Mankiw Law Weekly: Summary of global crypto regulatory policies (July 1-7, 2024)

According to incomplete statistics from Mankiw Law Firm, from July 1, 2024 to July 7 (UTC+ 8), a total of 21 key encryption policies and related actions were disclosed by countries and regions around the world, among which many countries/regions provided convenience for the Web3 industry through policy actions . Among them:

• There were 4 pieces of information about China’s crypto policies, among which the first Web3.0 industry report released by Shanghai had a great influence on the industry. Many experts called on government agencies to study “Token Economics” to optimize supervision.

• There are 4 policies and actions against the crypto industry in the United States. It is worth noting that cryptocurrency companies will no longer need a money transmission license issued by Hawaii when operating in Hawaii in the future;

• Japan and South Korea, represented by South Korea, involve 3 policies, such as postponing taxation on cryptocurrencies and Jeju Provinces desire to use encryption technology to digitally transform the tourism industry, both of which show South Koreas friendliness towards the encryption industry;

• In Southeast Asia, there are 3 policy pieces of information worth noting. Among them, the Philippines supports users to use USDT to pay for the social security system through the Uquid card on the TON blockchain.

The following is a summary of policies from July 1st to July 7th compiled by Mankiw Blockchain Law Firm.

China

Hong Kong Securities Regulatory Commission warns the public to stay away from seven entities suspected of virtual asset fraud

The Hong Kong Securities and Futures Commission today reminded the public to be vigilant against seven entities suspected of engaging in fraudulent activities related to virtual assets. These entities operate in the name of virtual asset trading services and often attract investors through social media or instant messaging software. The entities involved include XTCQT, CEG, BTEPRO, Bitones.org, Yomaex Crypto Market Limited, Bstor and Taurusemex.

Chongqing company suspected of fraud in selling virtual currency, the procuratorate initiated a debt verification registration

Chongqing Juxingyao Technology Co., Ltd. has been accepted for review and prosecution by the Peoples Procuratorate of Shapingba District, Chongqing for suspected fundraising fraud after selling EPF virtual currency. The company had promised high returns for purchasing EPF virtual currency, attracting a large number of investors and then exploding. In order to protect the interests of investors, the procuratorate has started the debt verification and registration work. Investors are required to bring all relevant materials for registration between July 1 and July 5, 2024. Investors who fail to declare within the prescribed time will need to resolve their subsequent claims through civil litigation.

Hong Kong Cyberport launches green fintech funding scheme

Hong Kong Cyberport announced the launch of the Green and Sustainable Fintech Proof of Concept Testing Funding Scheme, which is commissioned by the Hong Kong Financial Services and the Treasury Bureau to encourage innovative green financial technology research and development and commercial applications, covering green and digital finance and investment, ESG compliance, carbon trading, ESG data analysis and risk assessment. The funding amount can be up to HK$150,000 to support the early development of related projects and accelerate Hong Kongs transformation into an international green technology and financial center.

Shanghai releases first WEB3.0 industry report, experts suggest studying Token Economics

Under the guidance of the Shanghai Science and Technology Commission, the Jiefang Daily and the School of Economics of Fudan University jointly released the 2024 Shanghai WEB3.0 Innovation Ecosystem Construction Research Report. This report focuses on the challenges and opportunities of WEB3.0 and puts forward a number of targeted suggestions. The report also recommends studying Token Economics to strengthen the formulation of industry standards and the innovation of the regulatory system, protect the interests of investors and promote the healthy development of the industry.

USA

US judge rules to continue hearing DraftKings NFT securities lawsuit

A Massachusetts judge recently rejected DraftKings motion to dismiss a class-action lawsuit involving sports-themed non-fungible tokens (NFTs) issued by DraftKings that were accused of constituting securities, paving the way for future legal debates over whether NFTs are securities.

SEC sues Silvergate Bank for securities fraud

The U.S. Securities and Exchange Commission (SEC) has filed a securities fraud lawsuit in federal court against cryptocurrency-focused Silvergate Capital Corp. The SEC accused the company of conducting a fraudulent scheme against investors through its bank secrecy and anti-money laundering compliance procedures, as well as serious deficiencies in its financial health, following the collapse of crypto exchange FTX in November 2022. Silvergate Bank agreed to pay $63 million to settle with the SEC and other regulators.

Coinbase wins bid for cryptocurrency management services from the U.S. Department of Justice

The United States Marshals Service (USMS) under the U.S. Department of Justice has launched a tender for its Asset Forfeiture Division (AFD), seeking business proposals for providing first-class cryptocurrency management services. This service includes the storage, management and liquidation of cryptocurrencies, ensuring that they are legal, professional and in compliance with government policies. Currently, the USMS has released the results, and Coinbase has won the bid with $32.5 M.

Hawaii ends regulatory sandbox: Crypto firms can operate without state licenses

The regulatory sandbox program in Hawaii has ended, and cryptocurrency companies will no longer need a money transmission license issued by Hawaii to operate in the state. This change allows participating digital currency issuers to operate without a state-level money transmission license, but they must comply with federal regulations, including those of the Financial Crimes Enforcement Network (FinCEN), the Securities and Exchange Commission (SEC), and the Financial Industry Regulatory Authority (FINRA).

Japanese and Korean

South Korea postpones cryptocurrency taxation until 2025

The South Korean government has announced that it will postpone the implementation of new virtual asset taxation regulations until January 2025. The postponement mainly affects resident individual income taxes and withholding taxes on non-residents and foreign companies. The extension provides the government and the crypto industry with time to fine-tune the regulations and ensure a smooth transition to the new tax regime in 2025.

South Korean Government Launches Real-Time Monitoring System to Combat Crypto Fraud

South Korea’s Financial Supervisory Service announced today that it has developed a 24-hour monitoring system in cooperation with local exchanges to screen for any suspicious activities in the cryptocurrency market. The system will be launched on July 19, the day when South Korea’s first regulatory framework for crypto investor protection takes effect.

South Koreas Jeju Province emphasizes that the time has come to introduce virtual currency

Wu Yingxun, governor of Jeju Special Self-Governing Province, said that now is the necessary time to introduce virtual currency to Jeju tourism. Jeju Province is taking digital transformation as a core issue and plans to open up new markets by introducing NFT and virtual currency, and integrate the digital economy and technology into the tourism industry.

Europe

EU to implement EU Travel Rule on cryptocurrency exchanges to strengthen anti-money laundering measures

The European Banking Authority (EBA) has published new guidance on the “EU Travel Rul”, the information accompanying transfers of funds and certain crypto-assets, which clarifies what information should accompany transfers of funds or crypto-assets and lists the steps that payment service providers (PSPs), intermediary PSPs (IPSPs), crypto-asset service providers (CASPs) and intermediary CASPs (ICASPs) should take when they detect missing or incomplete information, as well as the measures to be taken when a transfer of funds or crypto-assets lacks the required information.

Basel Committee approves crypto asset disclosure framework for banks and revised capital standards

The Basel Committee on Banking Supervision recently approved a disclosure framework for banks crypto asset risks, which is scheduled to come into effect on January 1, 2026. In addition, the committee also approved targeted revisions to prudential standards for crypto assets, especially the standards for stablecoins to receive preferential Group 1b regulatory treatment, which will also take effect on January 1, 2026.

Denmark’s Financial Supervisory Authority refutes rumors of banning self-custodial wallets

Recently, news has been circulating on social media that Denmark will ban Bitcoin wallets, but Tobias Thygesen, head of the DFSA, said in an interview with Cointelegraph that the DFSA did not propose to ban hardware wallets or other non-custodial wallets. He emphasized that the MiCA (Market Crypto Assets) regulations are only related to the activities of providing crypto asset custody and management services to customers, and self-custodial wallets are naturally not included in this regulation due to their completely decentralized nature.

Southeast Asia

The transnational fraud gang Lock Star was arrested in Thailand, and assets worth about 30 million baht were seized

Colonel Atip Pongsivapai, commander of the Technology Crime Suppression Unit of Thailand, said on Friday that six members of a hybrid fraud gang called Lock Star were successfully captured, including two Chinese citizens and four Thais. The gang carried out digital currency investment fraud through a fake application called Tidex, which lured victims to install the application and transfer investment.

Paxos gets approval from Singapore to issue stablecoin, DBS provides custody services

Digital asset company Paxos has received full approval from the Monetary Authority of Singapore to provide digital payment token services, enabling it to issue stablecoins in Singapore. Singapore’s largest bank DBS will become its main banking partner for cash management and stablecoin reserves.

Philippines supports using USDT to pay for social security system

According to Tether’s official announcement, users in the Philippines can now use USDT (Tether) to pay for Social Security System-related fees through the Uquid card platform on the TON blockchain. This brings the convenience and innovation of digital currency to the Philippines’ payment system.

Other countries and regions

Nigeria plans to establish national AI and blockchain research center

Nigeria’s National Information Technology Development Agency (NITDA) plans to establish research centers in six geopolitical zones across the country focusing on emerging technologies such as artificial intelligence (AI), the Internet of Things (IoT) and blockchain. In addition to funding research, NITDA also plans to support Nigerian startups in developing products using emerging technologies and create innovation sandboxes to help startups develop use cases, build businesses and bring products to market.

Nigerias Central Bank accuses Binance of unauthorized banking services

The Central Bank of Nigeria (CBN) has accused cryptocurrency exchange Binance of providing banking services without proper authorization. Olubukola Akinwunmi, the CBN’s Head of Payment Policy and Regulation, testified before the Federal High Court in Abuja that Binance’s deposit and withdrawal transactions should be exclusive to banks and authorized financial institutions.

Nigeria’s Securities and Exchange Commission requires crypto firms to set up local offices

New regulations from the Nigerian Securities and Exchange Commission (SEC) require virtual asset service providers (VASPs) to set up offices in Nigeria to comply with its Accelerated Regulatory Incubation Program (ARIP). The program aims to facilitate the registration and operation of VASPs in Nigeria. In addition, the companys CEO or general manager must reside in Nigeria.

Paraguays electricity prices increased by 14%, Bitcoin mining companies may consider stopping operations

Paraguay’s National Electricity Administration (ANDE) has suddenly announced a 14% increase in electricity fees for cryptocurrency mining operators, a change that has caused a company that planned to invest more than $400 million in the country to withdraw. The measure could threaten the continued operation of Bitcoin mining companies in Paraguay.