The cryptocurrency market in Asia is booming, as it led the world in terms of share of global value, per a Chainalysis report covering July 2020 to June 2021 period.

The Central and Southeast Asia and Oceania or CSAO region represented 14 per cent of global cryptocurrency value in that period, which was equivalent to $572 billion; Eastern Asia also had 14 per cent of the global value of cryptocurrency transactions, amounting to $591 billion; while the Middle East had seven per cent, or $271.7 billion. In sum, CSAO, Eastern Asia and the Middle East made up about 35 per cent of the global value of cryptocurrency from 2020 to 2021, or a value of more than $1.43 trillion.

cryptocurrency in asia: an overview

Growing, growing, growing

The same Chainalysis report showed the three nations that dominated the Global Crypto Adoption Index are from Asia: Vietnam, India and Pakistan.

Vietnam, which topped the blockchain analysis firm’s 2021 Global Crypto Adoption Index, is a promising cryptocurrency hub not only in Asia but also worldwide. About 6.1 per cent of Vietnamese are crypto investors. A 2019 OECD survey found that 59 per cent of Vietnamese respondents wanted to hold cryptocurrencies in the future.

In India, cryptocurrency has shown to be a convenient way to get paid. The country currently provides 44 per cent of global outsourcing solutions. Krishna Sriram, Managing Director at Quantstamp, told Chainalysis: “Tons of Indian developers, fund analysts, and independent freelancers working for overseas employers have started requesting to be paid in cryptocurrency.”

Over in Pakistan, crypto investors seem to be unbothered by the government’s warnings against the sector and the Central Bank’s recommendations to ban cryptocurrency altogether. Just last year, Pakistani crypto investors made well over $604.5 million.

Southeast Asian countries Thailand and the Philippines were ranked 12th and 15th, respectively in the said report.

Southeast Asia, in particular, has become an interesting region for the cryptocurrency market. On average, Southeast Asia has a crypto adoption rate of 3.5 per cent in 2021, with Singapore leading at 10 per cent, based on a White Star Capital Report. Globally, TripleA put the figure at a 3.9 per cent adoption rate in the same year.

The Philippines, one of Asia’s largest growing markets, is showing potential for mass crypto adoption. Cryptocurrency soared to popularity in the country, thanks largely to Axie Infinity, a play-to-earn game developed in Vietnam. The game rewards players with Pokémon-like NFTS that can be cashed out. About 40 per cent of Axie players are from the Philippines, according to Activeplayer.io. Currently, PHX, a stablecoin pegged to the Philippine peso, is issued by the Unionbank of the Philippines.

At the grassroots level, emerging markets are driving cryptocurrency adoption, with users in these areas turning to the asset class out of necessity, either to preserve their savings in the face of currency devaluation or to carry out remittances they wouldn’t otherwise be able to.

Chainalysis

In South Korea, retail investors continue to show interest in the market, even after the epic crash of stablecoin Terra Luna, which South Korean national Do Kwon developed. Almost two million South Koreans owned cryptocurrency in 2021. Just this August, thousands attended Korea’s Blockchain Week, despite the crypto winter. This is the biggest cryptocurrency event in Asia.

“Despite the Luna-Terra crash, the nation is big on crypto and is one of the tech centres of the world,” said Seo Sang-min, in an interview with the New York Times. Seo leads South Korean blockchain firm Klaytn Foundation.

Luxembourg-based Forex Suggest, in its Worldwide Crypto Readiness Report, found Hong Kong as the most prepared nation to widely adopt cryptocurrency, due to its number of crypto ATMs, existing blockchain startups and cryptocurrency legislation. It also currently does not impose capital tax gains on crypto.

Hurdles

Since the market has moved to the mainstream, there seem to be hurdles after hurdles within the sector. Naturally, due to its volatility, cryptocurrency was not initially widely accepted. But as it showed promising growth over the past decade, more investors – retail and institutional – jumped into the wagon. And now, governments and financial watchdogs want a part in the play as well, to regulate the market and prevent illicit transactions through compliance regulations.

The Future of Digital Assets

Bolder Group is proud to co-sponsor a webinar on “The Future of Digital Assets”. The webinar, organised by the DBS Bank will provide insights on the state of the cryptocurrency market in Asia and the path it is projected to take, amid global market trends. For more information, click this link.

If you are interested in this webinar, please register via this link.

Or let’s talk about the future of digital assets now. Contact our industry experts for our cryptocurrency fund administration and compliance solutions in Asia.

The UK-US Financial Regulatory Working Group is looking to broaden regulations involving virtual assets, particularly cryptocurrency and the possibility of launching CBDCs. This was one of the central themes of the latest meeting of the group, which also discussed international and bilateral cooperation, benchmark transition, financial innovation, sustainable finance, non-bank financial intermediation, operational resilience and cross-border regimes.

On cryptocurrency, the group’s discussion highlighted the recent market developments, especially the stablecoin situation. According to the latest joint statement of the UK-U.S. Financial Regulatory Working Group: ‘All participants committed to continued cooperation to support safe financial innovation, as well as to strengthen regulatory outcomes for stablecoins across jurisdictions.’

The UK-US financial regulators recognised the need for broader crypto-asset regulatory initiatives and is looking to explore and strengthen central bank digital currencies (CBDCs) in the jurisdictions. CBDCs are banks for digital currencies (similar to cryptocurrencies), pegged at the country’s fiat currency and issued and regulated by a national monetary authority. The financial innovation has, more or less, the same design as cryptocurrency minus the need for blockchain technology, which primarily prevents crypto transaction tampering.

Only the following countries have launched CBDCs as of early August 2022:

  • The Bahamas
  • Jamaica
  • Anguilla
  • Saint Kitts and Nevis
  • Montserrat
  • Antigua and Barbuda
  • Dominica
  • Saint Lucia
  • Saint Vincent and Grenadines
  • Grenada

Last June, the participants had shared updates on the CBDC policy research and crypto-asset regulatory framework initiatives. Earlier this year, the US Fed released a study on the possible implementation of CBDC in the country. It explained that while CBDC eliminates the use of fiat, the system must comply with anti-money laundering and counter terrorist financing laws, which would mean CDD and KYC checks.

The Working Group said it will continue the ongoing partnership between the two countries for multilateral discussions on financial innovations like the broader crypto market. Senior officials from the HM Treasury, Bank of England, the Financial Conduct Authority, the U.S. Treasury Department, the Federal Reserve Board, the Commodity Futures Trading Commission (CFTC), the Federal Deposit Insurance Corporation (FDIC), the Office of Comptroller of the Currency (OCC), and the Securities and Exchange Commission (SEC) are part of the Group.

Bolder Insights

Bolder Group is a global fund administration service provider. As part of our mission to keep our clients informed, involved and in control, we also keep abreast of the latest developments in the industry, based on reliable resources.

Please be aware that content on this website are for information purposes only. If you need expert advice, kindly contact one of our thirteen offices.

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Since the first cryptocurrency Bitcoin was launched in 2009, the sector has been largely unregulated. Bypassing traditional financial institutions, operations lie mainly at the hands of users who transact peer-to-peer. However, in the past years, government and regulatory bodies, as well as financial institutions, have been keeping a close eye on the sector, especially amidst its instability recently. Hong Kong, for example, is set to impose stricter cryptocurrency regulations as it amends its Anti-Money Laundering and Counter-Terrorist Financing Bill 2022.

In a previous article by Bolder Group, we went over some of the key AML and CTF regulations that may affect cryptocurrency in Asian nations like Hong Kong, Singapore and the Philippines where we offer our fund administration services. Hong Kong, for example, ensures safe financial transactions through major legislation “Anti-Money Laundering and Counter-Terrorist Financing”.

Under the law, financial institutions and designated non-financial businesses and professions (DNFBPs) are mandated to:

  • perform customer due diligence requirements and record-keeping
  • provide these records to relevant authorities and regulatory bodies

In addition, the law regulates money services by licensing operators, trusts and company service providers. That was the 2018 amended version, which did not mention any regulations relating to cryptocurrency operations in Hong Kong. This year, an amendment bill is proposed to include the imposition of regulatory frameworks on virtual asset service providers (VASPs) and dealers in precious metals and stones (DPMS).

New VASP and cryptocurrency regulations in Hong Kong require providers to apply for licence from the FSC.

Existing cryptocurrency regulations in Hong Kong and the AML/CTF Amendment Bill

According to the Hong Kong government, ‘The legislative proposal is pertinent to our fulfilment of the relevant FATF obligations and will mitigate the risk of money laundering and terrorist financing in Hong Kong. This will safeguard the integrity of Hong Kong as an international financial centre, protect investors and add to our credibility as a trusted and competitive place to do business’.

‘As money laundering and terrorist financing (ML/TF) risks continue to evolve, so must our understanding and response’, wrote Carmen Chu in a letter addressed to financial institutions in Hong Kong. Chu is the Executive Director for the Hong Kong Monetary Authority’s Enforcement and AML division.

Hong Kong’s risk assessment report for 2022 acknowledged the vulnerability of virtual assets due to their borderless nature and the fact that they are designed to allow hidden beneficiary ownership. Many transactions, the report found, take advantage of jurisdictional arbitrage. As a result, VAs can become instruments for money laundering. Hence, the need for cryptocurrency regulations in Hong Kong.

As a matter of fact, in 2021 Hong Kong has already established the Cryptocurrency Stop Payment Mechanism to deter money laundering using the technology. Under the mechanism, the government requests ‘stop payment’ and ‘subscriber check’ from a cryptocurrency exchange when authorities identify crime funds channelled through the platform. This is regardless of the country where the exchange is based. In 2021, 738 stop-payment requests equivalent to HKD 29.3 million crypto-assets were processed. 

Five key points of the amendment bill affecting VA

  1. The Bill introduces a licensing regime for virtual asset service providers (VASPs) to impose mandatory AML/CTF obligations on the sector. An individual who intends to operate a virtual asset exchange in Hong Kong must secure a licence from the Securities and Futures Commission (SFC).
  2. Licensed VASPs must perform customer due diligence (CDD) and record-keeping requirements pertaining to AML and CFT regulations. Enhanced CDD must be implemented when a transaction involves a politically exposed person and a formerly politically exposed person, in accordance with FATF recommendations.
  3. The Bill also pushes for the regulation of VA-related advertisements and the imposition of fines and punishment to parties involved in fraudulent, deceptive or misrepresented VA transactions. Under the new Hong Kong regulation, individuals found guilty of fraudulent transactions through VAs like cryptocurrency may be fined up to HKD 10,000,000 and face a maximum ten-year jail term (Section 53ZRF).
  4. Under Section 53ZRK, VASPs applying for an operating licence in Hong Kong must have at least two responsible persons. The FCS has sixteen conditions for a licence granting, including the applicant’s financial resources, risk management procedures, internal AML and CTF policies, financial disclosure, VA listing and trading policies and cybersecurity, amongst others.
  5. A month after it has been granted a licence, a VASP must appoint an eligible auditor to perform required auditing functions. Section 53ZRZ subsection 3 also requires the associated entity to appoint auditors. Under subsection 1 of Section 53ZSB, the entity must submit annual financial statements and audit reports to the SFC.

Read the entire bill here: AML and CTF (Amendment) Bill 2022

How this affects crypto players

What does this new regulation in Hong Kong mean for cryptocurrency players? The short answer: more compliance requirements. Compliance is vital to ensure a service provider, an investor, a fund manager, etc. remains on the good side of the governing jurisdiction. This regulatory framework in Hong Kong may result in an additional reporting burden for crypto actors as stricter CDD and AML measures are imposed on VASPs as well as players.

With Bolder Group’s compliance solutions, though, crypto investors or crypto fund managers can stay laser-focused on growing their portfolio, amidst changing cryptocurrency regulations in Hong Kong.

Please contact our Hong Kong office to know more about our regulatory compliance solutions and crypto fund administration services.

The European Parliament and European Union (EU) member states have agreed to strengthen rules and parameters to control what they consider the ‘wild west’ of the financial markets — the crypto world. On Thursday (30 June), the 27-nation political bloc established new regulations to safeguard crypto traders within the union.  

Being decentralised finance, crypto assets are uncontrolled globally. As such, national operators in the EU are needed to implement protective measures for traders and anti-money laundering procedures.  

The Markets in Crypto-assets (MiCa) law is set to take effect by the end of 2023. It will be the first attempt to establish standard crypto regulations across the EU instead of a variety of state rules, as is currently the case. 

According to the legislation, a crypto-asset service provider will need authorisation from one of the national market regulators of the EU to passport its services across the Union. The ESMA (European Securities and Markets Authority), the pan-European regulator, will then receive information from local regulators. 

Stefan Berger, the centre-right German Member of the European Parliament (MEP) who oversaw negotiations on behalf of the parliament, said during the discussion of the new regulations that ‘[the EU has put] an order in the wild west of crypto assets and set clear rules for a harmonised market’. 

Berger added, ‘the recent fall in the value of digital currencies shows us how highly risky and speculative they are and that it is fundamental to act.’ The market’s overall size has decreased from $3 trillion (£2.5 trillion) last year to less than $900 billion over the same period. 

When Voyager Digital, a cryptocurrency broker, said it had ceased withdrawals, trading and deposits to its platform on Friday (01 July), the market for digital assets saw additional volatility. 

Voyager chief executive Stephen Ehrlich said the decision allows the business ‘additional time to continue exploring strategic alternatives with various interested parties.’ Compared to the $1.1 billion in crypto assets it had lent, US-based Voyager reported the value of the crypto assets it currently controls is $685 million. 

Following the failure of the TerraUSD and Luna tokens last month, the value of cryptocurrencies was put under pressure, and this month, major US-based Bitcoin lending company Celsius Network froze withdrawal and transfers. 

According to Ernest Urtasun, Spanish MEP for the Green Party in the parliament, MiCA would be the first comprehensive regulatory framework for crypto assets in the world and will include robust safeguards against market misuse and manipulation.  

The law grants ‘passports’ to cryptocurrency asset issuers and service providers, allowing them to serve clients throughout the EU whilst adhering to capital and consumer protection regulations. MiCA does not apply to non-fungible tokens (NFTs), a market worth $40 billion last year. 

Neither the UK nor the US, two major crypto hubs where regulators are calling for tighter consumer protection, have approved a regulation similar to MiCA.  

The Financial Conduct Authority in the UK is considering ideas on how to advertise cryptocurrency to consumers that may have a substantial impact on the ability of crypto exchanges to operate in the country. 

Although one expert suggested that the MiCA law might not be duplicated, it is anticipated that it would serve as a benchmark for other regulatory frameworks around the world. 

new eu crypto rules | Bolder blog
Photo from Freepik

European Central Bank in Action 

This week, the European Central Bank (ECB) is expected to issue a warning to Eurozone nations about the risks of national regulators getting ahead of impending EU cryptocurrency legislation and the challenges of establishing effective oversight of the quickly developing ‘wild west’ industry. 

A comprehensive set of standards and rules for the crypto business was approved by the EU Commission last week. MiCa is scheduled to become law next year, but the central bank is worried about a confusing patchwork of national legislation managing the overlap between banks and cryptocurrency companies before the package is fully implemented 18 months later. 

So far, Germany has taken the most initiative to control virtual currencies. To comply with German banking law, it utilised the EU’s 2020 anti-money laundering regulation to mandate businesses that keep and enable trading of cryptocurrency assets on behalf of clients to apply for special licenses. 

The Netherlands and other nations in the Eurozone initially directed their attention to registrations for compliance with anti-money laundering laws. However, after Russia’s invasion of Ukraine showed the potential for cryptocurrency to be used for criminal purposes including evading sanctions, several other nations have started considering more extensive measures.  

The ECB is concerned about the possibility of deciding on crypto-related license applications made by banks in the absence of a pan-European regulatory framework.  

Tougher rules, Bolder solutions

With new and tougher regulations in the cryptocurrency market comes stricter reporting and compliance requirements. For crypto traders and crypto fund managers, this will be an additional burden. This is where we enter. Bolder Group is a global fund and compliance administrator with thirteen locations over the world and a team of crypto experts and compliance officers with whom you can entrust your fund administration and reporting needs.  

We keep ourselves informed of the latest in the industry, including regulations and legal, reporting and administrative requirements. If you need crypto fund administration and compliance solutions, you have come to the right place. Contact us to get started. 

The global fund administration services industry was worth at least $8 to $12 billion as of August 2021. The market plays a significant role in keeping the funds and related information in order, as well as regulatory and legal obligations. Not only do fund administrators offer accounting or reporting services, but also compliance, reporting and directorship solutions, amongst others.

For fund managers and asset managers, it can be challenging to run in-house middle-office and back-office operations, which is why they partner up with third-party providers of fund administration services (whether those that offer local or global solutions). This way, the managers can focus more on their portfolio and less on the paperwork and compliance matters.

As we are halfway through 2022, let’s see the key trends that have been shaping the global fund administration service industry.

One: rapid digitalisation of the global fund administration service industry

global fund administration services: digitalisation

Looking back, the world had already been prepping for massive digitalisation from across industries. However, the process was sped up as a necessary response to keep businesses and operations running amidst lockdown orders at the height of the Covid-19 pandemic. The industry of global fund administration service is no exception, especially as most professionals were left with no choice but to work remotely.

A recent study commissioned by Funds-Europe found that 54 per cent of fund administrators globally understand that legacy technology is a challenge for the industry. 38 per cent of the same respondents said their company will highlight digital transformation to keep up with the demands of asset managers and other clients.

A fundamental shift in the digital capacity of fund administrators will be crucial in ensuring real-time accessibility, transparency, and security of their clients’ data, activities, investments, portfolios and even trading, to name a few – especially because of huge volumes of data. For providers of global fund administration services, investing in digital transformation is a necessity to survive and thrive.

Moving forward, widespread digitalisation will reduce – or even completely remove – manual labour processes in the middle and back offices, eliminating human errors. Importantly, digitalisation has changed the way compliance is done. For example, it has strengthened remote KYC processes by investing in advanced forensic tech.

Bolder Group’s global fund administration services are in line with the latest technological developments and innovations. We understand the importance of data and easy yet secured access to this. We partnered with some of the most trusted software developers for our fund administration solutions.

Bolder Group also has an in-house team of tech experts who are adept at the latest digital requirements of global fund administration services and are sensitive to our clients’ needs. To know more about the Bolder Group technology, click this link.

Two: The continuous rise of impact-focused investments and funds

global fund administration services: esg focus

ESG is a prominent keyword in the financial landscape. With Elon Musk defining ESG ratings as merely a ‘scam’ and investors and consumers generally preferring impact-focused services and products – ESG seems to be the rave these days. Plus, the Covid-19 pandemic has magnified the need for sustainability and other ESG factors.

But how does it impact global financial services? Like consumers, investors have started to look for partners (fund managers and fund administrators) that execute ESG efforts themselves or, at least, have ESG-related policies in place within their organisation or processes.

More and more organisations have been keenly tracking business entities that are either ESG-compliant or non-compliant; the most prominent are the S&P 500 DJI and Bloomberg Scores.

However, data gaps in ESG reporting must be addressed to ensure complete and accurate reports.

In the first quarter of 2021, the European Union enforced the Sustainable Finance Disclosure Regulation or SFDR, which aims to increase transparency within the financial market in terms of investment ESG risks and opportunities. ‘Amendments and additions to the legislation require financial entities to comply with the SFDR and provide penalties for non-compliance’, according to Bolder Group (Read more here.)

Regulations like the SFDR would mean additional reporting requirements for organisations.

Three: Emphasis on emerging markets and alternative investments

In the past decade, investors and fund managers have shown a steady, if not increasing, interest in alternative investment funds. Historically, only UHNWI and accredited investors bet on AIFs, but after the 2008 recession, investors have grown wiser and looked at alternatives to diversify their portfolios, whilst spreading out risks and enjoying potentially higher returns. Following the 2008 recession, investors became much more into passive rather than active investments, according to the Harvard Business School.

According to industry data tracker Preqin, in 2008, there were about 3,500 investors capitalising on AIFs; in 2018, there were 11,000. In that same year, the result of a Prequin survey showed that 84 per cent of investors plan to commit more capital to alternative assets over the next five years (up until 2023). The tracker forecast from 2020 to 2025 the AIFs sector will see a compounded annual growth rate of 9.8 per cent. By 2026, AIFs under management is expected to be valued at $17.2 trillion.

Higher demand for AIFs mainly drives the growth; each asset class, however, tells a different story.

Despite the recent breakdowns, cryptocurrency is still a rockstar alternative asset class. In 2021, there were 300 million crypto investors; a third of that figure is from emerging market India.

On the other hand, real estate is not so hot. With the Covid-19 pandemic forcing the world to shift radically to the digital space, there was a decline in commercial real estate demand. Experts do not expect previous demand for office spaces to return, as the world has been introduced to permanent hybrid or remote work setups. Nevertheless, things are looking up for the industrial real estate sector, fueled mainly by the rise of e-commerce.   

There are also emerging AIF markets. Investors are looking outside North America and Europe. Fund managers have been paying close attention to investment opportunities in Southeast Asia, China, India and Brazil.

As a global fund administration service provider, our business development professionals continuously look for ‘new new’ businesses, that is, emerging markets that are yet to be tapped. Additionally, Bolder Launch – a subsidiary of Bolder Group – focuses on assisting businesses entering foreign markets or expanding there.

The colossal shifts in the global economy, principally due to the Covid-19 pandemic, will directly affect the way global fund administration services are demanded and delivered. Bolder Group keeps up with the changes, to make sure our clients do too. We provide fund administration services on a global level. With thirteen locations all over the world, our Bolder team can help private and corporate clients, asset and fund managers in terms of fund administration, governance and compliance solutions and secretarial support.

For more information about our full range of services, contact us or visit the nearest Bolder office.

The past few years have been challenging for the Philippine economy no thanks to the pandemic smacking it down to the point where national debt has ballooned to over PHP13 trillion or USD250 billion.

On May 20th, local time, Ferdinand Marcos, Jr. was proclaimed the next Philippine president. And as the current administration is preparing for its exit and making way for the new Marcos-led government, the country’s Department of Finance is proposing new tax measures to pay off or, at least, reduce the record-high debt. The Bureau of Treasury estimates the Philippines will need at least added PHP249 billion annually to pay the debts (at the current interest rate) without using borrowings.

The Finance department’s proposal includes:

  • Deferment of personal income tax reduction, set to be enforced by 2023 under the country’s TRAIN Law. Based on the Finance Department’s recommendation to the incoming administration, the personal income tax reduction should instead take effect in 2025.
  • Slapping excise duties on motorcycles, luxury goods, single-use plastics, social media influencers and gaming
  • 12 per cent value-added tax for digital services (streaming services and online stores)
  • Imposition of tax on carbon, more ‘sin’ products including sweetened beverages
  • Imposition of tax on cryptocurrencies and other digital assets and related transactions

On taxing cryptocurrency

tax crypto philippines

The DOF proposes slapping taxes on digital assets and cryptocurrency, including transactions involving these, by 2024. Based on the department’s ‘Proposed fiscal consolidation and resource mobilization plan’, the 2024 tax package seeks to also ‘clarify the tax treatments of cryptocurrency transactions’.

The DOF has not given an estimate the amount of revenue earnings should cryptocurrency and crypto transactions be taxed in the coming years. The incoming Marcos Jr. administration is yet to decide on whether it will accept the DOF’s proposal to impose duties on the local crypto industry.

Last year, the Philippine taxman has already tried to tax activities related to cryptocurrency; in particular, the earn-to-play game Axie Infinity, whose largest market is the Philippines. Mid-2021, DOF officials said the ‘earnings’ of Filipino Axie Infinity players must be declared personal income. As such, the income is taxable.

How does Axie Infinity work anyway? The game rose to popularity during the height of the pandemic when Filipinos were looking for ways to earn a living. Players grow NFT-like creatures called ‘axies’, which they can trade for cryptocurrency. They can translate the crypto coins to fiat currency through digital wallets and generate income. The DOF insisted that players who earn from the game – whether in kind or cash – must pay taxes.

Currently, there is no Philippine law or specific tax guidelines on cryptocurrency transactions and how much – if at all – these should be taxed. Nonetheless, under the Tax Code, annual gross earnings in the Philippines (from whatever source) that exceed PHP250,000 are subject to personal income tax.

Outside the Philippines, G7 has recently called for tougher regulations on cryptocurrency, amid the stablecoin meltdown headlined by the Terra Luna Crash in recent weeks.

Local crypto scene

The Bangko Sentral ng Pilipinas (BSP), the country’s central bank, regulates the digital currency space in the Philippines. As of November 2020 (the latest), the BSP is regulating only 17 local cryptocurrency exchanges, which had to register as Remittance and Transfer Companies (RTC) with Virtual Currency (VC) Exchange Services and place measures to prevent money laundering, fraud and cybercrime attacks, amongst others.

About 4.3 million Filipinos are crypto investors. The Philippine cryptocurrency market is burgeoning. 2020 data from Statista showed that crypto transactions in the country had reached 7.2 million – a 36 per cent growth from the previous year.

Administrating crypto funds 

Cryptocurrency is a significantly newer game than the centuries-old financial system, which covers banks and other traditional financial institutions. The digital currency space is highly unique. As the times evolve, so does the way we transact. We understand that at Bolder; and we understand the need for people that crypto fund managers and crypto investors can trust.

To protect, diversify and grow your cryptocurrency portfolio and investments, you can count on Bolder Group to extend our crypto fund administration services as well as our compliance solutions, so you don’t have to worry about the burden of reporting, KYC measures and AML requirements.

Learn more about how we can help you. Contact us today.

RELATED: Things to know when investing in cryptocurrency in the Philippines

RELATED: Is crypto taxable in the US?

It’s time to have better crypto regulations, international financial ministers and watchdogs call.

It has been a rocky road for the digital asset world in the past few weeks. Bitcoin is on its course to recording two straight months of losses. The largest ‘algorithmic stablecoin’ Terra Luna is experiencing an epic meltdown. From peaking at $119, Terra’s Luna coin is now worth $0 – it virtually has no worth for the time being. Its stablecoin sister, UST, pegged at the US dollar is, as of writing, also worth $0. It’s a plunge so historic, it could determine the future of the stablecoin subsector; or in an extreme scenario, completely wear out investor confidence in stablecoins (and cryptocurrency as a whole, to an extent).

It’s crash after crash in the crypto world. Crypto market leaders are saying they are ‘poor again’ amidst the crisis. Tether has paid about $10 billion to withdrawals since early May. However, it has assured the public that the stablecoin (1 is to $1) has enough reserves to accommodate massive redemptions. The largest stablecoin has dropped to a record low of $0.94 per coin. Small-time investors are bruised over losing their investments – some, even life savings.

Time for tough regulations?

Stablecoin in spotlight: Following steep crypto decline, G7 calls for tougher  crypto regulations

In the third week of May, after drastic plunges in cryptocurrency – stablecoin, particularly – prices, G7 leaders expressed their concerns over the matter. 

In its latest communique, the G7 said it throws its full support behind the Financial Stability Board in addressing risks in the crypto-asset world. Part of the statement reads:

In light of the recent turmoil in the crypto-asset market, the G7 urges the FSB, in close coordination with international standard-setters, to advance the swift development and implementation of consistent and comprehensive regulation of crypto-asset issuers and service providers.

Following the sharp decline in stablecoins – particularly the USD Terra (UST) – the G7 stated crypto-assets should follow the same standards as the rest of the financial system. The world leaders ask the Financial Action Task Force to implement ‘stronger disclosure and regulatory reporting’ on stablecoin reserves. The statement continues:

We reaffirm that no global stablecoin project should begin operation until it adequately addresses relevant legal, regulatory and oversight requirements through appropriate design and by adhering to appliable standards. The G7 remains committed to high regulatory standards for global stabelcoins, following the principle of same activity, same risk, same regulation.

To contextualise, UST is the leading ‘algorithmic stablecoin’ globally. This means that 1 to $1 UST is not backed by fiat or physical reserves the way traditional stablecoins are so that they preserve their dollar peg. Instead, UST relies on its sister base coin Luna (1 Luna coin is burnt when a UST is minted and vice-versa) to balance the coin supply-demand and soak up volatility. Both UST and Luna plummeted (worst hit in the recent crypto crash). The Terra Luna crash wiped out about $45 billion worth of investments overnight.

Existing crypto regulations

Cryptocurrency is a decentralised financial system. It is inherently designed to be detached from any central institution – like banks or governments – so it cannot be controlled by a single entity, but by the crypto actors within the blockchain. Still, the trillion-dollar market is carefully being watched by world leaders and financial regulators, especially sceptical ones. Given the risks – price volatility, ransomware attacks and lack of regulations, mainly – concerns are unsurprising.

Currently, there are existing regulations surrounding cryptocurrency – security measures, anti-money laundering protocols and tax issues. The European Union, for example, highlights crypto regulations through the MiCA or Markets in Crypto-assets proposal, which is a part of the Commission’s Digital Finance package seeking to regulate the digital financial landscape.

With regards to stablecoins, part of the MiCA proposal reads:

While the crypto-asset market remains modest in size and does not currently pose a threat to financial stability, this may change with the advent of ‘global stablecoins’, which seek wider adoption by incorporating features aimed at stabilising their value and by exploiting the network effects stemming from the firms promoting these assets.

Under the MiCA proposal, the Commission calls for the entire crypto market to align its regulations with that of recognised financial regulators: FSB and FATF. Moreover, EU-based crypto issuers would also be subject to EU laws. MiCA also ensures the ‘limiting’ of stablecoin use and investment in the bloc. Read more on MiCA here.

EU’s DAC-8 also minimises the potential risks of the barely-regulated digital financial world. Principally, DAC-8 is concerned about the possibility of tax fraud, tax evasion and tax competition between EU jurisdictions as there is a lack of regulations to oversee the crypto market’s taxation system. We previously discussed DAC-8 in this article.

On the other hand, the US has come up with regulations related to taxing cryptocurrencies in the country. We discussed crypto tax in the US in this article.

Over in Asia, Singapore is at the forefront of working on stricter rules on how cryptocurrency works in the financial hub. The Monetary Authority of Singapore (MAS) acknowledged the healthy economic activity that cryptocurrency brings, as long as it’s checked. Its two-point approach: one, grow digital asset capabilities; two, manage the risks. The MAS regulates services related to digital assets in terms of activity, whilst allowing innovation. Generally, MAS’ regulations are focused on anti-money laundering and technology risks.

MAS managing director Ravi Menon said in 2017, ‘On the international front, the community could do more to itemise the various risks, rather than to speak of them as a basket of risks. Money laundering risks would require a specific kind of regulation. Technology and cyber-related risks are also important in this space and thirdly, investor protection.’

As cryptocurrency is a relatively new digital financial system with a massive potential to change the way the global economy works – new regulations might be needed: to manage the risks, protect investor interest and make sure the blockchain works for the public economy.

For now, it’s foggy; but when there is a more harmonious set of international policies and standards with which the crypto market should align, perhaps there will be a clearer direction to where this ever-volatile market can go. Whether up or down — that remains to be a question.

Bolder regulations mean bolder requirements

As the finance ministers and world leaders have started laying down plans to regulate the crypto market on both national and international levels, stricter compliance requirements are not too far behind: KYC and AML, specifically.

Bolder Group, an international fund administrator with locations in Europe, the Americas and Asia, has been servicing clients in the traditional and digital financial systems for decades. Our team of compliance officers and governance solutions experts can help you navigate the crypto world better, by easing the burden of compliance so you can focus on growing your investments and diversifying your portfolio.

Our crypto experts are also well-equipped and refreshed on the latest in the digital asset world. Bolder Group also offers crypto fund administration services.

To know more about what we can do, reach out to us today.

At one point, the Terra Luna blockchain was valued at $40 billion. Then, it came crashing down. Now, each Luna coin is worth $0. Let’s talk about how this happened and what’s next for the whole crypto world after the epic Terra Luna crash?

Image shows terra luna crash april 20-may 20, 2022
Luna price April 20, 2022 – May 20, 2022 (Screenshot from CoinDesk)

Look back  

In 2018, South Korean Do Kwon, 30, founded Terraform Labs, shortly after earlier digital currency project Basis failed. In effect, Kwon’s Terraform Labs created two sister digital currencies – the TerraUSD (UST) and Luna. Each serves different purposes. UST was always meant to be a stablecoin, so its value remains consistently at just $1. Unlike traditional stablecoins, however, UST is much more ‘algorithmic’. Meaning, it is not backed by any physical asset or holdings in banks to protect its value.   

Enter Luna – UST’s sister-slash-partner currency – which is meant to balance the two and keep UST’s dollar peg. While UST’s value is consistently just – more or less – a dollar, Luna, like other cryptocurrencies, rises and falls.   

How do the two balance each other, and how does UST keep its dollar peg minus the physical reserves? Well, Terra’s system goes like this: minting a UST is equivalent to burning a dollar-worth of Luna, and vice-versa. Theoretically, this relationship balances out the supply-demand of the coins, and therefore, stabilises the price. The ‘algorithmic’ dollar protects the coin value and investor assets.   

In essence, what shouldn’t happen to ensure the ‘balance’ and integrity of the algorithm and the Terra ecosystem is UST value dropping below a dollar and continuing to plummet — which is where it’s at now.   

So, how did Terra Luna crash exactly?

Leading to the Terra Luna crash

The UST enjoyed an all-time high of $1.09 for over a year since 2021 before it nosedived to $0.04 in May 2022. Its sister coin, Luna was valued at an all-time high of $119 and then historically plunged to $0. It spelt panic and investors were scrambling to liquidate.   

On May 16, the Terra blockchain halted its operations after an overnight 100% drop in the token’s price. How did this happen?   

For one, the broad crypto market has been bleeding recently. Bitcoin plunged in the first two weeks of May – so did the rest. And this pushed the value of Luna downward. As a result, UST, relying on Luna to absorb price volatility shocks, went below a dollar. The market hasn’t fully recovered yet; for the Terra ecosystem, things look bleak as does investor confidence.  

Another major reason for the crash – Anchor protocol, a borrowing/lending platform on the chain. The Terra network promised a 20% annual percentage yield to investors who bought UST and loaned it back to Anchor. Investors scrambled when they heard the news. At one point, 75 per cent of UST coins are parked in Anchor. So, one thing’s clear: investors are after the 20 per cent APY and Terra is using the protocol to attract capital. But when news of Luna losing value and UST depegging, investors ran for the exit, leaving the protocol dry.   

The promise of an algorithmic stablecoin with no fiat or collateral guarantees to hedge against the volatility of cryptocurrency and protect investors … well, it was broken. The architecture of the crypto subsector is, at the very beginning, already very risky. In 2021, Dr Ryan Clements of the University of Calgary Faculty of Law published his study ‘Built to Fail: The Inherent Fragility of Algorithmic Stablecoins’.   

According to Clements, such coins ‘are not stable at all but exist in a state of perpetual vulnerability’; he went as far as to say algorithmic stablecoins are ‘fundamentally flawed’. The Terra ecosystem is believed to be unsustainable from the very beginning because it heavily relies on market sentiment and demand volume, with no guarantee from collaterals or fiat reserves whatsoever.   

Call for regulations?  

Kwon, who is very visible and active on Twitter, has just recently announced he is ready to leave the project behind and move forward to another one: Terra 2.0 chain. #TerraisMoreThanUST, he tweets and has rallied the support of Terra builders to realise his proposal to create a hard fork back to the classic Luna. Following the Terra fiasco, however, investors aren’t excited about the rebuild.   

Terra investors are hurt; sceptical regulators are watching. In recent weeks, the crypto market was in a freefall, and investors are losing their money – life savings – due to the epic Terra Luna crash and how it took down with it the sector.  

Dr. Clements, in his study mentioned above, wrote there is a need for regulatory guidelines on stablecoins, such as transparency safeguards, risk disclosure and containment measures.  

In the wake of the Terra Luna catastrophe, authorities are taking an even closer look at the crypto space. French central bank head Francois Villeroy de Galhau told Reuters that crypto assets will be discussed during a G7 meeting this May.   

What happened in the recent past is a wake-up call for the urgent need for global regulation’, said Galhau.  

In March 2022, the European Union adopted the Markets in Crypt-assets (MiCA) Regulations. As an overview, MiCA was created to protect investors, ensure the crypto market integrity and prevent market manipulation as well as potential economic crimes like money laundering and terrorist financing.   

The Bolder Guarantee  

As a global cryptocurrency fund administrator, we watch and study the trends, patterns and latest developments in the cryptocurrency space. In doing so, we guarantee that our digital asset experts are well-informed so that they can provide our partners and clients with professional but personalised solutions.   

With the looming new cryptocurrency regulations, investors and crypto fund managers alike might have to comply with additional compliance requirements. With Bolder Group’s outsourced compliance and governance services, crypto investors and managers can focus on their portfolios and protecting their assets.  

Learn more about our crypto fund administration services here and our outsourced KYC compliance solutions here.  

RELATED: Crypto exchanges and digital compliance

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About 4.13 million invest in cryptocurrency in the Philippines, according to estimates by Triple A. Latest Statista report shows that the cryptocurrency transaction volume in the country reached 7.2 million (2020, latest) which amounted to 76 billion pesos.  

Do you plan to invest in crypto in the Philippines? Should you, would you? Here are five things to keep in mind:  

Legitimate exchanges  

If you decide to invest in cryptocurrency in the Philippines, the first step to do is find a legitimate cryptocurrency exchange where you can do your transactions or trade your coins. Some of the better-known exchanges in the country are:  

  • Philippine Digital Asset Exchange (PDAX): Launched in 2018, PDAX is available for website and mobile use. The exchange is regulated by the Central Bank of the Philippines (BSP). Investors can trade coins like Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), etc. on PDAX. Similarly, PDAX can be used to deposit and withdraw assets with direct conversion to Philippine Peso (Php).  
  • Coins.ph: This exchange allows users to trade cryptocurrency coins like BTC, ETH, Axie Infinity Shards and Smooth Love Potion (SLP). The platform offers free trading and charges Php 10 for withdrawal. It is also regulated by the BSP.  
  • Juancash: This virtual asset service provider (VASP) gives users a platform to convert fiat money to cryptocurrency and vice versa. The mobile application is available for download on Google Play and Apple Store.  
  • Bexpress Pro: The trading platform currently has three listed coins: BTC, ETH and USDT. It is working on expanding its coin offerings soon. Bexpress Pro is licensed by the BSP and is affiliated with major banks in the Philippines, such as Union Bank, Landbank of the Philippines, BDO and PNB, among others.  

For the complete list of BSP-regulated cryptocurrency exchange platforms in the Philippines, click this link. 

Want to invest in cryptocurrency in the Philippines? Here's what you should know

Cryptocurrency regulations  

In the Philippines, cryptocurrency transactions are legal; however, crypto coins are not considered ‘legal tender’ as they are not issued by the BSP. In 2021, the Central Bank released the Guidelines for VASPs. Under the Guidelines, these are the following key points and information useful for those who’d like to invest in cryptocurrency in the Philippines:  

  • To run as a money service business, a VASP must apply for a Certificate of Authority from the BSP. During the COA application, the BSP shall evaluate the ultimate beneficial owner of the VASP.  
  • VASPS must employ efficient cybersecurity framework for digital wallets, data confidentiality and safeguards against cyberattacks.  
  • VASPS must employ customer due diligence processes to obtain client identification data and avoid potential money laundering and terrorist financing activities.  

Furthermore, under the BSP Circular 944, Virtual Currency Exchanges must register to the Central Bank as remittance and transfer companies. The authority also requires them to have systems in place for consumer protection as well as technology risk management.  

In 2018, the Securities and Exchange Commission of the Philippines issued an advisory on cloud mining contracts. The SEC defined cloud mining as the ‘process of acquiring cryptocurrency through the utilization of shared mining equipment in … remote data centers’. To be involved in this contract, a user should register and pay an initial fee via fiat or cryptocurrency. According to the SEC, this investment scheme is illegal because it involves security sales to the public, which are not duly registered to the SEC.  

Risks when you invest in cryptocurrency in the Philippines 

The BSP Circular 1108 series of 2021 states:  

The Bangko Sentral recognizes that virtual- asset (VA) systems have the potential to revolutionize the delivery of financial services by providing faster and more economical- means to transfer funds, both domestic and international, and may further support financial inclusion. These benefits, however, should be considered along with the attendant risks in VAs considering the higher degree of anonymity involved, the velocity of transactions, volatility of prices, and global accessibility. 

Here are some of the risks that you need to understand when you invest in cryptocurrency in the Philippines, which are also almost the same risks you face when you buy or trade crypto outside the country.  

  • Price volatility 
  • Ransomware attacks 
  • Scams 
  • Technical glitches 

Should you invest in cryptocurrency in the Philippines, you can avoid these risks by using only BSP-regulated exchanges. If you’re a big-ticket player, you may consider investing in a crypto fund administrator in the Philippines to protect your assets and even help diversify your crypto portfolio.  

Currently, the Philippines is not seen to have an aggressive attitude towards cryptocurrency investment. Think tank Economist Intelligence Unit (EIU) said the country has a ‘benign approach’ in crypto. But the growth of the digital asset landscape in the Southeast Asian archipelago is watered by cash remittances, which, in 2021 amounted to a record high of USD 31.418 billion. According to the EIU, cryptocurrency wallets are becoming the preferred cash remittance channels. In addition, the EIU says:  

‘In the medium term, we expect the authorities to promote cryptocurrency use cases with supportive policies, through government initiatives. That said, we do not expect cryptocurrency to become the prevailing method of payment in the Philippines in the long run, as it is unlikely to be accorded legal tender status.’ 

Want to invest in cryptocurrency in the Philippines? We can help you!

As a global fund administrator, Bolder Group knows the cryptocurrency game in its areas of business, including the Philippines. Our professionals are highly experienced in frequency trading, indexing and arbitrage. We can help you launch and administrate a crypto fund and in your legal compliance needs.  

If you wish to invest in cryptocurrency in the Philippines, it’s best to speak to an expert. Reach out to us today. 

A small country sitting at the centre of Europe, mountainous Switzerland, known for cheese, chocolates and luxury watches is an economic powerhouse. One of the wealthiest countries in the world, the Swiss nation is also considered a tax haven for its highly private banking system, making it an attractive destination for the wealthy. But while it has held a reputation for having a secretive banking system, anti-money laundering regulations, due diligence processes, procedures to know-your-customer or KYC in Switzerland are being implemented. That is to ensure that the Swiss financial landscape is compliant with international laws and regulatory frameworks.  

In this article, let’s focus on KYC in Switzerland.  

The processes of KYC in Switzerland follow the same recommendations by major finance governing bodies that rule many EU countries, such as FATF and FINMA.  

First, what are the FATF and FINMA?  

The Financial Action Task Force or the FATF is an international financial watchdog whose mandate is to prevent organised economic crime like big-time money laundering and corruption and terrorist funding. Over 200 jurisdictions, including Switzerland, are complying with FATF, and implementing the Force’s regulations.  

The FATF is not only a policy-making body, but it also evaluates the AML and CFT (counter terrorist financing) measures of jurisdictions, so it can make look at new risks and make recommendations, based on the latest developments in the financial world. It also monitors countries to ensure they implement the FATF standards fully and effectively and holds non-compliant countries accountable.

READ: AML, KYC regulations in the EU: The Union’s war vs. illicit finance 
 
Just last year, the FATF recommended some regulatory updates focusing on several matters like customer due diligence, PEPs (or Politically Exposed Persons), virtual assets, suspicious transactions, and more. These recommendations are being followed by Swiss banks and FINMA as well. 
 
Switzerland’s FINMA, or the Swiss Financial Market Supervisory Authority, keeps to FATF regulations. The FINMA is not a government body but a private one. However, it works with the government to observe financial regulations and laws. Like the FATF, the FINMA makes sure that financial protection regulations are properly adhered to; the difference is that FINMA regulates on the country level (KYC in Switzerland, for example), whilst the FATF, internationally.  

KYC in Switzerland: the basic requirements and how it changed due to crypto

Standard KYC requirements in Switzerland

Just like any country or jurisdiction, KYC processes in the Swiss country have some initial requirements which depend on whether the customer is an individual or an entity, for instance. Here are the KYC requirements in Switzerland:   
For domestic persons:   

  • Identity documents like an ID or passport  
  • Proof of nationality  

For international persons:   

  • Professional photo  
  • Identity card 
  • Passports 
  • Driving licence  
  • Name of birth  
  • Date of birth  
  • Address 
  • Nationality  
  • Identity documents like an ID or passport  

For corporate entities:  

  • Registered office in Switzerland  
  • Commercial register 
  • UBO (Ultimate Beneficial Owner)   

RELATED: Registering a UBO in the Netherlands 

Take note that these may not be the exact requirements and that the list is not a one-size-fits-all. The necessary documents may differ depending on the case or conditions.  

KYC in Switzerland in the time of crypto  

Virtual assets like cryptocurrencies are not yet considered legal tender in Switzerland. However, crypto transactions with coins like Bitcoin and Ethereum are legal, if they are licensed and regulated by the FINMA. These crypto transactions are done via VASPs, or Virtual Asset Service Providers.   

The FINMA requires VASPs to provide Personally Identifiable Information, or PII, of customers (natural or legal persons) involved in crypto transactions. This is part of the KYC process in the Swiss crypto space. PII includes:   

  • Client’s name 
  • Client’s account number, or a reference number for the transaction 
  • Client’s address, date and place of birth, their client number, or national ID number 
  • Beneficiary’s name 
  • Beneficiary’s address 

Remote KYC in Switzerland

Almost six years ago, the Swiss FINMA started allowing Swiss-based financial institutions to use online identity verification to fulfil the due diligence requirements under the Swiss Anti-Money Laundering Act. This means customers could be verified remotely, removing the need to visit a local branch to open a Swiss account.  

But with deepfake technology these days, ensuring a secure online ID and verification process is trickier than it used to be. To combat these, the FATF recommends financial institutions to ‘Seek assurance [in] testing and certification by the government or an approved expert body, or where these are not available, another internationally reputable expert body. Where available, participate in public sector regulatory ‘sandboxes’ (or other relevant mechanisms) to assess the digital ID system’s assurance levels.’  

There are many KYC, AML, and compliance software programs and tools that are developed by private companies that financial institutions can take advantage of. Many of them are for medium to large scale banks and other companies offering legal services, fund management and/or administration.  

What we can do for you 

Here at Bolder Group, we like to keep ourselves informed, involved and in control. As such, we make sure that we are always updated on the latest regulations and trends in the financial world. That, combined with our decades’ worth of experience in fund administration, including governance and compliance solutions, we can assist you in your needs.  

Need some hand in accomplishing KYC in Switzerland? Contact our Bolder team.  

More than a thousand lives were lost and millions more displaced amidst the Russia-Ukraine conflict—and these numbers go higher by the day. The most tragic outcomes of the Russian-Ukraine war are the lives lost, families torn apart and livelihoods disrupted. But whilst the conflict has the most direct consequences on the people of Russia and Ukraine, the ripple effect that spans across continents is crystal clear. In this article, we highlight the economic repercussions of the ongoing conflict. Let’s talk about the Russia-Ukraine War and the financial world.   
 

The financial world is closely tied to any international (and even civil) conflict; amidst the Russia-Ukraine war, there seems to be more emphasis on the linkage. Even more so because the global economy is still recovering from the blowback of the present pandemic. Let’s dive deeper. During the first month of the Russia-Ukraine war, what significant changes in the financial world have we seen? 

Russia-Ukraine War and the Financial World: The immediate results  

International sanctions on Russia  

Most jurisdictions, particularly the European Union and the G7 countries, have taken initiatives to prevent Russia from acting any more aggressively during this conflict by imposing various international sanctions; the major ones being:  

  1. Financial sanctions. The European Union has cut Russia’s access to the region’s capital markets. As a result, Russian banks (including the Central bank) are not allowed to lend to and buy securities in EU entities. Major Russian banks have also been excluded from the SWIFT system. The EU will also not be co-investing projects with the Russian government. The Union says 70 per cent of the Russian banking system is not allowed to apply for refinancing in the region. On the other hand, G7 has pressed full blocking sanctions against more than 600 Russian elites with ties to the Kremlin, including Russian President Vladimir Putin’s advisors, bank heads, Duma members and other financial institutions. Both G7 and the EU announced they have joint sanction actions to share information relative to the Russia-Ukraine war and the financial world.   
  1. Export controls. The EU and the United Kingdom imposed a ban on exporting dual-use items (goods with military and civil applications), including software and technology, electronics, computers, telecommunications, lasers and marine items, amongst others. These are items considered to be useful in developing military, defence and security equipment.   
  1. Import restrictions. The EU also ordered an export ban on luxury goods (cars, watches, jewellery) to Russian elites. Additionally, because the economic powerhouses removed Russia’s ‘most-favoured-nation’ status at the World Trade Organization, there is a potential ban, higher tariff impositions or cross-border restrictions on Russian products like diamonds, steel, aluminium and platinum.   

There are sanction packages also apply to Belarus, which has since announced its public support for Russia. According to the European Union, the sanctions it has imposed are a way to ‘cripple the Kremlin’s ability to finance the war’ and ‘impose economic and political costs for Russia’s political elite who are responsible for the invasion’. Both the US and the EU are expected to release more sanctions on Russia.   

Reuters published a list of global sanctions against the country.  

To address these global sanctions, the Russian government has taken countermeasures. On 28 February 2022, Putin issued a special decree: ‘On Special Economic Measures in connection with the Unfriendly Actions of the United States of America and Other Foreign Countries’. This decree mandates, amongst others:   

  1. Russian residents and entities to sell 80 per cent of foreign currency received from foreigners since the start of the year.   
  1. The prohibition of extending foreign currency loans to non-Russians as well as wiring fund own fund transfers in foreign currency to financial institutions abroad   
  1. Allowing public companies in Russia to buy back shares if certain conditions are met  

Rising oil and gas prices   

Russia-Ukraine war and the financial world: oil price hike

Russia supplies 11 per cent of the world’s oil, making it the third-largest oil producer. The country is the largest oil and gas supplier in Europe. According to the Columbia Climate School, 45 per cent of the EU’S gas imports are from Russia and so is 40 per cent of the union’s consumption.  

Dutch Prime Minister Mark Rutte has repeatedly expressed that Europe is heavily dependent on Russia in terms of energy, so cutting oil and gas supply from the country will have ‘enormous ramifications’. In a separate press conference, Rutte said the EU has ‘vulnerabilities in terms of [its] dependency on Russian oil and gas’, calling this ‘the uncomfortable truth’. Similarly, EU Commission President Ursula von der Leyen said in an official statement: ‘We must become independent from Russian oil, coal and gas. We simply cannot rely on a supplier who explicitly threatens us.’   

It’s a different story for the US, which leads imposing sanctions against Russia, as the country does not heavily rely on Russian gas; so much so that on the second week of the Ukraine crisis, the White House banned Russian oil and gas imports to the country.   

So, how, exactly, does the Russia-Ukraine war affect the oil prices?   

Due to the supply disruption of oil and gas—in the US, particularly—oil prices have gone up (which was already the direction even before the crisis broke out). In fact, this year, Brent crude price has spiked to USD 130 per barrel. In comparison, it was only USD 70 pb in 2021. On average, a gallon of gas is worth $4.17 in the US this year, much higher than last year’s $2.66; and the price is anticipated to go even higher as summer approaches.   

Apart from the US pulling out of the Russian oil market and the EU considering following suit, big names like Shell and BP have stopped buying oil from Russia.   

Still, Russia has found a way to dispose of its crude oil and gas supply: by selling it at discounted prices. India is a big target market. Reportedly, Russia offers its oil to the Asian country at pre-war prices plus a bonus of a $35 discount per barrel. The tradeoff, though, is that India must bypass the SWIFT system to buy cheap Russian oil. Ruble-rupee transfers will be done via the SPFS in exchange for the Urals. Experts warn there may be a flipside for countries outrightly transacting with sanctioned Russia. Others argue, however, that India buying oil from Russia is no different when Russian oil dependent-EU member states are doing the same.   

Continuous gas price shocks force the public to spend more on energy than any other commodities due to its feedstock nature. When oil prices move, it’s a domino effect, and clearly, there will be a significant impact on inflation and GDP.   

Supply chain disruption   

Russia-Ukraine war and the financial world: supply chain disruption

The Russia-Ukraine war and the financial world are linked not only because of money and economic matters but the supply chain as well, which includes the production and delivery of key agricultural products and important minerals. Even the corporate exodus from Russia has an impending financial impact on a global scale. How does the tension affect the global supply chain? Let’s talk numbers:   

  1. Combined, Russia and Ukraine control already a quarter of the world’s grains trades. Both countries are amongst the top three exporters of wheat, corn, sunflower seeds and oils, according to the United Nations Food and Agriculture Organization (FAO).   
  1. Russia is the world’s biggest exporter of nitrogen filters and the second-biggest producer of potassic and phosphorous fertilizers. 50 nations import an average of 30 per cent of their wheat from Russia and Ukraine. (Source: FAO / Full report of FAO here)   
  1. Russia supplies 30 per cent of the world’s platinum-based elements and 11 per cent of nickel. (Source: Deloitte Insights)  
  1. Palladium’s price has spiked 80 per cent since the conflict started. (Source: Deloitte Insights)  
  1. There are 15,000 Tier 1 suppliers in Russia, 7.6 million Tier 2 suppliers to Russian companies (Source: Deloitte Insights)  
  1. Over 600 companies have stopped operating in Russia, including entities from China, India, Europe, the United Kingdom and others. More are expected to withdraw from the country (Source: Yale)   

The rising oil price will, of course, carry with it higher shipping costs. Some analysts say corporations, especially manufacturing companies, will likely consider producing goods domestically as the supply chain and oil price shock continue to impact the world. Recycling materials may also be seen as a stopgap solution to continue production.   

ESG: U-turn, handbrake or acceleration?  

Russia-Ukraine war and the financial world : changes in esg

Over the past years, ESG investing has been at the forefront of the sustainable investment movement, with emphasis on the environment movement. From a niche, ESG has become a corporate norm as the public and government bodies have started being critical of the environmental and social responsibilities of corporations. Then the Russia-Ukraine war happened.   

The conflict has a severe impact on financial markets and basic commodities; what’s more, it has also changed the way corporations make business decisions: which side of the war are they on?   

Relative to ESG, the recent developments have put the following questions front and centre:   

  1. Is investing in defence and military bad? What if a company is investing in a manufacturer that supplies weapons to the underdog; isn’t that some kind of a dilemma? In the past years, portfolio managers have been keeping away from aerospace investments and defence stocks, to push the ESG agenda. Why? Well, because manufacturing related equipment, especially weapons, has a large carbon footprint. Interestingly, it’s a war that may have pushed some to rethink this decision. The Wall Street Journal reported Swedish bank SEB made a U-turn in its no-defence-investment policy. WSJ estimates higher military spending and a spike in defence shares due to the war.  
  1. Oil prices are soaring at an all-time high, are corporations considering hitting the brakes on the green transition to secure energy supply?   
  1. Will the war underline the need for integrating political stability and border protection into the ESG funds of mainstream investors—to check the social tick box?   

Crypto under the spotlight 

Russia-Ukraine war and the financial world: cryptocurrency

Lately, cryptocurrency has been making headlines. And when news of global financial sanctions versus Russia broke out, the digital asset has been thrust even further at the centre stage. Questions arose: does cryptocurrency have a role above its weight amidst the ongoing conflict?The clear answer is yes. Whether the role is favourable or not depends solely on which side of the coin you support.   

In a previous article, we explained how cryptocurrency proved to be useful for both Russia and Ukraine.   

More than a month into the war, what changed in the cryptocurrency game in a time of war?  

With the key role that cryptocurrency played in the first days of the war (Russians using it to exchange their rubles; Ukraine using it to accept humanitarian and military donations), the world is gradually starting to make sense of how this ‘digital money’ and the process of peer-to-peer transactions are shaping international affairs.   

Mid-March of this year, the Ukrainian government enacted a law that provides for the legal framework of cryptocurrency transactions within and from the country. This, after digital coin donations poured in rapidly in the first week of the crisis. Just last year, Ukraine President Volodymyr Zelenskyy vetoed a similar bill. Notably, El Salvador is the only country to fully accept cryptocurrency as legal tender. Is Ukraine’s action a step toward a global embrace of the virtual asset? The answer, like crypto, will remain volatile.   

On the other hand, Russia’s use of crypto as a manoeuvring technique against sanctions may push the west—and the rest of the world, for that matter—to impose stricter regulations on the use of the virtual coin.   

Russia-Ukraine war and the financial world: change continues  

With geopolitical tensions unfolding in front of us—amidst a recession brought by the Covid-19 pandemic, no less—new information is available every minute, and along with it, crucial changes to the global marketplace. The conversation on the Russia-Ukraine war and the financial world—the shifts and spikes and the spiralling down—goes on; so, for now, the most important thing for governments and corporations to do is listen closely to and answer back carefully.   

Tough calls, bolder answers 

Bolder Group commits to its values of caring, connecting and challenging. As a global fund administration services provider, we deeply care about international affairs, not only because of business but more importantly because of humanitarian reasons. As we face dark days, we do our best to connect with our teammates, partners and clients, to keep them updated on how the recent events may affect them and our relationship with them. And as challenging as these times may be, it is up to us to face the challenge of taking bold steps to help. Our team members have taken initiatives to aid people affected by the crisis, and we hope to inspire more to break the barriers one kind act at a time.   

The earth has seen hundreds, maybe even thousands, of conflicts and two world wars; during these tragedies, lives are lost, and the economy collapses. As a result, we lose even more—and it takes decades before we can fully recover. Now, just over ten years after the 2008 global recession and amidst a pandemic that continues to fracture national economies all over the world, a war is happening. It’s a war in the age of smartphones; a war in the age of the internet; a war in the age of ‘woke’ generations; a war in the age of crypto.

And as this war began, countries responded to the Russian invasion of Ukraine through international sanctions that could trigger economic rubble in the Federation: import bans, asset freeze, threats of oil export embargo. However, there is something that even world powers cannot completely control, as its movement is heavily dictated by the actors: cryptocurrency. 

Major Russian banks banned

As a result of global sanctions against Russia, seven Russian banks have been banned from SWIFT or the Society for Worldwide Interbank Financial Telecommunication. The SWIFT is the leading global network through which over ten thousand banks all over the world communicate for payments and foreign exchanges. Disconnecting these banks from the SWIFT effectively erases them from a major international banking system, which would spell trouble for the country’s external financial affairs. Notably, the SWIFT isn’t the only platform of its kind. It is, though, the most efficient and least risky. 

As major Russian banks have been de-SWIFTed amidst the Russo-Ukrainian war, can the Federation turn to the blockchain network for international transactions?

Crypto, a safe haven?

The questions now: will unregulated, decentralised finance be a safe haven for governments and their wealthy constituents? This is war in the age of crypto … does this mean Bitcoin, Ether and other virtual currency can actually be used to finance war efforts? 

The war has pushed cryptocurrency into the spotlight, too. There is an increase in the demand for Bitcoin, as both Ukraine and Russia may be using digital coins amidst the conflict … but for different reasons. 

Some authority figures believe that cryptocurrency and other digital assets may act as loopholes and undermine the power of international sanctions. The U.S.A’s Federal Reserve Board Chairman Jerome Powell cited concerns that these virtual coins are being used as workaround in dodging sanctions. 

Addressing the US House Financial Services Committee, Powell said the ongoing war between the two European countries ‘underscored the need for Congressional action on digital finance, including cryptocurrencies’. 

There have been suggestions that Russians may be converting their savings into crypto in this time of war and an imminent post-war economic crisis. There have also been records of a significant increase in ruble and Tether transactions as the country experiences economic blowback after the West announced sanctions against the Federation. This may lead to crypto becoming a ‘safe haven’ for Russians—particularly in Tether, a ruble-dominated stablecoin. 

But the likelihood of Russian crypto market participants using the blockchain to evade sanctions might be ‘misguided’, according to Valkyrie Investments CEO Leah Wald. It is because on-chain transactions are easier to track than cash exchanges.

The preference of crypto over fiat money during times of unrest could also be impractical from a logistics point of view. Battles may result in power outages and internet loss. Crypto transactions are heavily reliant on both. 

Yet, the war and crypto seem to be roped together.

War in the age of crypto: what use are virtual coins?

war in the age of crypto. bolder blog

Bitcoin prices have picked up days following the Russian invasion — after the prices had seen slumps the previous week. Until now, BTC prices remain volatile, but the spike is evident, especially in the first days of the war. Crypto watchdogs believe heavier BTC transaction volumes within Russia and Ukraine could be the primary reasons for the recent price jumps. 

On the other side of the coin, even Ukraine has found cryptocurrency useful in its military efforts. Crypto investors have been donating to the Ukrainian government. As of March 9th, the donations have reached $90.5 million. (Click here for the live dashboard of ‘Crypto for Ukraine’). The Ukrainian government largely accepts Bitcoin, Ethereum and Tether for war funding. This is a first-of-its-kind. Ukraine is the only national government, so far, to accept war donations through crypto fundraising. On top of that, Ukraine’s Ministry of Digital Transformation has approached—through social media, no less—big-ticket crypto investors and platforms for donations, including Michael Chobanian, founder of Kyiv-based Kuna.

Interestingly, just last February, both Ukraine and Russia made massive steps towards the legalisation of cryptocurrency, whilst tension was brewing. The Ukrainian parliament passed a bill legalising the use of cryptocurrency, which protects investors from fraud and abuse. However, it has not gone the route of El Salvador, which adopted crypto as legal tender in 2021. On the other hand, the Russian Ministry of Finance has introduced a draft bill allowing cryptocurrency mining in the country to create a legal market for crypto participants. This, despite the Central Bank’s demand for a blanket ban on crypto. 

Now, crypto has been in the headlines alongside the war, as it continues to play a seemingly crucial role in the financial side of the geopolitical tension. How so, and how big? These questions will have different answers by the day, as this war in the age of crypto goes on. For now, like crypto traders who watch the trends closely, we look hard and near to assess the extent of the financial damage of the war, not only on the traditional economic sphere but also within the digital arena — and, ultimately, how we can cope. 

As a fund administrator involved in cryptocurrency, Bolder Group does its responsibilities in keeping itself informed about matters surrounding the digital asset world. While Bolder Group has been closely monitoring the developments in the Russo-Ukrainian War, this article is not a news source. Rest assured, we only publish articles based on facts and our own informed and expert opinions. Please go to trusted news websites for the latest developments about the war. 

ALSO: Bolder Group has organised donation drives to support refugees and people affected by this horrible crisis. We highly encourage you to aid those who need your help amidst this tragedy, even in the small ways you can. 

READ: How money laundering happens in the crypto world

READ: Crypto exchanges and digital compliance

Photo by Karolina Grabowska from Pexels


Crypto and taxes

There are roughly 59 million Americans who own some form of crypto, according to Finder.com. And that number has increased since the previous years. The same source also noted that 8.3% of Americans own cryptocurrency. But despite such a small number, IRS chief Charles Rettig says the country is losing about a trillion dollars every year in unpaid taxes, and he credits this tax gap, at least in part, to the rise of the crypto market. That said, the IRS has begun sending letters to virtual currency owners advising them to pay back taxes and file amended returns as part of tax compliance beginning in 2019. In this blog, we’ll discuss the basics of how crypto is taxed in the US.

READ: ABCrypto: The basics of digital assets 

Disclaimer 

Bolder Group does not consider this article tax advice but merely a source of information that you can use as a reference for research or when discussing with a tax advisor. We’d also like to add that this blog solely focuses on US tax laws on crypto, and if you’re in another country or have a physical presence in a different one, we recommend looking for a different source.  


Photo by Karolina Grabowska from Pexels

Categorising what is taxable and what is not 

When taxing crypto, we first need to identify if a transaction is either a taxable or non-taxable event. Let’s differentiate the two:

Non-taxable events  

  • Buying crypto with cash and holding it  
  • Donating crypto to a certified tax-exempt charity or non-profit 
  • Receiving crypto as a gift 
  • Giving crypto as a gift 
  • Transferring crypto to yourself  

Taxable events (as income)  

  • selling crypto for cash 
  • converting crypto to another 
  • spending crypto on goods (including services)  

Taxable events (as capital gains)  

  • getting paid in crypto (in exchange for goods and/or services  
  • mining crypto 
  • earning crypto staking rewards 
  • inheriting crypto 
  • Accepting crypto via Airdrop  

What is crypto holding?  

Crypto holding is when you technically hold crypto and wait for it to compound, or so. Similar to investing, depending on how the market is, holding crypto could either be a gain or a loss in the long run.

Photo by RODNAE Productions from Pexels


When it comes to taxing withheld crypto, there’s no gain or loss. Taxation only applies when the crypto is sold. However, there is another thing called long and short-term gains.  

Short term vs long term gains 

If your crypto has been on your account for 365 days or fewer, it will be taxed like ordinary income and subject to short-term capital gains tax. On the other hand, if it has been more than 366 days, taxes will be subjected to long-term capital gains – which is about 0-20% based on your ordinary income tax rate.

However, these taxes will not apply if you have not realised your gains or losses. This is why you need to identify your crypto income flow first before you can calculate your taxes.  

Defining capital gains vs losses 

Before diving into that, we first need to define what the cost basis is. When it comes to cryptocurrencies, the cost basis is the price or cost you spent initially when buying the crypto. However, when crypto is mined or staked, the cost basis is determined by the fair market value when it is received. Finally, a gifted crypto’s cost basis is determined by the sender and the fair market value simultaneously.

Photo by Mikhail Nilov from Pexels

In simple thoughts 

The US Law has defined virtual currencies like crypto as virtual properties which makes them taxable under IRS Notice 2014-21. It is best to note that taxing crypto will vary depending on its category – whether it is considered taxable or non-taxable. And taxable events can be categorised into two: capital gains and income. Finally, when holding crypto, taxes vary if it is held short or long-term.  

Other IRS resources to guide you:  

MORE ON CRYPTO: Dissecting DAC8 and its impacts on crypto 
Money in codes: The why, the how and the risks of cryptocurrency

Bolder Group provides services for administering cryptocurrency funds including reporting through manual and automated reconciliation using API. Our processes and procedures are designed to eliminate inefficiencies, provide oversight and execute at the highest service levels. Visit our service page to learn more.

Know Your Customer or KYC is the process of getting information from your clients about who they are, what they do, what kind of transactions they will be doing. KYC is used to protect a finance institution or company along with its other clients from fraudulent and illegal activities including money-laundering. We can say that KYC under anti-money laundering (AML)  strategies, but there are more strategies other than KYC when it comes to AML.

READ: Know the Risks, Know the Clients


And when the US declared that all crypto exchanges are defined as money service, KYC then became a requirement for all crypto activities. That said, KYC for physical finance vs virtual institutions are different from one another. And we’ll further discuss those in this blog.

READ: ABCrypto: The basics of digital assets


Why is KYC important?

As of 2021, ransomware victims paid close to $350 million worth of crypto assets to attackers. That is a 311% increase in comparison with its previous year’s data. This data is according to the Chainalysis Data Crime Report 2021. 

Chainalysis Data Crime Report 2021 showing increase of cryptocurrencies paid to ransomware attackers over the past few years.

Other than ransom attack payments, crypto can also be used to fund and transact illegal activities like money laundering, funding terrorism, tax evasion, and others. But with the KYC process, it helps institutions raise flags for suspicious accounts and crypto transactions.

Brief history of KYC in Crypto

Based on a joint statement issued by the Financial Crimes Enforcement Network (FinCEN), the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) in 2019, cryptocurrency exchanges was defined as money service businesses (MSBs), thus making them subject to AML and KYC regulations under the Bank Secrecy Act in the US. Before 2019, no specific law that regulates KYC for the protection of crypto and virtual money was in place making the industry insecure and a high target for the black market. 

One bitcoin cryptocurrency

And since 2019, new regulations have followed. And other countries made their own laws or updated their regulations too. It is also best to know that each country has its own law that covers KYC in crypto.


Latest updates on KYC compliance for crypto transactions (2022)

As mentioned above, each country has its own law that covers KYC in crypto. Listed are the updates for KYC in crypto based on its country

Most of the countries above updated their AML laws to include digital trading and cryptocurrencies in regulation and crime prevention; as well as further defining what covers cryptocurrencies and digital assets. Unlike China, who has completely banned crypto mining and trading since 2019. 

So what kinds of info is asked during the KYC process in crypto? 

Man filling out online form for digital KYC compliance

Just like the KYC processes in physical financial institutions, KYC processes in virtual worlds vary from which and what jurisdiction they run in. But in most cases, they do require the same basic information when creating accounts or making transactions, such as:

  • Identification
  • source of funds
  • address or physical presence

What differs is the exact type of documentation which will change if the account owner is a person or a legal identity. Other than that, creating a crypto account usually asks for those top three info mentioned above.

So what happens if no KYC is done?

While some may be concerned about sharing their identity to a virtual trading platform, as well as questioning the ethics of sharing identities in a supposedly decentralised trading ecosystem, there will be countries that require KYC process and will be required to be followed. In those cases, it would also be best to look into the platform’s data and privacy policies before engaging in it.

It’s also best to note what happens when KYC is done and vise versa. According to Shapeshift,  a crypto exchange platform,  it lost 95% of its users as a result of the KYC measures it was forced to implement.

However, there are platforms that let users create an account without the KYC process but are limited to using their platform from trading or withdrawing crypto funds. While there are platforms that let users who did not go the KYC process able to withdraw funds, but on a certain limit.

Also, there are also platforms that allow crypto trading without KYC, but such action is risky as there was no assessment done on every possible profile accessing the platform.

Traditional KYC vs Virtual KYC

Aside from adjusting the identity verification to adapt to the virtual system from the traditional physical system, there are several differences between traditional vs virtual KYC. Some of the are listed below:

  • ensuring the accuracy of identity proof 
  • adjusting virtual transaction verification processes 
  • detecting virtual money mules 

KYC risks in Crypto

Bitcoin analysis data and risks

Crypto and digital assets exchange platforms, as well as fund managers and administrators, use systems and algorithms or tools to look into transactions and make sure that they are KYC compliant. Here are what to look for according to Financial Action Task Force (FATF):

  • Anonymous transactions
  • Transaction speed
  • Structured transactions
  • Money muling
  • Transaction Type
  • Transaction Pattern
  • Anonymity
  • Senders and Recipients
  • Source of Funds
  • Geographical Risks

Benefits of KYC in Crypto

Image showing bitcoin coins and phone screen with the bitcoin crypto account value

That said, there are benefits of applying KYC due diligence in crypto. This is why countries and regions like the EU are imposing it and are looking into improving it. Ensuring that KYC process is well executed and applied, it provides: 

  • customer or client transparency 
  • enhanced stability and sound crypto market 
  • enhanced customer trust 
  • reduced risk for money laundering activities


Conclusion

Each country and jurisdiction have set their own rules based on their own rules on how to apply KYC in Crypto. At the end of the day, these KYC in crypto laws and its updates are made to secure the financial structure that digital assets hold on to.

There are also slight differences between KYC processes for physical and digital assets like crypto that digital assets exchange platforms and fund managers or administrators use to manage cryptocurrencies.

For more information about our crypto fund administration services, click this link

Bolder | At the base of business

SUGGESTED BLOG: Dissecting the Directive on Administrative Cooperation (DAC 8) and its impact on crypto

They say money talks the loudest; but when we’re talking about huge sums of it, money, sometimes, keeps it silent. Anonymous. In the shadows. Secretive. We’re talking about money laundering in cryptocurrency and in the global financial system, of course.

Organised criminal groups rely heavily on money laundering tactics to cover their tracks and feed their income into the economy, banks, financial institutions and lawful investments, among others. 

The ‘cleaning’ of dirty cash has always been a titanic problem, not only within countries but even more so across continental borders. And as the financial world evolves, so do money laundering tactics, especially in an era of rapid and widespread digitalisation. Governments and financial watchdogs have kept eagle eyes on transactions in the virtual marketplace; particularly, they have doubled, if not tripled, their efforts in implementing efforts to fight money laundering in the cryptocurrency market, a segment that is barely 13 years old. 

Crypto crime

Blockchain research firm Chainanalysis found that about USD 8.7 billion worth of cryptocurrency was laundered in 2021 — a 30 per cent increase from the previous year’s numbers. Still, this was less than the amount of cryptocurrency laundered in 2019, which reached nearly USD 11 billion. In total, cybercriminals have laundered over USD 33 billion since 2017. 

Chainalysis explained its data came from their research on funds sourced from ‘online illegal activities’ like hacking and ransomware attacks. Profits from these activities were transacted and exchanged through cryptocurrency. The research firm clarified that money from ‘offline’ crimes, such as illegal gambling and drug trafficking, laundered through crypto transactions were more challenging to track, and, therefore, excluded from the 2021 report. However, Chainanalysis believes there is ‘anecdotal’ evidence of this situation.

So there’s dirty cash in the crypto world—but where do the dollars go? 

Much like laundering fiat currency, no one is certain about the points A and B of money laundering in crypto.

Before we follow the money trail, let’s first talk about how money laundering works. The United Nations says there are three straightforward steps to launder money: move the dirty cash, disguise its trail through fake banks or intermediaries and lastly integrate it into the legitimate financial system by purchasing investments, funds and luxury items, for example. That is usually how illegal money is cleaned up. 

Illicit crypto coins are cleaned before exchange or cashing out using the same concept as laundering fiat money: placement, hiding and integration. There are also a number of other crypto laundering practices illicit actors can use to clean dirty crypto coins: 

Blending crypto in tumbler services: 

Imagine you’re a bartender: you mix alcohol, syrups, fruits and other ingredients in a shaker (or tumbler) to make one glorious cocktail. When the cocktail is done, there’s no way of knowing which part of the drink is from which ingredient. That’s essentially how a crypto tumbler works. It mixes crypto exchanges together. How? Mixing services break down data of crypto users — who, to be clear, are not absolutely anonymous on the network — to create a unique blockchain, which results in a thicker layer of security amongst parties and transactions involved. Tumbler makes data access a complex process, and no one is sure where the root money comes from. Money launderers utilise crypto tumblers for high-value illicit crypto transactions. That is why the service lands in a grey area; it’s not completely unlawful, but it’s also a useful tool to launder money. 

Transacting in high-risk or non-compliant exchanges

Currently, there are nearly 400 crypto exchanges available globally. Because crypto is not regulated by any official government body or financial institution, it is up to the crypto service provider to act as a moderator within the network and make sure all transactions are legal and legitimate, at least in the jurisdiction where they are operating. However, some exchanges have very lax regulations, such as deficiency in know your customer and due diligence regulations.

Wanted: Treasure Men

There’s a saying about cash being king. But for them to sit on the throne, there need to be some people behind them – the kingmakers. In the crypto world, the kingmakers are called the ‘treasure men’.

Treasure men are hired to carry out money laundering schemes in the cryptocurrency world.

Let’s backtrack: where does all the dirty money go and who does the deed? Treasure men—that’s who; a rendezvous—that’s where.

Treasure men are everywhere in the Hydra marketplace. They know their way around the blockchain network to keep their clients anonymous and, eventually, liquid. The treasure men, also called droppers, facilitate the withdrawal of cryptocurrency, usually laundered money. The service can be in exchange for vouchers, crypto payments or through debit card deposits. 

How do they work? Well, think of how a courier works. Both parties come up with a meeting place and time for the client to claim their money. Or, in some cases, the money is buried and the client looks for it in a coordinate that the treasure man provided. 

Interestingly, the service is not at all discreet as droppers can post listings for their services publicly on Hydra. 

Money laundering in cryptocurrency is a serious issue …

Crypto transactions in the blockchain network are inherently transparent and irreversible because of the availability of a public ledger. The risks of money laundering and financial crime in the crypto world can be considered relatively manageable, at least for now. For context, here’s a comparison: Chainalysis recorded about $33 billion worth of cryptocurrency laundered from 2017 to 2021, whilst the UN estimates about $800 billion to $3 trillion fiat money originated Nonetheless, issues surrounding money laundering in cryptocurrency should not be taken lightly. 

Around the world, there are AML regulations surrounding crypto transactions; actors are required to submit official identification documents and other information. But in nations that do not want any of the risks surrounding peer-to-peer money transmission, cryptocurrency is completely banned. These include China and other Middle-Eastern countries. In other nations, law enforcement has teamed up with crypto forensics teams to analyse crypto transactions and prevent any crime funded by digital coins. 

Ultimately, stronger AML policies within the crypto world is a key solution to stopping money laundering and other related crimes. This can be done primarily by crypto service providers and platforms through stricter Know Your Customer and Enhanced Due Diligence measures. It should always be noted that although crypto is advertised as a platform for anonymous investors, in the network, no legitimate crypto user is completely invisible

As a funds administration service provider, Bolder Group is serious about ensuring there are financial safeguards in place to protect our clients’ interests and the legitimacy of their transactions. We can help you navigate your way around the cryptocurrency network to secure your investments and protect your reputation. We understand the vital role that AML compliance plays in financial business operations.

Talk to us today about crypto risk management and AML application in your portfolio. Our team of compliance officers and crypto fund administrators will walk you in the right direction. 

Reach out to the Bolder team near you

Bolder | At the base of business

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In the know: Understand how cryptocurrencies and ESG go hand in hand in these times; Is Crypto ESG-friendly?; and how do you mind crypto with sustainability in mind? 

This blog discusses the take on ESG and Cryptocurrencies, two recent booming concepts in the finance industry. Read below for an in-depth research about the topic.

READ: ABCrypto: The basics of digital assets

Understand how crypto and ESG go hand in hand in these times

Image of gold coins with cryptocurrency logos.
Photo by Kanchanara on Unsplash

According to Statista, Etheruem’s value quadrupled in comparison with December 2021 vs. 2019 of the same month. Whilst Bitcoins value went around 6x than its value within the same time period. These numbers suggest that more and more experts and investors are putting their virtual currencies up than before. This is the reason why industry professionals are asking what are the possible effects of virtual investing, specially crypto, on ESG. Let’s discuss that further. First, let’s break down ESG and correlate them each with cryptocurrency.

READ: On ESG Compliance, and the matters that should matter.


E (Environment) –

Fiat money and digital currency can both be used to exchange goods or services but they are different with how they are made. We wrote a blog that explains that here.

While fiat money needs resources like cotton, fibre, and linen to be produced; crypto needs internet, computers, and electricity to be mined. Both are uniquely produced so when compared, they do have different energy consumption required for production.

According to research done by the University of Cambridge in 2019, Bitcoin mining requires less electricity than what common household appliances use in the US.

Cambridge University Data on US common household energy use vs. Crypto-mining energy use. 
This data shows that Bitcoin mining requires less electricity than what common household appliances use in the US.
However, the US is not the highest contributor for Bitcoin mining according to the data from Cambridge research in June 2021. Said data shows that Mainland China has a 86% higher contribution than the US.

Image shows data that says Mainland China has a 86% bitcoin mining activity higher contribution than the US.
Several countries, including China, are also becoming aware of the energy that digital asset mining is consuming and are making regulations to lower it. As of January 2022, a total of 8 countries have banned crypto and its mining activities.

It’s also good to know that there are other ways to mine digital assets – Proof of Stake (PoS) vs Proof of Work (PoW). Here’s a video explainer from Simply Explained how they differ from each other.

This means that depending on where and how the digital asset is mined, it can be carbon-neutral or not at all. In the end, digital asset mining is energy friendly if it consumes renewable energy rather than coal and/or old forms of energy sources. And a unified regulation will also help to make crypto mining more sustainable.


S (Social) –
Since crypto is decentralized, there are questions about investor protection and security against illegal activities and transactions. This is the same concern raised by China. As China’s National Development and Reform Commission spokesperson Meng Wei said, crypto production and trade produces “prominent risks,” she also comments that the industry is “blind and disorderly.”

Crypto stock exchange and activity using Binance software.
Photo by Kanchanara on Unsplash



However many argue that a decentralized system makes cryptosystem good as transactions are faster, cheaper, inclusive, and censorship-free. As a blog article about crypto published by For Dummies,  said, “In general, more decentralized cryptocurrencies are likely to be more stable and likelier to survive (long enough for you to profit from mining) than more centralized and less distributed cryptocurrencies.”


In conclusion, there’s no specific answer as to whether or not crypto is social-friendly. And that further studies are needed to better understand if the positives outweigh the negatives in terms of social for crypto and vise versa.


G (Governance) –
When it comes to governance, more countries and legislations are creating regulations about crypto security, management, and production. But keep in mind that the framework of crypto  is decentralized as it is made that way. And that in the future it could lead to either: 1) a uniformed rules and law that encompasses all crypto and digital asset systems; or 2) unique laws for each country or jurisdiction to protect its investors against crimes that can be committed with crypto.

Image showing different types of cryptocurrencies.
Photo by Kanchanara on Unsplash

Speaking of which, is Crypto ESG-friendly?


With the information and research listed above, we can say that crypto can be ESG friendly if looked at a certain angle, but not on the other and vise versa. This applies the same with how you approach crypto mining, as well as the social and governance aspect of running cryptocurrencies.

Lady showing her vision for cryptocurrency.
Photo by Thought Catalog from Pexels


Now, how do you keep crypto with ESG in mind?


Since there is no specific handbook that tells exactly how, it’s best to use ESG best practices that can be applied for crypto. This includes using renewable energy as well as applying Proof of Stake when mining, and others.

As there are more studies that need to be done for both ESG and Crypto, more and more laws and regulations will eventually fall into place.

And as investors, it’s important to keep updated and knowledgeable of these trends to help you decide and calculate the risk factors that can come along with the potential results of crypto investment.

Get updated with the latest finance trends, knowledge, and info by visiting Bolder Group’s blog page.

Image showing Bolder Group logo.

At the base of business

Skyrocketing one day, plunging the next — that is how volatile cryptocurrency value is. As a decentralised finance (DeFi) that is unregulated by government bodies or financial institutions, cryptocurrency is a naturally unpredictable market; even more so, a secretive one. As investors and users are allowed to remain pseudonymous, the identities of those betting their money on digital coins — both big time players and small fishes. A classic example is Bitcoin founder Satoshi Nakamoto, who, until now, has not revealed his/her/their identity. 

As a crypto fund administrator, Bolder is dedicated to learning the latest developments surrounding the virtual asset world — market news, practises, crypto investors, the lows and highs, the technology and more importantly the legislations involving digital assets. 

Bolder’s Global Head of Growth, Communications and Marketing, Jeroen van Zanten, talks more about DAC 8 and the latest EU regulations surrounding cryptocurrency. 

Q: Cryptocurrency is categorised as decentralised finance or DeFi. As such, does the government have the power to regulate cryptocurrency? 

Jeroen: We are very interested in all kinds of regulatory restrictions that might impose our clients doing business, so it’s essential that we follow all latest regulations. As cryptocurrency and other digital assets become more prominent in the financial landscape, the European Union has introduced the so-called DAC 8 (Directive on Administrative Cooperation – 8) legislation, as to increase transparency and combat tax fraud. 

Organisations that are active in the sector, like the Bolder Group, we need to not only protect our clients, investors, but also ourselves, to ensure that we are ready for this new DAC 8 legislation. 

The cryptocurrencies and decentralised finance is some sort of a blockchain-based form of finance that bypasses central financial intermediaries like banks. They have been making headlines as we speak. 

It looks like there’s a new story every day. It makes sense because if you look at the crypto industry, in total, it’s worth over a couple of trillions. I believe two trillion dollars, from the latest information we, as Bolder, received. 

As the cryptocurrencies and digital assets move towards the mainstream in the post-pandemic world, there are a lot of questions around the application of taxes. With concerns that the absence of a clear taxation framework for such assets will fuel risks, market volatility and unfair tax computation between different jurisdictions. Hence, there is a need to actually regulate crypto assets and cryptocurrencies.

Q: What are the latest developments in terms of cryptocurrency regulation?

Jeroen: There have been tremendous efforts by both the global and European legislative authorities to better monitor transactions involving crypto assets and to implement so-called AML — anti-money laundering — screening. 

For example, in 2015 and then again in 2019, the Financial Action Task Force (FATF) updated its guidelines for a risk-based approach to virtual assets and virtual asset service providers by amending the recommendations of FATF; and introduced definitions that really focus on the service providers and making sure that they adhere to rules set locally. The FATF, they published the new update, I believe, a year ago in March. This suggested adopting approaches to the one applied in traditional finance, such as the mandating of KYC-AML laws. 

So, you will see that at global and European, and also on a local level, new laws are either in preparation or being implemented as we speak. 

Q: What steps have the EU commission taken to regulate cryptocurrency?

Jeroen: This is an interesting phenomenon because it looks like economic and economic reality are far ahead, and the legislation is trying to catch up. So this is an interesting game we’re seeing. But you know, in general, at the EU level, we have the Fifth Anti-Money Laundering Directive. But it doesn’t refer to virtual assets directly, more to virtual currencies. And they’re trying to adopt a narrow definition, but still, they haven’t been able to really focus on the real issue. 

The real issue, at present, is that each EU member state applies different rules or has no rules at all. So when it comes to crypto assets and paying taxes or disclosing ownership, we have a problem because there is still no harmonised approach. And that’s what we’re trying to tackle. And this results in a risk of underreporting of tax income, leading to revenue losses for these governments. The central body is worried about this, that there is this lack of transparency, lack of AML control. That’s why the EU Commission has decided to, recently, take much firmer action in the form of DAC 8

Q: How will the Directive on Administrative Cooperation or DAC 8 affect the crypto ecosystem?

Jeroen: It’s another big framework that the EU Commission is trying to launch. Actually, they started with this a year or two ago. Last year, I believe the end of Q1, the EU Commission launched a public consultation letter and was aimed at strengthening the rules on administrative cooperation, expanding exchange information, regarding e-money and crypto assets.  

The findings from this public consultation, which is finalised, will provide a new update to the Directive on Administrative Cooperation — this DAC 8 as it’s now known. It will be much broader than the current lacking EU regulations and will provide each and every country and financial authority new options of taking action against frauds, tax evasion and AML. 

People expect that this DAC 8 will be implemented within a year, a year and a half, tops. 

This consultation was required because regulating a dynamic environment means that you need a thorough mapping of stakeholders to understand exactly what is it for, what kind of activities it carries out and how the member states are currently qualifying crypto assets to apply relevant tax provisions. 

The EU Commission also asked interested parties whether they think that crypto asset service providers should be subject to reporting obligations.

It is still an ongoing process. Consultation is closed. But ultimately, the goal is to limit the possibilities to take advantage of particular potential loopholes.  And also, trying to avoid potential harm to innovation because we don’t want to impose too many burden on newly-created or small businesses in terms of compliance.

Q: What does the future hold for cryptocurrency?

Jeroen: I don’t have the crystal ball, unfortunately, but as our company is active in this industry, we pick up signals. We speak with professionals that are heavily involved in this industry. We cannot ignore that crypto asset has become a global phenomenon. 

I think it’s good that the authorities at the international level, these guys at the EU level, can combine and come up with transparent rules about reporting what other rules that crypto assets and crypto asset service providers should adhere to. 

DAC 8 will need to ensure a comprehensive and coordinated approach that will encompass all the involved actors whose roles in facilitating crypto asset exchange has already been considered in 5AMLD and other proposals. The use of public consultations … reveals a growing awareness by legislators and regulators that they need to engage with stakeholders active in this field in this evolving ecosystem in order to apply the appropriate level of regulation. 

Q: What does Bolder do to prepare for DAC 8?

Jeroen: I think DAC  8 will be implemented in the next twelve to eighteen months, and it will have an impact on crypto asset owners, corporations, individuals, investors, fund managers, crypto asset creators and distributors. Also on us, the administrators. So we need to be very much aware of what’s going on. 

It will mean quite some additional regulatory requirements and potentially more administrative burden with respect to KYC reporting, requirements. Any individual or company involved in this industry will check their upcoming obligations under DAC 8, and then prepare to implement a process to collate important data. 

I think here, as Bolder Group, we can play a  very important role by assisting our clients active in this industry in navigating this immense, complex regulatory field of new laws and regulations.  At Bolder, you will be at the right hands for appropriate solutions and administrative assistance. 

Watch the full discussion here:

As a crypto fund administrator … 

Bolder acknowledges the unique facets of this novel financial segment. We also understand that it’s a complex sector. With cryptocurrency, it seems as though we’re always on the edge — it could be a hit or miss; coin values are constantly in fickle. Our team of crypto experts here at Bolder makes sure you can miminise the risks of investing in the ever-changing world of crypto. We can assist you from fund launch to investment protection. We’re also a call away if you have any questions about the latest developments you need to know about the crypto world. 

For more information about our crypto fund administration services, click this link

Bolder | At the base of business

RELATED: The why, the how and the risks of cryptocurrency

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Here’s the thing about cryptocurrency: it’s money in codes. You cannot touch or see your assets, but you know they are there, and you’re a hundred per cent in control.

These days, cryptocurrency is almost everywhere. And interest in cryptocurrency among investors, the public and the media is growing. According to Statista, less than a million Blockchain wallets were existing in 2011, two years since the inception of the first cryptocurrency Bitcoin. By the second week of 2022, the figures have risen to 80.67 million unique Blockchain wallets. That’s in a span of just a little over nine years! 

These 80.67 million Blockchain wallets are not owned only by individual investors globally. Even public companies have taken advantage of the benefits of investing in cryptocurrency. Global software company MicroStrategy (NASDAQ: MSTR) and vehicle/rocket manufacturer Tesla (NASDAQ: TSLA) are only two of the biggest companies that heavily invest in cryptocurrency, specifically Bitcoin (BTC) and Dogecoin (DOGE) for the latter. 

Although still unpredictable, crypto continues to grow stronger as the world eases into a more digitised and technology-centred era. But here’s the ultimate question: why would you even exchange your physical assets for codes, blocks or, simply, money you can’t even touch? 

Independent, trustless, secure blockchain technology

In 2008, Satoshi Nakamoto (pseudonym for a programmer or a group of programmers who founded Bitcoin) released a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. Nakamoto’s study detailed a digital system that allows individuals to transfer electronic cash without any third party, like banks. The following year, Nakamoto launched the protocol and open-source software for the digital coin network. 

Cryptocurrency allows borderless international remittance from one token holder to another, through blockchain technology, without the participation of banks or other institutions. This third party-independence system attracts many investors to put their money in crypto wallets. 


(RELATED: How cryptocurrency works, and the basics of digital coins)

Inflation-proof digital coins

Cryptocurrency is considered a more effective hedge against inflation than fiat money like dollars or euros. That is one of the reasons it has grown more appealing to investors over the years — meaning digital coins don’t lose value the way physical money does over time. 

But why? Well, for one: scarcity. It’s economics 101. The larger the quantity of something, the cheaper it gets. Considering this, relative to cryptocurrencies with a fixed limited supply, fiat currencies that governments print regularly may depreciate over time while crypto value rises.

Cryptocurrencies are coded and designed to be finite. New ones cannot be created the way paper money can be manufactured and printed. Giant cryptocurrencies like Bitcoin, Cardano and Binance Coin have limited supply. Bitcoin is famously known to release only 21 million coins. In other words, the network will stop issuing new coins until the last one is mined. Currently, more than 18.8 million Bitcoins are in circulation; the rest is yet to be mined.

Another reason digital coins are inflation-resistant is that the network is not regulated by government bodies or legacy financial institutions. As blockchain technology is inherently a peer-to-peer transaction platform, governments cannot affect the value of coins — at least for now.

Portfolio Diversification

Portfolio diversification is one of the many financial lessons we have learned from playing the real estate board game Monopoly — whether or not we realise it. One of the best strategies to win the game is to strategically buy properties across the board. We don’t only purchase one or two assets. 

The same principle applies to the real world. As an investor, you don’t want to put all your eggs in one basket. For example, if you bet all your investments in the stock market, you are vulnerable to losing your hard-earned money should the stock market plunge … just like you don’t put all your money in properties because then you’re exposed to a bubble burst. We all know the U.S. housing market crisis of 2008

As an intelligent investor, you want to bet your money on diversified assets to minimise the risks of each class of security. This is where cryptocurrency comes in. Buying cryptocurrency adds a new variety to your investment — a variety that is inflation-resistant and independent. 

Unsurprisingly, diversification is a strong crypto investment strategy. If you’re only starting to invest in digital assets, you can do that by consulting a financial expert or a provider of crypto fund administration services provider. When you spread your wealth across various crypto coins, especially those with historically impressive performance, you’re shielding yourself from a major financial blowout if one of your investments doesn’t work out. 

Digitising your dollars: The first steps

  1. Choose a cryptocurrency exchange. Examples of this exchange are Coinbase, Binance.US, Kraken and Gemini. (See CoinMarketCap’s list of exchanges here.) Then, create a digital wallet to store or hold your crypto assets. Ensure the security of your wallet by setting up a two-factor authentication process and a strong and unique password. 
  2. Link a payment channel to your wallet. The payment channel can be a bank from which you can deposit directly to your crypto wallet. But make sure the bank you choose allows crypto transactions because not all banks do. Also, keep in mind to avoid using credit cards as payment options as much as possible, as the volatility of the market may balloon the coin purchase. 
  3. Order your coins. You may choose from the thousands of cryptocurrencies available on the exchange.

But before you buy … here’s the other side of the coin

When Bitcoin was launched over a decade ago, a single coin was virtually worthless, barely more than ZERO US DOLLARS. In early 2022, Bitcoin is worth more than USD 38,000. While Bitcoin has experienced spikes and declines in terms of value, the trend for the currency is mostly upwards. Imagine being one of the early investors of Bitcoin and mining at least 100 coins in 2009 — you would be a millionaire today. 

Of course, that’s only one side of the coin. 

Taking reference from the popular TV show Game of Thrones, the internet is dark and full of terrors. Although blockchain technology has layers and layers of protection to ensure the security of transactions and the identity of members across the network, scams and hacking continue to threaten crypto. 

The market’s unpredictability itself is a major risk, especially for conservative and traditional investors. Cryptocurrency remains a highly volatile investment as we are experiencing now with an enormous price fall of the Bitcoin this month. Its price movement  can go back to climb, but there is not enough guarantee it won’t plummet again. That is why, still, some experts advise their clients against it. However, the risk is a part and parcel of any financial decision. You only need to assess carefully. 

If you’re still unsure about investing in cryptocurrency, it’s best to consult an expert. Our team at Bolder Group has relative experience and valuable expertise in crypto fund administration services. We can answer your questions, and help you take the first step. 

Talk to us today or know more about our crypto fund administration services here

Bolder | At the base of business

Cryptocurrency — a young finance technology that has taken the world by storm since it was launched over a decade ago by a person or an entity, whose identity remains a mystery. So, what exactly is cryptocurrency, and is it the future of trading? 

Here are the answers to some of the most frequently asked questions surrounding cryptocurrency. 

Question 1: What is cryptocurrency?

Think about the U.S. dollar or Euros. These are traditional currencies circulating within a country’s jurisdiction. They are called fiat money, which is centralised, controlled and maintained by government bodies and banks and used for the exchange of goods and services.  

Now, imagine electronic money that has the power to purchase and sell assets; only they are decentralised and distributed exclusively via the Internet. That is what cryptocurrency, or crypto, does. Like traditional currencies, crypto is used as a medium to buy and sell goods, services, and assets. It is a hundred per cent digital — meaning it does not come in any physical form like traditional money and precious metals do.  

With cryptocurrency, anyone with an exchange account can transact in as fast as seconds, even intercontinental, without the help of third-party financial institutions, such as traditional banks.

Question 2: How does cryptocurrency work? 

Before you learn about how cryptocurrency works, first, you need to understand blockchain technology. Blockchain is the digital equivalent of a ledger in traditional accounting, but, instead of numbers and figures, blockchain records transactions through codes or cryptography. A block contains data of each crypto transaction: the public key (permanent code identifier) of the crypto sender and receiver, the amount of coins, the hash (unique identifier of the transaction) and the previous hash (the unique identifier of the immediate previous crypto transaction). That is why each block is linked, ergo blockchain. The chain is a digital database of all crypto transactions around the world.  

But how does crypto work? Cryptocurrency is very straightforward. First, you need to have a “wallet” — it’s an account you create on a cryptocurrency exchange that holds your virtual assets. When you have an account, you have to transfer money from your bank to your crypto wallet. With crypto coins, you can start purchasing goods and services from companies that accept crypto as a mode of payment. Or you may hold on to these coins, wait for their value to skyrocket — or moon — then sell them for profits.  

All your transactions — and others’ from all over the world — are recorded onto the blockchain. 

Question 3: What are the most popular cryptocurrencies?  

Currently, there are thousands of cryptocurrencies globally. The two most popular are:  

Bitcoin (BTC), which is the first cryptocurrency ever launched. This was created by a pseudonymous person or persons known as Satoshi Nakamoto in 2009. Bitcoin was created to give the public an alternative peer-to-peer digital payment system free from traditional banking or government regulations. As of mid-January 2022, Bitcoin remains the most popular and most valuable cryptocurrency, with a value of USD 42,776 per coin. Bitcoin is capped at 21 million coins, which means there will be no more than 21 million Bitcoins.  

Launched in 2015, Ethereum (ETH) is the most valuable crypto exchange behind Bitcoin. Ethereum coins are called ether, and as of early January 2022, each coin is valued at USD 3,788.64 US. Eth was used to buy the most valuable non-fungible token (NFT) Everydays – The First 5000 Days for USD 69 million.  

Considered the “silver to Bitcoin’s gold” is Litecoin (LTC), which is among the most valuable crypto coins as of January 2022. LTC has capped coins of 84 million. One LTC is worth USD 146.25 as of mid-January 2022.  

Other popular crypto coins are Binance Coin, Cardano, Tether and Solana.

Question 4: Are cryptocurrencies legitimate and legal?   

Although there is no single institution regulating decentralised finance (DeFi), many countries and brands have already accepted cryptocurrencies as legal tender. They are legitimately used in purchasing and selling investments.  

Giant brands that accept cryptocurrency as a form of payment include PayPal, AT&T, Tesla and Starbucks.  

Member countries of the European Union recognise cryptocurrency, as well as the United States, Canada, Australia and El Salvador, among others. However, some countries consider crypto illegal, such as China, Egypt and Qatar. 

Question 5: What are the risks of cryptocurrency?

Like with other investments, such as stocks, cryptocurrency has its fair share of risks. One of the things that financial experts are concerned about cryptocurrency is its volatility. Because cryptocurrency is decentralised, the users across the blockchain network determine the prices and trends of cryptocurrency. Sudden mooning and sharp losses in cryptocurrency have made the virtual asset world unpredictable. Those have become norms in the digital coins landscape. That is why crypto investors need to monitor their coin values regularly.  

Due to the surge in prices of cryptocurrency coins like BTC and ETH, digital assets have become a target for hacking. The good news is that blockchain technology inherently ensures investment security. The open-for-all ledger provides additional protection for investors, as well.  

Human error is also a risk associated with cryptocurrency. As the investor, and because cryptocurrency is virtually unregulated, you are solely responsible for storing your assets in your digital wallet, that is encrypted and secured with a private code. You will need this code, usually a long pass key that is shortened to a 12-word seed phrase, to access your wallet and make transactions. If you forget this key phrase, you will most likely lose your investment. 

Question 6: How do I protect myself from the risks of cryptocurrency?

There are many ways to protect yourself from the risks of cryptocurrency. One is to use a “Cold Wallet”. This is a hardware wallet where you can store your private keys to crypto. This wallet can reduce the risk of cyberattacks.  

Don’t use public networks when making crypto transactions. If you are using a secure home network, a VPN will add a layer of digital protection for your coins, as it changes your location and IP address.  

Our team here at the Bolder Group has the knowledge and experience as corporate & fund administrator of cryptocurrencies and can provide you with relevant information regarding structuring and administration of crypto funds and investment vehicles. 

To know more about cryptocurrency and our crypto fund administration services, consult with us today.  See our locations here to get in touch with the Bolder Group.