Authored by: Mankun Law Firm

 

According to incomplete statistics compiled by Mankun Law Firm, from September 2 to September 8, 2024 (UTC+8), a total of 23 significant crypto policies and related actions were disclosed across various countries and regions worldwide. This represents a significant decrease compared to previous weeks. The majority still involved various regulatory and enforcement actions, with a few relating to developments in virtual currency regulatory policies. Among these:

• There were 5 items of information regarding crypto policies in China. Notably, the topic of judicial disposal of virtual currencies in China warrants attention. Following the Supreme People's Court's announcement that it is one of the key funded research topics, the China Court Daily also published an article actively promoting research on this topic;
• In the United States, there were 9 major policies and actions involving the crypto industry. Among them, the CFTC took action against prediction markets again, this time targeting Kalshi’s listing of 2024 election contracts;
• In Japan and South Korea, there were 3 noteworthy policy updates during the week. Notably, Japan is considering changing the taxation method for cryptocurrencies to a financial assets tax. This would significantly reduce the tax burden on cryptocurrency investors.

Below is a summary of policies from September 2 to September 8, compiled by Mankun Law Firm.

 

China

Taiwan Prosecutors’ Office Indicts Military Officers for Corruption and Leaking Secrets

The Kaohsiung District Prosecutors’ Office in Taiwan has indicted two military officers suspected of corruption and leaking state secrets. The two Taiwanese officers face serious charges, including violations of the Act for Punishment of Corruption and the National Security Act, for allegedly selling sensitive government information to a contact in exchange for cryptocurrency payments. Prosecutors stated that strict measures will be taken against cases endangering national security to safeguard national security and social stability.

Xuhui District Procuratorate Launches “Guangqi X Space,” Focusing on Rule of Law Issues in Blockchain and Other Fields

On August 29, the Xuhui District Procuratorate unveiled the “Guangqi X Space,” aimed at combating new types of network technology crimes and serving as an important platform for case handling and sharing outcomes. This space will focus on rule of law issues in fields such as artificial intelligence and blockchain, promoting the integration of cyberspace governance with technological innovation, and providing effective support for preventing and combating cybercrime. At the event, Lü Hao, a member of the Party Leadership Group and Deputy Chief Procurator of the Xuhui District Procuratorate, and Yu Shengming, Deputy Secretary of the Party Committee and Deputy Director of the Xuhui District Public Security Bureau, jointly signed the “Guidelines for the Disposal of Virtual Currencies Involved in Criminal Proceedings,” providing specific guidance for the lawful disposal of virtual currencies involved in cases.

Weifang City Issued Implementation Rules to Promote the Development of the Metaverse Industry

The Weifang Municipal Bureau of Industry and Information Technology released the “Implementation Rules for Several Policies on Accelerating the Development of the Metaverse Industry,” aimed at supporting the development of metaverse-related enterprises by providing measures including financial support, talent introduction, and land use guarantees. The policy emphasizes strengthening legal research on emerging technologies, promoting innovation and application in the metaverse industry, and ensuring the healthy and orderly development of the sector.

Wuhe County Public Security Bureau in Anhui Province Precisely Cracked Down on “Running Points” Money Laundering Cases

The Wuhe County Public Security Bureau in Anhui Province successfully solved a case involving “running points” money laundering using virtual currency trading platforms, arresting three suspects. The gang used virtual currencies to conceal illegal activities, involving amounts totaling tens of millions of yuan, posing a serious threat to financial order and social security. After in-depth investigations, the police gathered sufficient evidence, and the suspects confessed to their criminal acts. Compulsory measures have been taken against them in accordance with the law.

China Court Daily Publishes Article “Judicial Disposal of Virtual Currencies Must Be Standardized”

An article in the China Court Daily pointed out that exploring and optimizing compliant pathways for the judicial disposal of virtual currencies is of great significance for maintaining financial stability and promoting the healthy development of the market. The article emphasized that China should issue comprehensive guidance to clarify the legal framework and build a healthy, transparent, and efficient financial market environment to support the prosperous development of the digital economy and digital finance.

 

United States

CFTC Files Emergency Motion to Block Kalshi from Listing Election Prediction Contracts

After a judge ruled to allow the prediction market Kalshi to list 2024 election contracts, the U.S. Commodity Futures Trading Commission (CFTC) quickly filed an emergency motion requesting a temporary block on this listing, citing that the CFTC is preparing an appeal. The CFTC stated that if the contracts begin trading, it would be difficult to withdraw approval, which could negatively impact the integrity of the elections.

Magic Eden Launches Separate Websites for International and U.S. Users

NFT marketplace Magic Eden announced the launch of magiceden.io for international users and magiceden.us for U.S. users. Magic Eden stated, “.US will still have features familiar to users, while .IO will have more features.”

CZ Permanently Barred from Managing Binance but Remains a Major Shareholder

Binance CEO Richard Teng stated that Binance’s former CEO, Changpeng Zhao (CZ), is permanently barred from managing the company. However, as a major shareholder, he will continue to have a significant influence on the company’s operations. Although Zhao can participate in shareholder rights after completing his prison sentence, the company’s governance structure must still comply with anti-money laundering and compliance requirements. Legal experts indicated that further clarification is needed on the specific enforcement of this ban.

Robinhood Reaches Settlement with California Regulators for Prohibiting Customers from Withdrawing Cryptocurrencies, Paying $3.9 Million in Settlement Funds

Robinhood’s crypto trading subsidiary was fined $3.9 million by California for previously prohibiting customers from withdrawing purchased cryptocurrencies. The state’s investigation found that this practice violated the California Commodities Law, requiring Robinhood to continue allowing customers to withdraw cryptocurrencies and update disclosures regarding asset custody.

Federal Reserve Issues Cease-and-Desist Order to Texas Bank for Cooperating with Crypto Companies

On September 4, the Federal Reserve System issued a cease-and-desist order to United Texas Bank, pointing out “significant deficiencies” in the bank’s transactions with crypto clients, particularly in risk management and anti-money laundering compliance. Although the bank has taken steps to strengthen its compliance program, this action by the Federal Reserve has sparked allegations that the government is coordinating efforts to prevent banks from cooperating with the crypto industry.

CFTC Issues Ban on Uniswap Labs for “Illegal” Margin Products Due to Illegally Providing Digital Asset Derivatives Trading

The U.S. Commodity Futures Trading Commission (CFTC) issued an order against Uniswap Labs, accusing it of illegally offering leveraged or margined retail commodity transactions through its decentralized trading protocol. The order requires Uniswap Labs to pay a civil penalty of $175,000 and cease violations of the Commodity Exchange Act. The CFTC stated that DeFi operators must ensure that transactions comply with relevant laws to protect consumer rights.

U.S. Federal Court Orders Oregon Man to Pay Over $209 Million in Penalties

The U.S. Commodity Futures Trading Commission (CFTC) announced that a judge in the U.S. District Court for the Northern District of Illinois issued a final judgment against Sam Ikkurty of Oregon and his company, Jafia, LLC, among others, ordering them to pay penalties totaling $200 million. Previously, Ikkurty conducted a traditional Ponzi scheme through a disguised “crypto hedge fund” and obtained illegal profits. In this case, the CFTC successfully recovered stolen digital assets worth over $18 million.

SEC Commissioner Calls for Creating a “Customized” S-1 Form for Digital Asset Securities

At the Korea Blockchain Week 2024 event, U.S. Securities and Exchange Commission (SEC) Commissioner Mark T. Uyeda stated that the SEC needs to create a specialized S-1 registration form for digital asset securities. He pointed out that current standard registration forms may not meet the needs of certain financial products and emphasized the need to work with digital asset issuers to develop tailored registration requirements. Uyeda also mentioned that digital asset securities (such as tokenized bonds or cryptocurrency exchange-traded funds) fall under SEC regulation, but uncertainty remains regarding whether cryptocurrencies are considered securities.

SEC May Challenge Stablecoin Repayments in FTX Bankruptcy Plan

In court documents, the U.S. Securities and Exchange Commission (SEC) stated that it might challenge distribution transactions involving crypto assets in the FTX bankruptcy plan. The FTX bankruptcy estate proposed to repay 118% of claims to 98% of creditors in cash within 60 days after court approval. The SEC noted that FTX’s early documents defined “cash” to include stablecoins pegged to the U.S. dollar but stated that it would not make a judgment on the legality of this transaction and reserved the right to object to transactions involving crypto assets. This move could affect the confirmation of FTX’s bankruptcy plan.

 

Europe

UK Regulator States That 87% of Crypto Registration Applications Failed to Meet Approval Standards

Of the 35 crypto company registration applications received by the UK Financial Conduct Authority (FCA) in the 2023–24 fiscal year, only 4 were approved, with over 87% rejected for failing to meet approval standards. The FCA has regulated the crypto industry since 2020 and stated that it will continue to communicate with applicant companies to help them understand registration requirements.

 

Japan and South Korea

Three Major Japanese Banks Launch Pilot of “Project Pax” Cross-Border Stablecoin Transfer Platform

Three major Japanese banks, together with Progmat and Datachain, launched “Project Pax,” aiming to develop a cross-border stablecoin transfer platform to address the high costs and low efficiency in the current cross-border transfer market. The platform will utilize blockchain technology and Swift’s API framework to support fast and economical international transfers, with plans to achieve commercialization by 2025. This initiative is expected to provide financial institutions with new transfer options while reducing operating costs.

Japanese Financial Regulator Considers Taxing Cryptocurrencies as Financial Assets

The Japanese Financial Services Agency stated that it might change the taxation method for cryptocurrencies from the current income tax to a financial assets tax. This change could reduce the tax burden on high-income cryptocurrency investors, as current profits from cryptocurrencies can be taxed at up to 45% under income tax, whereas the capital gains tax rate for financial securities is 20%. The agency believes that crypto assets contribute to wage growth and the increase in household assets, but their use by individual investors remains limited at present.

South Korean Financial Supervisory Service Initiates First Inspection of Virtual Asset Enterprises

The South Korean Financial Supervisory Service will conduct inspections of the first batch of virtual asset enterprises since the implementation of the Virtual Asset User Protection Act in July. The inspections will focus on compliance, user protection, and self-regulation. Two major fiat currency exchanges and other virtual currency market participants are expected to be selected as inspection targets to ensure their compliance with relevant regulations and internal control measures. The inspections will focus on user asset management, monitoring of abnormal transactions, and potential misconduct, aiming to maintain market order and protect user rights.

 

Southeast Asia

India’s Financial Intelligence Unit May Approve Two Overseas Crypto Exchanges to Resume Operations in India by March Next Year

The Financial Intelligence Unit of India (FIU-India) may approve two additional overseas crypto exchanges to resume operations in India by March next year, having previously approved Binance and KuCoin. FIU-India is reviewing requests from four crypto exchanges that were previously banned for non-compliance with anti-money laundering regulations, and at least two are expected to receive permission. The agency emphasized that any approval requires comprehensive due diligence to ensure compliance.

OKX Obtains Full License in Singapore; Former MAS Official Appointed as Local CEO

OKX announced that its Singapore entity, OKX SG, has obtained a full Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS) and appointed former MAS official Gracie Lin as the new CEO. This license allows OKX SG to provide digital payment token services and cross-border remittance services to Singaporean investors, including spot crypto trading.

 

Other Countries and Regions

Binance Kazakhstan Has Obtained a Comprehensive Regulatory License Approved by the Regulator AFSA

Binance Kazakhstan has officially obtained a comprehensive regulatory license approved by the Astana Financial Services Authority (AFSA). Binance Kazakhstan has completed the steps required to operate with a full license in Kazakhstan, including a series of internal and external audits and regulatory inspections. It will be authorized to operate virtual asset trading facilities and provide a range of virtual asset-related services.

Over 600 Bitcoin ATMs Worldwide Went Offline Within Two Months

In the first two months of the third quarter of 2024, more than 600 Bitcoin ATMs worldwide went offline, with the highest number of closures in the United States. This action was due to law enforcement agencies actively shutting down Bitcoin ATMs frequently associated with extortion and fraud activities. Data shows that losses from Bitcoin ATM scams exceeded $110 million in 2023, with individuals aged 60 and above being particularly affected.

Qatar Launches Digital Asset Regulatory Framework

The Qatar Financial Centre (QFC) released a comprehensive digital asset regulatory framework, including the tokenization process, legal recognition of property rights for tokens and their underlying assets, custody arrangements, transfers and exchanges, and provisions for the legal recognition of smart contracts.

 

 

This article is an original work of Shanghai Mankun Law Firm. It represents only the personal views of the author and does not constitute legal consultation or legal advice on specific matters.

 

Recommended Reading

Summary of Global Crypto Industry Regulatory Policies (August 26–September 1, 2024)

Summary of Global Crypto Industry Regulatory Policies (August 12–18, 2024)

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