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Hong Kong Pressing Banks to Facilitate Crypto ClientsHong Kong’s banking regulator is urging banks, including HSBC and Standard Chartered, to onboard crypto exchanges as clients, despite increasing regulatory scrutiny of the industry in the United States.That’s according to a report published by the Financial Times (FT) on Wednesday. The FT cited three people who it claims are familiar with the matter, together with a letter seen by the publication as the basis for the assertion.Photo by Ansel Lee on PexelsChallenging crypto banking reticenceAt a recent meeting, the Hong Kong Monetary Authority (HKMA) questioned these UK-based lenders, together with the Bank of China, about their reluctance to accept crypto exchanges as customers, according to sources familiar with the matter. The HKMA emphasized that due diligence on potential clients should not create unnecessary burdens, particularly for those seeking opportunities in Hong Kong. While banks do not have a ban on crypto clients, concerns over potential money laundering and illegal activities have made them cautious.The pressure faced by banks highlights the challenges Hong Kong is facing in establishing itself as a global hub for the crypto industry, especially in light of previous high-profile collapses, such as the implosion of FTX. However, the HKMA is encouraging banks to overcome their reservations, as the regulator believes there is resistance from senior executives who adhere to traditional banking mindsets.The enthusiasm of some Hong Kong officials for the sector is evident as pro-Beijing lawmaker Johnny Ng invited Coinbase and other crypto exchanges to set up operations in the city following the recent SEC lawsuit against Binance and Coinbase.Caught between opposing forcesBanks in Hong Kong find themselves walking a fine line between supporting the crypto industry as encouraged by the government and being cautious due to the US regulatory environment. They want to ensure the industry’s development aligns with government policies, but they are also concerned about potential anti-money laundering and know-your-customer issues.The HKMA and the Securities and Futures Commission (SFC) have been vocal about their expectations, setting them apart from regulators in other jurisdictions that may be more skeptical of cryptocurrencies. Last month it emerged that crypto startups are having difficulties in establishing banking facilities in the autonomous Chinese territory. At the time, the HKMA did convene a meeting to bring parties together in order to forge a path forward.While Hong Kong has a history as a crypto center, its position weakened after Beijing’s crackdown on the industry in 2017. However, the Hong Kong government aims to reestablish the city as a hub for digital assets, having expressed its desire to provide a supportive environment for crypto-related businesses. The introduction of a new licensing regime for crypto platforms in Hong Kong is part of the government’s efforts to attract more crypto groups to the city.HSBC, Standard Chartered, and the Bank of China hold influential positions in Hong Kong as issuers of the city’s currency and have key roles in the Hong Kong Association of Banks lobby group. Standard Chartered claims that it maintains regular dialogue with regulators on various subjects, while HSBC has claimed that it is actively engaging in policies and developments within the nascent industry.

The Securities and Exchange Commission (SEC) in Thailand has made a significant adjustment to the rules governing digital token investments. The SEC has decided to eliminate the investment ceiling previously imposed on retail investors participating in initial coin offerings (ICOs) tied to real estate and infrastructure.Photo by Colton Duke on UnsplashFostering digital economy growth and developmentThe announcement, specifying the revised criteria, was officially published in the Royal Gazette, with the measure taking effect on Tuesday. This move allows retail investors greater access to ICOs involving tokens backed by real estate or linked to real estate revenues. The SEC emphasized that, in addition to ensuring appropriate investor protection, its role extends to encouraging the utilization of technology and innovation in fundraising. The objective is to foster sustainable growth in the capital market and support the development of the digital economy. Prior to this adjustment, retail investors faced a restriction of a 300,000 baht ($8,450) investment limit per offering concerning digital tokens backed by infrastructure or real estate. The SEC's decision to remove this limitation aligns with the goal of managing product risks effectively while promoting a more inclusive environment for retail investors in the realm of digital token investments. Facilitating custodial walletsFurthermore, the SEC is currently undertaking a review of criteria to facilitate the establishment of custodial wallet provider businesses for digital asset operators with common major shareholders. This initiative aims to enhance the regulatory framework and provide guidelines for businesses involved in digital asset storage. Custodial wallets will be permitted in Thailand if operated by publicly traded companies with experience in digital asset storage. All Thai citizens will have a touch point with digital wallets shortly under a government program, a $14 billion digital handout scheme, which has been approved to distribute digital currency to the public through digital wallets. DASP approvalsAs part of its supervisory role, the SEC will also be responsible for granting permissions to digital asset service providers (DASPs) to expand into new business lines. Digital asset operators seeking to diversify their operations are required to obtain approval from the SEC before proceeding. This measure is intended to ensure the effective oversight of such businesses and maintain the credibility of the digital asset industry by preventing illegal operations. It’s likely no coincidence that tokenized real estate is being embraced in Thailand, given the background of Thailand’s recently installed Prime Minister, Srettha Thavisin. In 2021, Thavisin’s company played a role in funding crypto-friendly investment management firm XSpring Capital to the tune of $225 million. His firm also introduced a real estate-backed ICO in conjunction with XSpring. While Thailand’s SEC is moving forward with tokenized real estate, it doesn’t feel the same way about exchange-traded funds (ETFs). In the wake of the recent approval of spot bitcoin ETFs in the United States, the Thai SEC responded by stating that it currently has no plans to allow asset managers to launch similar products within the Thai market. 

Do Kwon Loses Fight to Conceal Singapore RecordsDo Kwon, the founder of Terraform Labs has failed in his attempt to deny the United States’ Securities and Exchange Commission (SEC) from accessing company records in Singapore.©Pexels/George BeckerIn February, the SEC filed a complaint against Terraform Labs and its founder in a US court. The move followed an investigation that the agency had carried out into the collapse of a number of digital assets established by the company. The lawsuit claims that both the company and Do Kwon had engaged in fraud, together with the sale of unregistered securities to US citizens.Jurisdictional challengeLawyers for Do Kwon had claimed that in trying to access documents related to the Singapore-domiciled company, the SEC was acting far beyond its jurisdiction. According to court filings, his defense team argued that Do Kwon is a Singapore resident while Terraform Labs is a Singapore-based company that operates on a global basis and not specifically in the United States.The filing pointed to the fact that the Terraform Labs CEO had “limited contact with the US.” “Most of the company’s business is essentially global, and it’s not specifically aimed at the United States,” it stated.His lawyers had filed a request for the SEC to withdraw its documentation request. In a recent hearing, US District Judge Jed Rokoff turned down Terraform’s request. The documents are understood to be held by the Monetary Authority of Singapore (MAS) although the specific nature of the documentation sought remains unclear.The SEC claims that in founding the Terra US dollar stablecoin (TUSD) and associated cryptocurrency LUNA, Terraform Labs and Do Kwon were responsible for wiping out more than $40 billion dollars in value following their collapse. The Luna Foundation Guard (LFG), which was established to provide funds to keep the TUSD stablecoin at a $1 value, is another entity that the SEC intends to access documents from with the court’s permission. Singaporean police had stated last month that they had launched an investigation into the collapse of the TUSD stablecoin.Meanwhile, both the South Korean and US authorities are seeking the extradition of Do Kwon to face related charges. He was arrested last month in the southeastern European country of Montenegro where he was charged with having used forged documentation to enter the country. Although he had denied it on social media, in effect Do Kwon had been on the run from the reach of South Korean authorities over the course of a number of months, spending a portion of that time in Montenegro.Asset huntAn investigation by authorities in South Korea in recent weeks revealed that they were unable to find any assets held in the country owned by the Terraform Labs founder. The trail in chasing down any such assets has led to the United States. It is understood that Do Kwon bought real estate in the United States under his mother’s name. This is a common tactic for those who attempt to evade future confiscation of assets.Earlier this week, South Korean prosecutors confirmed that they are investigating a transfer of funds by Do Kwon to a leading law firm based in Seoul.