IMF chief: Cryptocurrency regulation is ‘inevitable’

International Monetary Fund chief Christine Lagarde says it’s only a matter of time before cryptocurrencies come under government regulation.

“It’s inevitable,” she told CNNMoney emerging markets editor John Defterios. “It’s clearly a domain where we need international regulation and proper supervision.”

“There is probably quite a bit of dark activity [in cryptocurrencies],” she added at the World Government Summit in Dubai on Sunday.

Lagarde said that the IMF is actively trying to prevent digital currencies from being used to launder money or finance terrorism. But she argued that regulators need to focus less on entities, and more on activities — who is doing what, and whether they’re properly licensed and supervised.

Digital currencies have largely operated in a regulatory vacuum since bitcoin’s debut in 2009. But governments and central banks are starting to pay closer attention, warning investors about potential scams.

In December, the U.S. Securities and Exchange Commission and the Federal Bureau of Investigation started to crack down on alleged fraud in fundraising by some cryptocurrency companies and traders.

In Asia, where cryptocurrency is particularly popular, China and South Korea have both cracked down on cryptocurrency trading. Concerns about new restrictions, and rumors over a potential ban in India, have fueled volatility in digital currency prices.

Top government officials at the World Economic Forum in Davos also signaled that more regulation could be on its way.

“We encourage fintech, we encourage innovation, but we want to make sure that all of our financial markets are safe and aren’t being used for illicit activities,” U.S. Treasury Secretary Steven Mnuchin said last month at the conference.

British Prime Minister Theresa May echoed that sentiment, saying that her government would look “very seriously” at cryptocurrencies “because of the way they are used, particularly by criminals.”

Bitcoin has crashed along with global stocks, plunging 40% from a month ago to trade near $8,350. It had peaked at $19,343 on December 16.

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Israeli F-16 jet shot down by Syrian fire, military says

An Israeli F-16 fighter jet crashed Saturday in northern Israel due to “massive anti-aircraft fire” from Syrian forces, according to the Israeli army.

The incident was reported after an Israeli combat helicopter came in contact with an Iranian unmanned aerial vehicle that had been launched from Syria, the Israel Defense Forces said in a statement.

Israeli forces also launched attacks on what they described as Iranian targets in Syria, the IDF said.

Jonathan Conricus, a spokesman with the Israel Defense Forces said in a tweet that “Iran is responsible for this severe violation of Israeli sovereignty.”

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South Korean leader welcomes North Korean delegation to presidential palace

In an historic first, the South Korean President Moon Jae-in welcomed senior North Korean officials, including leader Kim Jong Un’s younger sister Kim Yo Jong, to Seoul’s presidential palace for a lunch meeting Saturday. The meeting is the most signifi…

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North Korea is winning the Olympics – and it’s not because of sports

The last time South Korea hosted an Olympic Games, the North went so far in its attempt to best the attention Seoul was getting that it drove its economy into perdition and its people into starvation.

North Korea spent billions to put on the World Youth Festival in July 1989, a year after Seoul hosted the Summer Olympics. Pyongyang refused to attend the 1988 Games and called for an international boycott, one that was albeit ignored by its Communist patrons in Beijing and Moscow.

Using the Festival as an opportunity to demonstrate its doctrine of self-reliance, North Korea hosted delegates from over 170 countries for a week of exhibitions, seminars, competitions and folk performances. It built a never-occupied 105-floor hotel, marble-lined subway stations, an Arc de Triomphe replica and a stadium seating 150,000 spectators. It imported over 1,000 Mercedes-Benzes to accommodate the influx of foreigners.

And while the Summer Games, precipitated by pro-democracy demonstrations and free elections marked a new era of success for South Korea, the 1989 Festival practically bankrupted North Korea months before Berlin wall fell, taking with it communism in much of eastern Europe and ushering in the end of the Cold War.

The withdrawal of food subsidies in the early 1990s from China and the Soviet Union, the disastrous effects of collective farming and major flooding followed by drought all led to food shortages and a subsequent famine that killed between 2 and 3 million North Koreans.

This time around however, the North has barely had to spend a dime. It might be the South’s Games, but Pyongyang has ensured it is commanding the spotlight.

Every snippet of news crossing the de-militarized zone, every glimpse of a North Korean athlete in Pyeongchang, or the arrival of a glamorous pop star, has captured the attention of a world hungry for details about life in the Hermit Kingdom.

“It’s pretty brilliant, and if it wasn’t Kim Jong Un and North Korea you’d have to admire what they’re doing, it’s pretty amazing,” said David Maxwell, associate director of the Center for Security Studies at the Walsh School for Foreign Service at Georgetown University.

“The North is masterful at getting something for nothing,” he told CNN. “They’re going to get recognition, legitimacy, resources, without giving anything up.”

From brinksmanship to one-upmanship

North Korean military parades, fantastical in their displays and sheer numbers, take months to prepare. It isn’t clear whether the one that occurred the very day before Seoul’s opening ceremony was scheduled to deliberately upstage the South’s moment in the global spotlight.

The regime usually holds parades in April to mark occasions like Army Day on April 25 and the anniversary of the birth of Kim Il Sung, the country’s founder, on April 15. Last year’s military display was on a scale experts said they’d never seen before, and included missiles that raised “questions about the size and scope of Pyongyang’s ICBM ambition.” It heralded the start of a faster-paced testing schedule for North Korea’s weapons, which included the launch of an intercontinental ballistic missile and, the regime claimed in September, a hydrogen bomb.

On Feb 8, military hardware was rolled out to celebrate a rarely-marked event, the day in 1948 when Kim Il Sung created the country’s armed forces out of the Korean People’s Revolutionary Army.

But this year’s parade was a subdued affair, a marked contrast to the shows North Korea put on in April 2017. While ICBMs were part of the parade, there was no new technology or missiles shown off to the audience at home or those watching from abroad.

“I think the military parade is a sideshow, I think they’re calculating the resolve of the Western powers and any chance to drive a wedge between the South Korean people is a worthy exercise,” said Joseph Siracusa, professor of human security and international diplomacy at RMIT University in Melbourne, Australia.

The North, he said, has nothing to lose with its Olympic gambit. It’s only task, he argues, is to look “normal.”

“If they come across as normal human beings, if they look normal and South Koreans treat them as normal, it’s a great diplomatic victory. It won’t solve a single problem though, as long as they continue with their nuclear weapons and ICBMs,” he told CNN.

The U.S. in the middle

Indeed the party looking most belligerent at the moment is the one Pyongyang is seeking to alienate from Seoul – the United States. Before arriving in the South to attend the Winter Games, US Vice President Mike Pence warned that Pyongyang’s charm offensive wasn’t fooling anyone.

“We will not allow North Korean propaganda to hijack the message and imagery of the Olympic Games,” Pence said after meeting with Prime Minister Shinzo Abe in Tokyo on Wednesday. “We’ll be there to cheer our athletes, but we’ll also be there to stand with our allies and remind the world that North Korea is the most tyrannical and oppressive regime on the planet.”

On Thursday he visited the Yokota Air Base in Japan, whose troops likely be among the front line in a military confrontation with North Korea.

“As the Old Book says, ‘the soldier does not bear the sword in vain,’ and we will defeat any attack and meet any use of conventional or nuclear weapons with a response that is rapid, overwhelming and effective,” he said.

He also said there were more sanctions coming for Pyongyang, but didn’t outline what they would be.

For Seoul, the possibility of a dangerous dilemma

South Korea has rolled out the red carpet for the North, keen to avoid any escalation of hostilities at a time when people are already leery of traveling to the peninsula. In its willingness to accommodate the North Koreans, the South agreed to have its athletes march with their northern neighbors under a unification flag rather than its own national standard. It also suspended joint military drills with the US for the duration of the Games. Meanwhile, in the coastal town of Gangwon on Thursday, the North Korean flag was raised alongside the Olympic standard.

South Korean President Moon Jae-in, who, during his presidential campaign, said he wanted to be the leader “who built a peaceful relationship” between the two Koreas, will face a quandary of catastrophic proportions should a member of the North Korean contingent decide to defect to the South.

“The position that would put Moon in: Am I going to send that person back? That’s what the Chinese do. Or do I allow them to stay and suffer the wrath of the North?” Maxwell from Georgetown University hypothesized. “North Korea would have an excuse to scuttle any agreement, withdraw from the Olympics, accuse the South of kidnapping.”

Siracusa says the South is already on high alert. It has thousands of security forces providing protection for the Games. “They’re worried about an act of terrorism. They’re worried about a drone. They’re preparing. They’re looking for something to happen,” he told CNN. The South has mobilized at least 60,000 policemen, military and other forces to maintain security during the Games. A spokesperson for the Games told CNN that number also included 600 firefighters and 2,400 private security officers.

Parry, riposte

The stage for the next two weeks is set for more moments of one-upmanship. Pence is initiating his own propaganda push while he visits South Korea for the Games. He has brought along the father of Otto Warmbier, the American student who was jailed in North Korea and died upon his return to the US last year after suffering extensive brain damage. On Friday the pair met with North Korean defectors including Ji Seong-ho. Pence told the group that “we ourselves have stood and looked across that demilitarized zone, that line across which you fled. You fled to freedom.” He called Fred Warmbier “a great champion” for the freedom of the people in North Korea.

And US President Donald Trump’s daughter Ivanka is scheduled to attend the closing ceremony, bringing her own quotient of glamor and celebrity to the proceedings.

Meanwhile, Kim Jong Un has sent his sister to attend the Games. The historic visit by the first ever member of the ruling Kim family to South Korea is being closely watched as the 30-year-old — blacklisted by Washington — is one of the most powerful people in the Hermit Kingdom.

Television footage of sporting events has been interspersed with scenes of buses pulling up and North Korea’s brightly-uniformed cheering squads and art troupes filing out. In between curling competitions the news that Moon was to meet with Kim Yo Jong took over the news cycle. Less than 24 hours later, the possibility of Moon being invited to visit her brother Kim Jong Un in Pyongyang itself captured people’s imagination.

As the Olympic program progresses, another competition plays out beside it in parallel. A charm offensive versus a propaganda drive, with nuclear ambitions at stake. What remains to be seen is whether any of the players will be ready for another round once the other Games are finished.

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Pence didn’t snub North Koreans deliberately, officials say

Vice President Mike Pence did not deliberately snub North Koreans at an Olympic reception, according to US officials who pushed back on South Korean reports that Pence deliberately came late to a VIP gathering Friday evening and then snubbed officials from Pyongyang.

Officials traveling with Pence to the 23rd Olympic Winter Games in South Korea were responding to reports that Pence had gone around a main table and greeted everyone except Kim Yong Nam, North Korea’s nominal head of state. These officials said that while Pence did not greet Kim Yong Nam, he didn’t deliberately skip over him. Instead, they said, Kim simply wasn’t seated in the area where Pence was receiving well-wishers.

The officials said it was fair to say both Pence and the North Koreans rebuffed South Korean President Moon Jae-in’s efforts to facilitate a meeting between North Korea and the US.

North Korea has sent some of the highest level officials ever to the south for these games, the result of diplomacy by Seoul that led to an agreement between the two countries — still formally at war — to participate together in the Winter Games. Athletes from the two countries marched side by side during the opening ceremony and have formed a joint women’s hockey team.

But Pence has not let up on the tough rhetoric he’s been delivering since arriving in Asia. Speaking to NBC’s “Nightly News” on Thursday, the vice president continued to stress that the US would protect itself from North Korean nuclear threats by taking whatever “action is necessary to defend our homeland.”

Officials traveling with Pence said it would be fair to characterize his failure to interact with the North Koreans as a mutual decision, with neither side making any public overtures.

Pence was in close proximity to the North Korean party both at the VIP reception and later, watching the opening ceremony from Moon’s box, which included Kim Yong Nam and leader Kim Jong Un’s sister, Kim Yo Jong.

That said, these officials said that if the North Koreans had approached Pence with pleasantries, he would have responded in kind.

As for sharing Moon’s box with the North Koreans, the officials said they knew in advance who was going to be in Moon’s box to watch the opening ceremony. They said Pence could have opted to sit with the US delegation and avoided the box that included the North Koreans.

The visual was important, a US official said.

“We wanted to show the alliance seated together,” the official said. “We wanted the North Koreans to see the vice president, Abe and Moon sitting directly in front of them for the opening ceremonies, and it would show that that alliance is strong.”

“At any moment, he could have gotten up and left and sat somewhere else, and then you would have had the image of North sitting in the box with South Korea and Japan,” the official added. “But he stayed there the entire time… and talked to Moon and Abe and their spouses, and the North Koreans sat in the back and didn’t talk to anybody, and that image is telling.”

Pence had said all week that if he met with the North Koreans, he would deliver a tough message. He also said the ceremonies were not the appropriate venue for serious talks.

Asked about criticism that Pence stood and cheered only for Team USA and stayed seated when the North and South Koreans marched in under a unified flag, the official was unapologetic.

“The vice present cheered for the team he’s rooting for. He cheered for the USA,” the official said. “That’s the team he’s going to be cheering for all Olympics. He wants them all to win medals. He’s biased for the Americans.”

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EU joins US in considering oil embargo on Venezuela

After U.S. Secretary of State Rex Tillerson hinted at an oil embargo on Venezuela last week, the European Union announced Friday they will follow in the steps of the U.S.  

EU parliamentarians passed a resolution calling for more sanctions on high level officials and their family members. They are also looking into “sanctions on Venezuelan oil including on dealings with the state-owned company PDVSA.”

Venezuelan President Nicolas Maduro didn’t respond to the threats even though they could have a serious impact on the oil-dependent country, but Petróleos de Venezuela, S.A.’s tweeted pictures of a meeting with representatives from China.  

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As a member of the Organization of the Petroleum Exporting Countries (OPEC), Venezuela had cut oil production in a Russian strategy to boost prices. Reuters reported PDVSA had resorted to bartering as a solution to the lack of U.S. dollars. Meanwhile, experts say the Trump administration has pushed the U.S. petroleum industry to become the world’s top exporter and turn China into a major buyer. 

“We now don’t hardly import oil from Venezuela,” Jamaican Prime Minister Andrew Holness said during Tillerson’s news conference. “With the new dynamics in the global trade and energy and the United States becoming a net exporter of energy resources, Jamaica can in this new paradigm benefit from that.”

Maduro is running for reelection April 22, and neither the U.S. nor the EU will be recognizing the results amid criticism that the Venezuelan Socialist Party’s candidate will not be running against any of the main opposition candidates. 

“Venezuela won’t be threatened by anything, not by one Rex Tillerson or a thousand of him,” Maduro said Monday during OPEC Secretary General Mohammad Barkindo’s news conference. “If the United States decides to sanction oil, our ships will go to other places and we will continue to sell.”

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