News Weekly | Hong Kong’s “Guideline on Virtual Asset Trading Platform Operators” will take effect on June 1, 2023.

Policy

▌ The Administrative Security Committee of the Korean National Assembly reviews the “Amendment to the Public Officials Ethics Act” and proposes that public officials register virtual assets

On May 22, the Administrative Security Committee of the Korean National Assembly held its first legislative review subcommittee meeting to review the “Amendment to the Public Officials Ethics Act” and require public officials to register their virtual assets. The core of this amendment is to include cryptocurrencies in the assets that senior public officials, including lawmakers, should declare and disclose. This review was triggered by controversy over lawmaker Jin Nanguo, who was accused of trading and holding cryptocurrencies and exited the Democratic Party. Unlike cash, stocks, bonds, gold, jewelry, antiques, and membership qualifications, virtual assets are excluded from property declaration under the current “Public Officials Ethics Act”. The committee will hold a plenary session on the 24th and 25th of this month to finally pass the amendment at the plenary session scheduled for the 25th. The National Assembly’s Political Reform Special Committee will also hold its first legislative review subcommittee meeting on the same day to deal with a bill that includes cryptocurrencies in lawmakers’ private interest registration. The move aims to prevent situations of conflict of interest.

▌ IRS will deploy personnel in Germany, Colombia, Australia, and Singapore to increase international cybercrime crackdown efforts

According to Blocking news, the US Internal Revenue Service (IRS) is stepping up its efforts to combat international cybercrime, and the US Internal Revenue Service will strengthen its supervision of “tax and financial crimes using cryptocurrencies, DeFi, peer-to-peer payments, and mixing services” through a pilot established by the agency. The plan will officially start in June, and the IRS is preparing to deploy staff to Germany, Colombia, Australia, and Singapore. It is reported that the deployment time of the staff is three months, and the work will end in September. In the United States, the IRS warns that a crackdown on digital assets and tax evasion measures is imminent. It is expected that the IRS will update tax regulations based on sections 6045 and 6045A, both of which cover broker reporting of digital asset information.

▌ IOSCO Proposes First Global Rules for Cryptocurrencies

The International Organization of Securities Commissions (IOSCO) has published the first set of global standards for regulating crypto assets and digital markets. The proposed standards cover areas such as handling conflicts of interest, market manipulation, cross-border regulatory cooperation, custody of crypto assets, operational risk, and discussions around retail customers. The 18 proposed measures are designed to establish long-term safeguards for mainstream markets that eliminate conflicts of interest between various parts of crypto trading. The regulatory body aims to complete these standards by the end of this year and hopes its 130 global members can use these standards to quickly fill gaps in the crypto rulebook.

▌ Ukraine Allows Partial MiCA Adoption and Unveils Legal Crypto Market

According to Blocking, Ukraine’s Deputy Minister of Digital Transformation, Oleksandr Boryakov, said that for a full launch of the Bitcoin industry, Ukraine only needs to adopt the MiCA specification. As the country has already obtained candidacy for EU membership, it is obliged to make cryptocurrency legislation compatible with European market regulation. However, to allow businesses to adapt more quickly in the first stage, some clauses passed by law can be delayed, and priority can be given to gradually introducing new regulatory mechanisms. Bornyakov also confirmed that the ministry plans to launch a legal crypto market in Ukraine as soon as possible. The authorities intend to determine the “virtual asset” law that Ukraine passed in consideration of new European rules. Earlier reports indicated that the MiCA bill was unanimously approved by the EU Council of 27 countries on May 16. EU member states have also approved new measures to combat money laundering.

▌ SFC: Multiple Regulatory Documents Applicable to Virtual Asset Trading Platform Operators Will Be Published on May 25, 2023

According to Blocking, the Hong Kong Securities and Futures Commission announced on its official website that on May 25, 2023, it will publish multiple regulatory documents in the Gazette, including the “Guidelines for Virtual Asset Trading Platform Operators”, “Guidelines for Combating Money Laundering and Terrorist Financing (Applicable to Licensed Corporations and Virtual Asset Service Providers Licensed by the SFC)”, “Guidelines for Licensed Corporations and Virtual Asset Service Providers with Linked Entities to Prevent Money Laundering and Terrorist Financing Issued by the Securities and Futures Affairs Supervision Committee”, and the “SFC Disciplinary and Fine Guidelines” for virtual asset service providers licensed by the SFC.

▌ Japan implements travel rules to combat cryptocurrency crime

On May 23, the Japanese Cabinet plans to implement travel rules from June 1 to combat money laundering and other criminal activities. The rules require financial institutions that handle the transfer of crypto assets to pass on customer information to the next institution, which should include the names and addresses of the sender and recipient; target crypto assets include stablecoins or cryptocurrencies pegged to currencies such as the US dollar or commodities; and those who violate the order of the authorities will face criminal penalties if they do not comply with it. Although Japan is one of the few countries with stricter legislation on cryptocurrencies, cryptocurrency crimes still exist widely. According to Coincub’s 2022 Cryptocurrency Crime Annual Report, Japan ranks sixth in terms of the amount of cryptocurrency crime losses, with losses exceeding $1.2 billion.

Blockchain Application

▌ Russia participates in de-dollarization negotiations with the Islamic world to establish an independent financial system

Blocking reported that Russia and the Islamic world are currently discussing how to deepen the de-dollarization agenda to create a new financial system. As the Group of Seven (G7) plans to further restrict Russia’s access to the financial system, Russia has been seeking to establish an alternative financial system recently, enabling them to trade with other countries without relying on the global bank contact system SWIFT and the US dollar. Earlier reports showed that Russia was removed from the cross-border payment system SWIFT, and cryptocurrency cross-border trading attributes were recognized, while stablecoins, due to their price stability, could become the preferred trading medium; some ordinary Russian citizens exchanged rubles for stablecoins to protect the value of their assets.

▌ Study: Distributed ledger technology can be used for cross-border and cross-currency payments between different CBDC ledgers

Block reported that according to research by the Monetary Authority of Singapore and the New York Federal Reserve, distributed ledger technology can be used for cross-border and cross-currency payments between different CBDC ledgers, reducing settlement risks and shortening settlement times. The experiment was conducted in a test environment, assuming that the payments used simulated wholesale central bank digital currencies for settlement. These teams interlinked different central bank currency ledgers, providing flexibility for the design and operation of each central bank’s ledger. This enabled payments to be securely executed on multiple ledgers without the need for a central clearing institution or the establishment of a shared central network. Michelle Neal, head of the New York Fed’s market division, said our research collaboration with MAS revealed key opportunities for central bank innovation that can play an important role in mitigating global wholesale payment processes and improving settlement outcomes.

▌ Three German institutions use Deka’s blockchain savings bank bond platform

Blocking reported that DekaBank, the securities supplier of German savings banks, announced that three savings banks have deployed digital savings bank bonds on the SWIAT blockchain platform. The Dortmund, Ludwigshafen and Schwarzwald-Baar savings banks issued bonds to institutions using the DLT registry. One of the main advantages of this solution is the speed of settlement. The transfer of ownership in paper form takes seven days, but now it can be completed in seconds.

▌ Zambia is about to complete the test of digital currencies such as Bitcoin

Blocking reported that Zambia is testing digital currencies such as Bitcoin. Zambia recently commented that these tests are almost complete. Felix Mutati, Zambia’s Minister of Innovation, Science and Technology, said in an interview that Zambia is about to implement rules and laws that allow all citizens to conduct secure and controlled encrypted transactions. Our main goal in the field of cryptocurrency is to balance innovation in digital payments with citizen safety, especially considering that cryptocurrencies are very unstable. The central bank is simulating this to understand what will happen in the real world. The results will help us formulate regulations. He also said that many Zambians have become very interested in investing in cryptocurrencies recently. Blocking reported that the cryptocurrency regulatory test that aims to help shape Zambia’s cryptocurrency laws and simulates the use of cryptocurrencies in the real world is expected to be completed before June.

▌ The Central Bank of Brazil announced 14 pilot institutions for CBDC, including Brazil Bank, Visa, and Microsoft

Blocking reported that the Central Bank of Brazil has selected 14 institutions to participate in the country’s CBDC pilot, including Bradesco, Nubank, and Itaú Unibanco, as well as Banco do Brasil and the local securities exchange B3. Multinational companies such as Visa and Microsoft are also involved. The central bank will start to include participants in the Real Digital Pilot platform in mid-June 2023.

▌ National Standard “Reference Architecture for Blockchain and Distributed Ledger Technology” was approved and released on May 23 .

Blocking reported that the national standard GB/T 42752-2023 “Reference Architecture for Blockchain and Distributed Ledger Technology” was approved and released on May 23. The national standard “Reference Architecture for Blockchain and Distributed Ledger Technology” is under the jurisdiction of TC590 (National Blockchain and Distributed Ledger Technology Standardization Technical Committee) and is supervised by the Ministry of Industry and Information Technology. The main drafting units include China Electronics Standardization Institute, Digital Currency Research Institute of the People’s Bank of China, and Shanghai Wanxiang Blockchain Co., Ltd.; the main drafters include Zhou Ping, Mu Changchun, Li Ming, etc. According to the National Standard Information Public Service Platform, the “Reference Architecture for Blockchain and Distributed Ledger Technology” was released on May 23, 2023 and will be implemented on December 1, 2023.

Cryptocurrency

▌ The market value of stablecoins has shrunk by 7.3 billion US dollars since the beginning of this year.

Blocking reported that since the beginning of this year, the market value of cryptocurrencies has soared by 41.77%, reaching a current market value of US$1.17 trillion. However, in this growth, the stablecoin economy suffered a huge loss of US$7.3 billion within 140 days. Archived records show that on January 6, the valuation of the stablecoin economy was US$138.12 billion, but as of today, it has been reduced to US$130.79 billion. It is worth noting that in the past four months, many stablecoin projects have experienced significant redemptions, and only USDC has lost more than US$14 billion. Similarly, since the first week of January, BUSD has suffered redemptions of more than US$11 billion, while DAI is facing redemptions of US$361 million.

▌ Cryptocurrency trading platform Hotbit announced that it will stop operating, and users need to withdraw their remaining assets before June 21 .

On May 22, Hotbit, a cryptocurrency trading platform, announced that it will stop all CEX operations starting at 12:00 on May 22 Beijing time, and all users must withdraw their remaining assets before 12:00 on June 21. Hotbit stated that the above decision is based on the deterioration of its business operations, changes in the trend of the cryptocurrency industry, and the discovery that the operation mode that supports diversified assets is unsustainable. In August 2022, Hotbit issued an announcement stating that several senior managers of Hotbit had been summoned by law enforcement agencies since the end of July, and deposit/withdrawal and trading functions were suspended.

▌ Bitcoin and Ethereum options contracts worth $3.6 billion will expire on Friday

According to Deribit data cited by Blocking, Bitcoin and Ethereum options contracts worth $3.6 billion will expire on Friday, including around 85,000 Bitcoin options contracts worth $2.3 billion and approximately 700,000 Ethereum options contracts worth $1.3 billion. Deribit’s chief commercial officer Luuk Strijers said that the ratio of put options to call options is 0.38, and unfinished call options may be more than two and a half times more than put options. The amount of expiring options is considerable, but that does not mean there is reason to panic in the market. The implied trading volume is still at its lowest level, with DVOL trading volumes for Bitcoin and Ethereum at 50, which saw similar low IV levels in January this year before a sharp rise.

▌ Ripple buys minority stake in Bitstamp from Blockingntera Capital

According to the latest records of a Galaxy Digital shareholder conference call, Ripple acquired a minority stake in the cryptocurrency exchange Bitstamp in the first quarter of this year, but did not disclose the specific shareholding. Ripple acquired these shares from the American digital asset investment firm Blockingntera Capital, with Galaxy Digital providing advisory services for the transaction.

Disclaimer: As a blockchain information platform, the articles published by Blocking are for information reference only and do not serve as actual investment advice. Please establish a correct investment concept and be sure to increase risk awareness.

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