profit blockchain association that received establishment approval from the Ministry of Science and ICT in 2018. In April, it established a 'Stablecoin Division' to examine the potential for and effectiveness of stablecoin legalization. Joint research is underway with major financial institutions such as KB Kookmin, Shinhan, Woori, IBK Industrial Bank of Korea, and the Korea Financial Telecommunications & Clearings Institute. A K Bank spokesperson said, "We will continue to prepare for financial innovation as a 'technology-leading bank' based on technologies including stablecoins and a variety of digital assets."

Member An Do-geol of the Democratic Party of Korea announced on the 12th that, in connection with the 'Digital Asset Basic Act' proposed by Member Min Byung-deok on the 10th, he would pursue the enactment of the 'Act on the Issuance and Operation of Digital Payment Instruments (KRW-based Stablecoin)' to additionally supplement the currency function and uniqueness of stablecoins. This bill is interpreted as a legislative effort to prevent Korea from lagging behind in the global digital financial industry if it misses the golden time to establish a foundation for digital payment instruments, as stablecoins are expanding their competitiveness in the global digital financial market. The need for introducing a KRW-based stablecoin system can be summarized in the following five points. △ (Securing digital payment instruments) Securing KRW-based digital payment instruments in line with the trend of rapidly expanding digital transactions and the global economy's transition toward digitalization △ (Securing monetary sovereignty) Proactively responding to concerns about the loss of monetary sovereignty—such as the replacement of the KRW's role or undermining the effectiveness of domestic monetary policy—if dollar-based stablecoins, which account for 98% of the global stablecoin market, expand in domestic use △ (Opportunity for KRW internationalization) Through the international acceptance of KRW-based stablecoins, expanding the KRW's internationalization and global economic influence is expected △ (Building next-generation financial infrastructure) Well-designed KRW-based stablecoins can promote cost reduction in payment and settlement, real-time interbank settlement, and the efficiency of domestic financial infrastructure, and, by sharing roles with CBDC (Central Bank Digital Currency), serve as core infrastructure for the future financial system △ (Innovation in fintech and the financial industry) The introduction of stablecoins is expected to enhance payment and remittance efficiency, and create various fintech and derivative financial services industries utilizing smart contract functions The bill promoted by Member An Do-geol is set to comprehensively include key aspects such as the qualifications for stablecoin issuers, licensing requirements, requirements for collateral assets, management measures from a currency management perspective, foreign exchange control, measures for building a sound stablecoin ecosystem, and safeguards for user protection. △ (Issuer qualification and licensing requirements) Regulations for capital requirements, qualifications, and licensing procedures for entities allowed to issue KRW-based stablecoins △ Collateral assets composed of high-liquidity assets (such as KRW deposits or government bonds), △ Collateral asset holdings of not less than 100% of the issued amount, △ (User protection) Transparent disclosure of issuance and circulation information, △ User protection provisions equivalent to those in the capital markets, △ Stipulation of payment guarantees or loss compensation for stablecoin holdings, △ Measures enabling the authorities to restrict issuance and circulation to protect users in case of significant risk situations △ (Management system and governance) Establishing tailored policy management and operational systems in consideration of effects on money supply and foreign exchange balance △ Establishment of policy management bodies through close cooperation between MOEF (foreign exchange authority), Bank of Korea (monetary authority), and FSC (financial authority), △ Division of roles such as issuance authorization, regulation of issuance and circulation scale, based on institutional expertise △ (Regulation on foreign exchange transactions) Ensuring smooth capital inflows and outflows, △ Promoting exchange rate stability, △ Guaranteeing monetary sovereignty, △ Establishing a rational management system for international remittance and receipt of stablecoins, considering harmonization with international standards Member An Do-geol stated, "If this bill is enacted, it will institutionally support the transition to a digital economy, secure monetary sovereignty for the KRW, and serve as a catalyst to significantly enhance the international competitiveness of the domestic digital asset platform industry."

The U.S. Securities and Exchange Commission (SEC) has officially abolished the so-called '3b-16' rule, a proposal that allowed the regulation of crypto asset (cryptocurrency) custody and decentralized finance (DeFi) platforms as national securities exchanges. On the 13th (local time), Eleanor Terrett, host at CryptoAmerica, reported via her X (formerly Twitter) account, "With the announcement of an expanded crypto asset custody rule encompassing all customer assets including digital assets, the SEC has officially announced the abolition of the 3b-16 rule and similar regulations from the Gensler era."

Israel has launched a preemptive strike against Iran. Tensions in the Middle East appear to be escalating. On the 13th (local time), Walter Bloomberg cited Channel 12, reporting that "Israel has launched a preemptive attack on Iran." According to an urgent report by Al Jazeera, Israeli Defense Minister Chak Israel also announced, "We are immediately declaring a special state of emergency nationwide." Following these reports, Bitcoin (BTC) has shown a sharp decline. Currently, Bitcoin is trading at $104,200 on the Binance Tether (USDT) market, a 4.01% decrease compared to the previous day.

It has been found that a significant number of large global family offices with assets under management of USD 1 billion or more are considering exposure to virtual assets (cryptocurrencies). On the 13th (local time), the global economic media Bloomberg, citing the BNY Wealth Investment Insight report, reported that "74% of global family offices with assets under management of USD 1 billion or more who participated in the survey have invested or are considering investing in virtual assets after the launch of the Bitcoin ETF." Sinead Colton, CIO of BNY Wealth, stated, "Currently, the most important factor in terms of digital asset investment is regulatory clarity. There is growing stability in the allocation of investments to virtual assets."

Global cryptocurrency exchange Coinbase is reportedly pushing to expand perpetual futures trading within the United States. According to a Reuters report on the 13th (local time), Coinbase plans to launch perpetual futures trading in the U.S. in accordance with regulatory standards set by the Commodity Futures Trading Commission (CFTC). With growing expectations for regulatory easing, the cryptocurrency market is gaining momentum, leading to more exchanges trying to expand their product lines. Max Branzburg, Vice President of Product at Coinbase, said at the Crypto Status Summit held in New York, "I am very pleased to share that perpetual futures trading compliant with CFTC regulations will soon begin in the U.S."

US banking groups, including the Securities Industry and Financial Markets Association, Bank Policy Institute, Independent Community Bankers of America, and Institute of International Bankers, have petitioned the US Securities and Exchange Commission (SEC) to repeal the regulations on cybersecurity incident disclosure requirements. According to a report by Cointelegraph on the 26th (local time), the US banking groups stated in a letter that "disclosing cybersecurity incidents directly conflicts with confidential reporting requirements aimed at protecting critical infrastructure and warning potential victims." The SEC's cybersecurity risk management regulations, announced in July 2023, require companies to promptly disclose cybersecurity incidents such as data breaches or hacking. However, the financial sector argues that these regulations were flawed from the start and have practical issues since implementation. If these requirements are accepted, virtual asset companies like Coinbase, which recently experienced data breaches, could delay the public disclosure of data breaches.

Global cryptocurrency exchange Coinbase is facing a class action lawsuit due to allegations of data breach and UK regulatory violations. According to a report by Cointelegraph on the 26th (local time), Coinbase investor Brady Nessler has filed a lawsuit in the Pennsylvania federal court, claiming that "Coinbase's data breach and violations of the UK's Financial Conduct Authority regulations have caused a significant drop in the market value of the company's common stock, resulting in substantial losses and damages to shareholders." Coinbase recently revealed that external cybercriminals bribed several customer support contractors to conspire and gain access to internal systems, stealing limited user account data. The attackers attempted to exploit the obtained data to extort approximately $20 million worth of cryptocurrency from users. Coinbase has announced that it will compensate for the cryptocurrency extorted by the attackers, and the compensation costs for recovery could reach up to $400 million.

Interview with Ismael Hishon-Rezaizadeh, CEO of Lagrange Real-world AI Use Cases by Large Corporations… Security Supported by ZK Blockchain is in a Turbulent Period… AI Innovation Will Occur "The blockchain industry is at a very interesting point of change. We believe that blockchain roll-up solutions centered around Zero-Knowledge (ZK) technology and AI use cases will create a major turning point." Ismael Hishon-Rezaizadeh, CEO of Lagrange, shared this outlook on the rapidly changing blockchain industry due to AI advancements in an interview with Bloomingbit on the 20th. We asked Ismael, a veteran in finance and blockchain with experience ranging from traditional finance to venture capital and zero-knowledge roll-ups, about the future of AI and blockchain integration and Lagrange's plans for utilizing zero-knowledge proofs. Real-world AI Use Cases by Large Corporations… Security Supported by ZK CEO Ismael Hishon-Rezaizadeh believes that global corporations will create real-world use cases for AI in the future. He thought that incorporating Lagrange's ZK technology into these AI use cases could create more stable services. Ismael said, "In the future, large corporations like Samsung, LG, and SK in Korea will inevitably use blockchain for business operations and security. In the past, the blockchain industry was a complex market with meme coins and scams, but now it will become a technology industry focused on real-world use cases led by companies." He added, "Lagrange is collaborating with numerous global companies and investor funds and is actively discussing with Korean conglomerates. DeepProve, a zero-knowledge machine learning (zkML) from Lagrange, will support companies in addressing ethical and fairness issues while utilizing AI." DeepProve provided by Lagrange offers decentralized ZK proofs that can be used by zero-knowledge applications, roll-ups, and protocols. By generating ZK proofs using a decentralized network, efficiency, cost savings, and stable operation can be secured. CEO Ismael Hishon-Rezaizadeh emphasized that Lagrange will do its best to be remembered as a 'trusted blockchain innovation leader' by users in the future. CEO Ismael said, "We are striving to develop solutions that make the potential of blockchain easier, more practical, safer, and scalable. Ultimately, we want Lagrange to establish itself as a 'trusted blockchain innovation leader' that helps the ecosystem grow continuously through advanced technology and reliable products." Blockchain is in a Turbulent Period… AI Innovation Will Occur CEO Ismael Hishon-Rezaizadeh started his career in the traditional financial market, went through a Web3 venture capital fund, and established Lagrange, a platform for generating decentralized proofs for ZK roll-ups and AI companies. He was confident that based on his experience at Lagrange, he could create new innovations by integrating AI and blockchain technology. He emphasized, "AI is creating tremendous changes in the evolution of technology, decentralized systems, and the virtual asset ecosystem. AI will be a key technology that enhances the efficiency of blockchain's consensus algorithms, improves transaction verification, and maximizes fraud detection capabilities within decentralized networks." Ismael thought that the most important thing for stably utilizing AI's explosive potential is trust and stability. Therefore, he emphasized that the use of ZK proofs for protecting sensitive information and preventing forgery is essential. CEO Ismael said, "AI is a very powerful tool, but concerns about trust and stability coexist. We protect AI model data and inference results using ZK. It supports safe service use by determining the authenticity of information without exposing personal information." For example, by using zkML, in the phone's facial recognition function, instead of the facial image file, the authenticity of the proof value is determined, and in financial platforms, encrypted KYC data can be received by automated machine learning AI to execute user commands. He explained, "zkML is like the HTTPS of AI. It keeps personal input values and the model itself private while still proving the results. We are implementing a zkML library infrastructure called DeepProve."

### Interview with Armani Ferrante, CEO of Backpack Exchange ### ### Expansion of virtual asset business based on MiCA ### Focus on recovering assets for FTX EU victims  Earlier this year, Armani Ferrante, CEO of Backpack Exchange, which gained industry attention by acquiring FTX Europe, was met at TOKEN 2049 Dubai held at Madinat Jumeirah, Dubai. Armani Ferrante, CEO of Backpack Exchange, believed that the comprehensive regulation MiCA for virtual assets (cryptocurrency) in Europe holds significant meaning for the industry. He said, "I think MiCA is a major advancement for the industry. It provides regulatory clarity and consistency, allowing responsible industry participants and users to engage in the market with confidence, and will serve as the foundation for the future development of the European virtual asset industry." Thanks to the legal foundation of MiCA, CEO Armani Ferrante was able to decide to acquire FTX EU earlier this year and pursue expansion into the European market. He said, "Currently, perpetual futures products are not regulated and compliant in the European Union (EU). After the bankruptcy of FTX, major virtual asset derivatives exchanges have withdrawn from Europe or stopped offering futures to European residents," adding, "I think providing regulated perpetual futures products to support European users to participate in the global virtual asset market in a safe and compliant manner is key. The acquisition of FTX EU is one of the important milestones to achieve this." However, he stated that before fully operating FTX Europe, they would focus on protecting victim assets and facilitating fund withdrawals. CEO Ferrante said, "Before we commence operations, however, we have also placed it upon us to first help former FTX EU users recover their assets as soon as possible. In fact, we will not serve a single new user or transaction until FTX EU users are able to withdraw their funds. "