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The NewsBTC team interacted with Pasi Koistinen for the first time after he was appointed the CISO of Coinhako. We asked him a few questions about the new role and his views on crypto markets and cybercrime. Here is an excerpt of the interesting interaction that happened recently.

Q: Thanks for joining us, and congratulations on your new role as the CISO of Coinhako. First, would you please introduce Coinhako to our readers?

A: Coinhako was founded in 2014 in Singapore, and the platform’s mission is to be the go-to gateway to the crypto economy, providing easy access to digital assets and connecting users to the crypto space.

Q: Can you tell us about your role in Coinhako and what made you join this company in particular?

A: My role as Coinhako’s CISO is to organize and manage cybersecurity activities across the whole company, and communicate related risks to stakeholders. I also act as the head of the security function and work in close contact with other business units spanning across legal, compliance, programming, and user ops. The move to the crypto space was a natural one as I always had a personal interest in the fast-growing digital assets industry. Coinhako was a good choice because it is one of the longest-standing digital asset companies in Singapore. Also, I felt that Coinhako having the in-principle approval as a DPT service provider in Singapore was a good indicator of their reliability.

Q: Would you like to give us some insight into how Coinhako protects the privacy and security of its users?

A: Besides having a robust security framework, our security protocol also includes educating our users with informational content via our online and social platforms, as well as through in-app prompts to encourage users to enable their 2FA, and avoid phishing attacks, dubious websites and other kinds of cyber threats.

Q: What are your plans with Coinhako? How do you intend to improve it further?

A: As the new CISO, I am excited to bring to Coinhako my extensive experience from various industries and different companies. Part of my plan includes growing our cybersecurity capabilities through refining and adopting new technologies and protocols. As the company is scaling up operations, the plan also includes increasing the security team’s headcount, which will be instrumental in expanding our company’s technological capability and maturity.

Q: When were you first introduced to cryptocurrencies? What were your roles and responsibilities before joining Coinhako?

A: My first foray into cryptocurrencies was in 2012. I read about Bitcoin and decided to buy a few back then, just for fun. I wish I still had them!

For the last 22 years, I have been working in the cybersecurity industry and have held various positions such as CISO and lead consultant. Also, I am a cybersecurity entrepreneur and co-founded two cybersecurity firms over the course of my career.

Q: Would you wish to educate our readers on the best practices to safeguard their crypto assets and protect themselves from cybercriminals?

A: The first rule of thumb is never click any message, link or file on the same device that you use for managing your digital assets. It is good practice to use 2FA for authentication but don’t rely on it to save you from a mis-click if a phishing attack is successful.

Q: What are your thoughts on cybercrime and crypto’s role in it? How is it different from pre-crypto days?

A: Cybercrime is evolving all the time and due to the anonymity of crypto, cryptocurrencies have been one of the preferred payment methods for cybercrime. However, they represent only a small percentage of the entire digital asset industry as cash is still the go-to medium for illicit payments. In the early years of cryptocurrencies, cybercriminals used to get paid in bitcoin and could launder their money with ease. But with the maturity of the crypto space, coupled with the transparency of blockchain payments, law enforcement agencies are becoming more knowledgeable of the workings of crypto and getting pretty good at investigations. Anti-crime efforts have to be consistent as perpetrators are constantly looking for opportunities to conduct illegal activities, so a huge shout-out to private institutions and regulators who are working tirelessly to mitigate such illicit activities.

Q: What are the common threats faced by crypto exchanges and businesses these days? How to mitigate them?

A: Crime syndicates generally have the same modus operandi for most attacks on exchanges and businesses. They typically try to illegally obtain assets from end customers through phishing attacks. Threat actors also target the exchanges by trying to infiltrate the systems via exposed systems or by hacking the employees. From our experience, the prime goal of such attacks is to steal customer data and the private encryption keys of the exchanges. Over the past months, we have seen a spike in such attacks. Mitigation of these threats requires a layered defense approach. As such, having a robust security framework consisting of multiple defensive controls to prevent, detect and react to attacks is especially important in ensuring the integrity of our platform and to protect our users’ assets.

Q: Would you like to share your vision of the crypto industry with our readers? How do people stand to benefit from it, especially with few governments attempting to stifle it with strict regulations?

A: The last two years have seen cryptocurrencies reaching mainstream consciousness. I posit that their adoption curve is just beginning though. We will continue to see extensive growth in value and adoption in both B2C and B2B. There will always be countries that want to benefit from this growth and these countries will have to put in place laws and governance that ensure that players in the market don’t cause excessive risks. Taking a responsible approach toward crypto will ensure that the industry gains maturity and trust in the eyes of society, consumers and lawmakers. Developing trust is paramount and will take some time, but it is inevitable too.

Q: Anything else you think our readers should know about?

A: I think cryptocurrencies are a great learning opportunity for everyone. They are effectuating a radical change in the financial ecosystem and beyond, and I believe crypto will modernize the global financial system like the Internet did to the exchange of ideas and information.

This is the inaugural monthly market insights report by Bitcoin.com Exchange. In this and subsequent reports, expect to find a summary of crypto market performance, a macro recap, market structure analysis, and more.

Crypto market performance

In late March, BTC tested $48,000, a key resistance level which had not been reached since September last year. After failing to push through, the marquee crypto saw a reversal to the $40-42,000 level. This had been acting as new support, notably higher than the previous support of $36-38,000 seen in the first quarter of 2022. However, at the time of writing, BTC had dropped below the $40,000 level.

Layer-one protocols led the outperformance over the last 30 days, with NEAR as the best performing large-cap coin. At the time of writing, it was up 64% on the back of a capital raise of $350M led by Tiger Global. Other top performers in the large-cap category included SOL and ADA, up 37.5% and 31.16% respectively over the last 30 days.

Despite a strong 30-day performance, the beginning of April has shown weakness, with the largest sectors experiencing losses across the board. Gaming saw the largest drawback, at -13.3%, followed by Web3 and Defi at -10% and -9% respectively.

Macro Recap: Hawkish Fed And Yield Curve Inversion Point To Gloom Ahead

April has seen some easing from the headwinds seemingly caused by the conflict in Ukraine, although U.S. monetary policy continues to be the main driver of financial markets. The month started with the release of the core U.S. CPI data from March 2022. At 8.5%, the number was slightly below expectations, which provided some relief to markets.

Nevertheless, 8.5% was the largest month-to-month increase in the core inflation metric since 1980. Federal Reserve Board of Governors member Christopher Waller stated he expects interest rates to rise considerably over the next several months given the current inflation numbers and the general strength of the economy.

Meanwhile, 2-year and 10-year Treasury yields inverted for the first time since 2019, which is commonly seen as a sign of recession on the horizon. This inversion has correlated with seven out of eight recessions historically.

Two-year Treasury yields are said to signify the cost of borrowing by banks while 10-year yields signify the potential to invest it in long-term assets. A tightened or inverted Treasury yield rate may force banks to restrict access to money, leading to a slow down in the economy.

Market Structure: Pricing Weakness Contrasts With Historically High Accumulation

BTC gains were erased over the last week after the previous breakthrough of a multi-month price range. Subsequent to the recent upside price action, there has been some profit taking in the market along with a decrease in activity in the network. However, some market metrics show all-time-high BTC accumulation providing support to the market.

We have seen this accumulation become public with the use of BTC as collateral. Notably, Luna Foundation Guard declared it is using BTC as collateral for its algorithmic stablecoin, but we’ve also seen inflows of BTC on Canadian Exchange Traded Funds (ETFs) as well as an increase in Wrapped BTC (WBTC) on Ethereum.

As shown in the graph below, exchanges have experienced a high volume of BTC outflows per month from their treasury, which can be interpreted as an indication of accumulation by BTC holders. The amount of Bitcoin leaving exchanges totalled 96,200 BTC in March, a rate similar to what we saw before the bull runs in 2017 and March 2020.

Another interesting metric that points to market accumulation is the ageing supply of BTC, defined as BTC not moved for at least one year. The below chart indicates an increase in ageing supply of 9.4% over the last eight months. This is similar to what we experienced in the 2018 bear market, when the ageing supply increased by 11.6% over a comparable time frame. This metric is important because it highlights the willingness of market participants to continue holding BTC despite experiencing drawbacks (53% in 2018 and 53.5% in 2022).

As mentioned, Luna Foundation Guard (LFG) is one of the most outspoken public organisations showing its interest in obtaining BTC supply. LFG increased its BTC balance sheet by 3x over a 9-day period, reaching 30k BTC held by their treasury.

Meanwhile, demand for BTC in the DeFi market is indicated in the growth of WBTC held by custodian Bitgo. This has also brought some buy pressure to the outstanding supply of BTC. Below we can see an increase in the supply of WBTC by 12,500 units in January, which will be deployed primarily in DeFi.

Lastly, we look at realized losses. This metric shows when holders prefer to sell and realize losses rather than hold the token with unrealized losses. During bear markets, we see an increased number of daily realized losses. The market is currently absorbing about 8.5k in BTC sales daily.

Overall one can argue that despite macroeconomic headwinds, BTC continues to find strong historical accumulation across a range of market participants. The realized losses numbers demonstrate that the weakness of some market participants is being absorbed at the current price levels. The resiliency of the market continues to prove strong. Along with an improving macro economic environment, this could provide positive price action in the near future.

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Russia’s recently revised bill “On Digital Currency” limits crypto purchases for non-qualified investors while providing legal ground for some cryptocurrency payments, according to local media. The draft law, proposed by the Russian finance ministry, also introduces strict requirements for platforms operating with digital assets.

Russian Citizens Who Don’t Pass Test to Buy Only $600 Worth of Crypto Annually

The Ministry of Finance of Russia recently submitted to the government an updated version of its bill “On Digital Currency” designed to comprehensively regulate the country’s crypto market. Details about the law’s provisions have surfaced in Russian media reports this week.

According to the draft, qualified investors, or “professional purchasers of digital currency” as they are now described, will have unrestricted access to crypto assets. Ordinary Russians, however, will be able to buy a maximum of 600,000 rubles (approx. $7,000) worth of cryptocurrency each year. And that’s after they take a special exam.

Those Russian residents who fail to pass the test will be allowed to only acquire coins with a total value not exceeding 50,000 rubles annually (around $600 at the current exchange rates), the Interfax news agency revealed, quoting a source familiar with the document.

The new law defines the term ‘digital currency’ as “a set of electronic data contained in an information system that can be accepted as a means of payment that is not the monetary unit of the Russian Federation, or as an investment.” Digital currency is considered property in Russia, the report notes.

The wording seems to provide the legal basis for the employment of cryptocurrencies in payments. But at the same time, the bill reads that Russian legal entities, including subsidiaries of foreign companies and international organizations established in Russia as well as individuals staying in the country for at least 183 days within 12 months, cannot accept digital currency as payment for goods and services.

The finance ministry has been lobbying to legalize the circulation of cryptocurrencies in Russia while the central bank has opposed the idea and suggested a ban on crypto-related activities such as the issuing and trading digital coins. Most other institutions in Moscow are backing the Minfin’s approach but there’s also a general consensus against allowing payments with any other currency than the ruble.

Russia to Introduce Stringent Standards for Cryptocurrency Companies

The draft law “On Digital Currency” is going to impose strict requirements for crypto platforms working in the Russian Federation. An “exchange operator,” which offers purchases and sales of digital currency on its own behalf and at its own expense, will have to keep at least 30 million rubles of capital. The mandatory threshold for “operators of digital trading platforms,” or those “conducting organized auctions,” is 100 million rubles.

If the bill is adopted as is, these businesses will have numerous other responsibilities, including preparing annual reports, maintaining records of digital currency owners, storing and backup trading data on a daily basis, and carrying out internal audits. The service providers will be added to a special register and their activities will be licensed and overseen by an authorized body appointed by the government.

The requirements are “extremely overstated” and only the largest financial institutions will be able to meet them, blockchain lawyer Mikhail Uspensky commented for the Kommersant. Besides, only Russian entities will be permitted to apply for the role of crypto operators. Foreign exchanges, for example, will have to establish a local subsidiary to obtain a license but many of them may be prevented from doing so by mounting western sanctions over Russia’s war in Ukraine.

Quoting the draft, the Russian business daily also unveiled that only identified users will be able to buy and sell digital currencies. Fiat deposits and withdrawals will be possible exclusively through bank accounts and crypto platforms will be obliged to report suspicious transactions to the Rosfinmonitoring financial watchdog. “Electronic wallets for digital currencies” will be subject to mandatory certification, although this applies only to wallets within the Russian crypto infrastructure.

The bill “On Digital Currency” allows both companies and individual entrepreneurs to engage in crypto mining, once they register with the government. Registration is not required for private Individuals minting digital coins if the electrical energy consumed for this purpose does not exceed certain limits that will be determined by the relevant authorities.

If Russian lawmakers approve the law, it is expected to enter into force on Jan. 1, 2023. The State Duma, the lower house of Russian parliament, is now also reviewing amendments tailored to regulate the taxation of crypto-related operations in the country.

Do you think Russia will implement the strict regulations for crypto platforms envisaged in the draft law “On Digital Currency?” Share your expectations in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.