Summary of Global Regulatory Policies for the Crypto Industry (June 17–23, 2024)

Track global policy developments and stay abreast of Web3 compliance trends

According to incomplete statistics compiled by Mankun Law Firm, from June 17, 2024, to June 23, 2024 (UTC+8), a total of key crypto asset policies and related actions were disclosed by countries and regions worldwide.36incidents, reflecting that countries and regions worldwide aregradually establishing and improving regulatory frameworks and laws and regulations for crypto assetsSpecifically:

There were 8 items of information regarding crypto-related policies in China. Among them, the Legislative Council of Hong Kong began soliciting suggestions from the global crypto industry on crypto policies and the direction of industry development; compliance regulations for the crypto industry will gradually become more rigorous and clear.
There were 7 policy developments and actions targeting the crypto industry in the United States. Multiple enforcement actions against crypto projects yielded results, demonstrating an overall more proactive stance. For example, the U.S. Securities and Exchange Commission (SEC) concluded its investigation into Consensys, and several prior litigation claims against Ripple were dismissed.
In the Japan and South Korea region, South Korea issued four policy signals during the week. The Financial Services Commission (FSC) of South Korea stated that it would not directly participate in the inspection of cryptocurrencies listed on South Korean exchanges. Subsequently, it was disclosed that all crypto exchanges in South Korea are jointly participating in the formulation of new self-regulatory management standards for listing and delisting tokens.
In Southeast Asia, there were 3 policy updates concerning the crypto industry. Although India’s Financial Intelligence Unit (FIU) dropped charges against Binance executives, it is imposing a fine of approximately USD 2.2 million (INR 1.882 billion) on the Binance project.

Below is a summary of policies from June 17 to 23, compiled by Mankun Blockchain Law Firm.

China

The Hong Kong Police Force arrested 39 individuals last week, solving 36 fraud cases involving HKD 71 million.

Thirty-nine individuals were arrested in the past week in connection with multiple fraud and money laundering cases, including two persons who committed fraud by establishing fake virtual currency trading shops. The total losses from these cases amounted to HK$71 million, covering various sectors such as online shopping, job recruitment, telephone, and investment fraud.

The Legislative Council of Hong Kong has established a committee to solicit global industry input on policy recommendations for crypto assets and the future direction of industry development.

To promote Hong Kong’s emergence as a global Web3 hub, the Legislative Council has established a dedicated committee to explore development policies for Web3 and virtual assets. It is currently soliciting input from the global industry, aiming to gather views on balancing the promotion of foundational technologies with legal and regulatory frameworks, as well as strategies for leveraging artificial intelligence to enhance Web3 development.

Taiwan, China, will complete the draft rules for the administration of virtual assets by December.

Peng Jinlong, the newly appointed Chairman of the Financial Supervisory Commission (FSC) of Taiwan, China, stated that a briefing on deregulating financial technology innovation businesses is scheduled for release in July. The draft rules for the administration of virtual assets are expected to be completed by December, with considerations being given to permitting investments in overseas Bitcoin exchange-traded funds (ETFs).

The "Central Bank" of Taiwan, China, released the preliminary design proposal for its central bank digital currency (CBDC), the "Digital New Taiwan Dollar."

The "Central Bank" of Taiwan, China, published the preliminary design proposal for its central bank digital currency (CBDC), the "Digital New Taiwan Dollar." The plan adopts a two-tier architecture, wherein the Central Bank provides the CBDC platform and is responsible for the issuance and distribution of the digital currency, while intermediary institutions are responsible for providing wallets and other related services to users. During the initial implementation phase, the CBDC will be issued on an interest-free basis.

Paul Chan, Secretary for Financial Services and the Treasury of Hong Kong, stated that close consultations are underway with mainland regulatory authorities to enable mainland investors to purchase Hong Kong-listed stocks using Renminbi (RMB).

According to a report by Jiemian News, Paul Chan, Secretary for Financial Services and the Treasury of Hong Kong, stated in Shanghai that 24 major Hong Kong-listed stocks can already be traded in both Hong Kong dollars and Renminbi (RMB). Close consultations are currently being held with mainland regulatory authorities to implement measures allowing mainland investors to directly purchase RMB-denominated stocks listed in Hong Kong using RMB, thereby linking the RMB counter to the Stock Connect mechanism.

The Securities and Futures Commission (SFC) of Hong Kong released its annual report, indicating that tokenization will be promoted over the next three years to enhance industry efficiency.

The Securities and Futures Commission (SFC) of Hong Kong released its Annual Report 2023-24 today, disclosing four strategic priorities for the SFC over the next three years. The report highlights leading market transformation through technology and environmental, social, and governance (ESG) principles, promoting tokenization to improve industry efficiency, and continuously refining the regulatory regime for virtual assets. Furthermore, it emphasizes the need to maintain market resilience and mitigate harm, with continued efforts to combat various forms of market misconduct, including those related to virtual assets.

Shareholders and senior executives of Huludao Bank were involved in a money laundering case involving virtual currencies.

Information disclosed on the China Judgments Online website indicates that in August 2020, Li Yulin, former Secretary of the Party Committee of Huludao Bank, colluded with President Li Xiaodong and shareholders Duan [Given Name] Tao and Zhou [Given Name] Long to fabricate asset management plans under the pretext of resolving non-performing assets, thereby misappropriating bank funds totaling up to RMB 2.6 billion. The court held that Chen’s conduct in conspiring with others constituted the crime of money laundering; however, as he played a secondary role in the joint crime, he was deemed an accessory. Ultimately, the court convicted Chen of money laundering, sentencing him to two years and three months of fixed-term imprisonment and imposing a fine of RMB 2 million, with his illegal gains subject to recovery in accordance with the law.

Tiger Brokers obtains approval from the Hong Kong Securities and Futures Commission to upgrade its license, formally serving Hong Kong retail investors

According to reports by Tonghuashun Finance, on June 17, Tiger Brokers (Hong Kong) received approval from the Hong Kong Securities and Futures Commission to upgrade its license, formally extending virtual asset trading services to Hong Kong retail investors.

United States

U.S. FASAB defines seized crypto assets as “non-monetary property”

The U.S. Federal Accounting Standards Advisory Board (FASAB) stipulates that crypto assets, such as cryptocurrencies and stablecoins, other than central bank digital currencies (CBDCs), shall be treated as non-monetary property. This is because these assets generally do not possess all the characteristics of money, such as stable store of value and widespread function as a medium of exchange.

California judge rules that Ripple’s civil securities litigation will proceed to trial

In response to allegations that Ripple’s CEO made “misleading statements” involving securities sales during a television interview in 2017, Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California ruled that the civil securities lawsuit against Ripple Inc. will proceed to trial, dismissing four class-action claims and allowing only one claim under state law to continue to trial.

Patrick McHenry states that the FIT21 Act has secured two-thirds support in the House of Representatives

Representative Patrick McHenry discussed the passage of the Financial Innovation and Technology for the 21st Century Act (FIT21) at the Consensus 2024 conference. He noted that securing two-thirds support in the House of Representatives is rare, attributing this success to effective policy, genuine innovation, and strong relationships; the policymaking process incorporated criticisms of the existing market from various stakeholders and built policies accordingly.

Jump Crypto donates $10 million to a U.S. political action committee, bringing the PAC’s total funds to $169 million

Jump Crypto donated $10 million to Fairshake, a political action committee (PAC) for the crypto industry, further enhancing its influence in congressional elections. The fund currently has $109 million available for expenditure, making it one of the largest pools of funds in the 2024 elections. These super PACs have heavily advertised during the primary elections and supported many crypto-friendly candidates.

SEC Concludes Investigation into Consensys; No Enforcement Action Against Ethereum

Consensys stated that the U.S. Securities and Exchange Commission (SEC) has concluded its investigation into “Ethereum 2.0” and will not take enforcement action against Consensys, a technology incubator that includes the MetaMask wallet. The SEC emphasized that, although it announced the conclusion of the investigation, this does not preclude future enforcement actions. Following the announcement, the price of ether rose by approximately 2.6%.

Cryptocurrency Trading Firm Cumberland Obtains New York BitLicense

Cumberland DRW, a major digital asset trader and liquidity provider, recently announced that its New York entity has been granted a virtual currency license known as the BitLicense by the New York State Department of Financial Services (NYDFS), becoming one of the licensed crypto companies primarily engaged in market-making activities.

David Hirsch, Head of the SEC’s Division of Crypto Assets and Cyber, Announces Departure

David Hirsch, Head of the U.S. SEC’s Division of Crypto Assets and Cyber, announced on LinkedIn that he is stepping down after nine years of service at the SEC.

Japan and South Korea

South Korean Cabinet Approves Proposal to Establish Virtual Asset Division within Financial Services Commission

According to reports, the proposal to establish a new virtual asset division within the South Korean Financial Services Commission, including amendments to its organizational regulations and related implementing rules, has been approved by the Cabinet and will be promulgated and implemented on June 25.

South Korean Financial Services Commission States It Will Not Directly Participate in Token Review and Delisting Processes

The South Korean Financial Services Commission (FSC) stated that it will not directly participate in the review of cryptocurrencies listed on South Korean exchanges. The review and delisting of crypto tokens will be handled by each cryptocurrency exchange and the Digital Asset eXchange Alliance (DAXA), a consultative body for South Korean digital asset exchanges.

South Korea to Launch $14.5 Million Blockchain Support Program

According to the Korean media outlet Financial News, the Ministry of Science and ICT and the Korea Internet & Security Agency (KISA) will jointly launch the 2024 Blockchain Support Program, investing KRW 20 billion (approximately USD 14.5 million) to develop public blockchain services and promote the commercialization of products by blockchain companies, including digital vouchers, digital badges, and online voting systems related to central bank digital currencies (CBDCs).

South Korea’s New Reform Party has publicly announced that it will adopt more robust measures to combat crypto fraud.

According to Money Today, South Korea’s newly established right-wing party, the New Reform Party, announced plans to impose heavy penalties on individuals involved in financial fraud and scams, particularly those engaged in cryptocurrency fraud, through stricter enforcement measures.

Europe

UK regulator FCA arrests two individuals suspected of operating an illegal crypto business worth GBP 1 billion

The UK Financial Conduct Authority (FCA) and the Metropolitan Police Service have arrested two suspects alleged to have operated an illegal crypto asset business valued at USD 1.3 billion. Since January 2021, companies providing crypto asset services must register with the FCA; to date, only 44 companies have successfully registered.

Italy to strengthen regulation of the crypto market and potentially impose fines of up to EUR 5 million

According to Reuters, the Italian government will enhance monitoring of risks in the crypto asset market and plans to pass a draft decree that imposes fines of up to EUR 5 million (approximately USD 5.4 million) for market manipulation. The decree also covers insider trading, unlawful disclosure of inside information, and market manipulation, with fines ranging from EUR 5,000 to EUR 5 million.

Swiss National Bank and SDX deepen exploration of CBDCs and tokenized securities

The Swiss National Bank (SNB) and SIX Digital Exchange (SDX) will continue to explore settlement methods for wholesale central bank digital currencies (CBDCs) and tokenized securities. This exploration will enter a new two-year phase, during which additional financial institutions and transaction types will be included. Meanwhile, the SNB is currently conducting CBDC experiments solely for digital cash flows related to wholesale securities settlement for institutions, excluding retail CBDCs.

Turkey submits crypto bill aimed at introducing a licensing regime for crypto assets

Turkey has submitted a legislative proposal to parliament aimed at reducing risks associated with crypto asset transactions. The bill contains multiple provisions regarding crypto assets, establishes key rules for crypto asset service providers, and will be implemented by the Capital Markets Board (CMB).

Southeast Asia

Singapore Government States That Its Banking Sector Faces Highest Money Laundering Risk in Wake of Scandal

According to Bloomberg, the Singapore government released a 126-page report on Thursday that provides an in-depth assessment of the money laundering risks facing the country. The report notes that in its efforts to attract global ultra-high-net-worth individuals and establish itself as an international financial and wealth management hub, Singapore also faces significant anti-money laundering challenges. This situation makes Singapore susceptible to being used as a conduit for laundering proceeds from overseas financial fraud and other criminal activities.

Binance Fined $2.2 Million by India’s Financial Intelligence Unit

Binance was fined approximately $2.2 million (1.882 billion Indian rupees) by India’s Financial Intelligence Unit (FIU) for failing to comply with India’s anti-money laundering regulations while providing services to Indian customers. Concurrently, Binance obtained FIU approval to operate as an offshore crypto asset-related entity in India, conditional upon payment of this fine.

Securities and Exchange Board of India Recommends Joint Regulatory Oversight of Crypto Asset Trading

The Securities and Exchange Board of India (SEBI) has recommended collaborating with regulatory authorities including the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (IRDAI), and the Pension Fund Regulatory and Development Authority (PFRDA) to jointly regulate crypto asset trading. This recommendation has been submitted to a government panel and is expected to be reported to the Ministry of Finance in June.

Other Countries and Regions

South African Revenue Service Scrutinizes Crypto Asset Traders to Strengthen Compliance

The South African Revenue Service (SARS) is intensifying its scrutiny of crypto asset traders to ensure tax compliance. According to reports, SARS has begun issuing audit notices to traders and collecting information from major crypto asset exchanges to assess compliance. Traders who fail to provide the required information may face criminal charges under the Tax Administration Act. In addition, SARS may investigate historical undeclared holdings of crypto assets.

Nigerian Securities and Exchange Commission Issues New Rules and Compliance Program for Digital Assets

The Nigerian Securities and Exchange Commission (SEC) has issued new rules and a compliance program for digital assets, launching the Accelerated Regulatory Incubation Program (ARIP) and amending the Rules on Issuance, Platforms, Trading and Custody of Digital Assets, thereby providing virtual asset service providers (VASPs) with a pathway to meet the new regulatory requirements. VASPs must complete the ARIP application process through the SEC’s electronic portal within 30 days of the notice; failure to do so will result in enforcement action.

The Australian Securities Exchange (ASX) is in discussions with multiple companies regarding the listing of spot Bitcoin ETFs.

According to Bloomberg, the Australian Securities Exchange (ASX) is holding discussions with several asset management firms aimed at listing spot Bitcoin (BTC) exchange-traded funds (ETFs). Currently, in addition to VanEck’s formal launch of a spot BTC ETF, Australian domestic firms BetaShares Holdings Pty and DigitalX Ltd. have also submitted applications to the ASX for spot BTC ETFs.

IMF States That CBDCs Can Enhance Financial Inclusion and Payment Efficiency in the Middle East

A survey by the International Monetary Fund (IMF) indicates that 19 central banks in the Middle East and Central Asia are exploring the issuance of central bank digital currencies (CBDCs), with a primary focus on how CBDCs can enhance financial inclusion and the efficiency of payment systems. Although CBDCs may not be a necessary means to achieve policy objectives, they can promote financial inclusion and reduce the cost of financial services.

Financial Stability Board Emphasizes Need for Global Crypto Asset Regulation to Prevent Arbitrage

On June 14, the Financial Stability Board (FSB) held its plenary meeting in Toronto. The meeting reviewed progress in implementing the global regulatory framework for crypto assets, emphasizing the need for broad implementation to mitigate risks of regulatory arbitrage in emerging markets and developing economies. It also discussed challenges related to global stablecoin arrangements and the impact of nature-related financial risks.

Tanzania Plans to Amend Income Tax Act to Impose Taxes on Crypto Asset Transactions

According to Bitcoin.com, Tanzania plans to amend the Income Tax Act to impose a 3% withholding tax on income derived from crypto asset transactions. Owners of digital platforms or facilitators of digital asset transfers will act as withholding agents. Foreign nationals operating such platforms must register under Tanzania’s simplified tax regime.

Brazilian Tax Authorities to Collect Information from Foreign Crypto Exchanges to Ensure Compliance

According to CryptoSlate, the Special Department of the Brazilian Federal Revenue Service will begin collecting information from foreign cryptocurrency exchanges to ensure their compliance with local regulations. Meanwhile, the tax authorities will also monitor the operations of these exchanges in Brazil and collect information relevant to tax liabilities. Regulations summoning foreign exchanges are expected to be issued before the end of this week.

Argentina to Open 50 Worldcoin Outlets in More Than 10 Cities

Following discussions between an OpenAI co-founder and the President of Argentina regarding Worldcoin investment, Worldcoin recently announced that it will open 50 outlets in more than 10 cities across Argentina to significantly expand its investment and business operations in the country.

The Financial Stability Board will expand its work on stablecoin risks in emerging and developing economies

According to CoinDesk, the Financial Stability Board (FSB) announced that it will expand its research on stablecoin risks in emerging and developing economies. The FSB plans to address relevant risks through in-depth analysis, including assessing differences and gaps in current regulatory frameworks across jurisdictions, and promoting unified regulatory standards for stablecoins to ensure the safety and stability of cross-border payments and the financial system.

Special Disclaimer:

This article is an original work by Mankun Law Firm. It reflects only the personal views of the author and does not constitute legal consultation or legal advice on any specific matter.