Indonesian Food Industry Conglomerate Embraces Blockchain Tech

LDP Working Group Proposes Web3 Industry Plan to Japan’s Prime MinisterJapan’s ruling Liberal Democratic Party (LDP) announced that its Working Group for Digital Society Promotion presented a proposal related to the Web3 industry to Prime Minister Kishida Fumio on Tuesday. The information was made public on the party’s website and later reported by the Korean crypto media outlet Tokenpost.Photo by Jezael Melgoza on UnsplashImproved crypto regulationsThe comprehensive 35-page study favorably reviewed the enhanced cryptocurrency regulations implemented by the Japanese government following the 2014 Mt. Gox breach and the 2018 Coincheck hack. The study credits these improved regulations for nurturing Japan’s robust Web3 ecosystem, which received global attention amidst the recent crypto winter. This term refers to a period marked by a sustained downturn in cryptocurrency values.Japanese crypto exchanges demonstrated prudence by refraining from listing most of the problematic tokens on their platforms, thereby averting panic within the market. This cautious approach was supported by Japanese law, which mandates crypto exchanges to securely store customers’ staked tokens separately. As a result, they were shielded from the repercussions of the FTX bankruptcy, which arose due to a liquidity crisis of FTT, the global crypto exchange’s native token.Significance of security tokensThe paper optimistically projected that Japan could lead the way in passing through the crypto winter ahead of other countries, citing the nation’s track record of overcoming numerous challenges in the industry. The authors highlighted the exit of speculative projects from the sector, balanced by the rise and continuous growth of new blockchain-based businesses. The report underscored the significance of tradable security tokens, which leverage blockchain technology to represent assets or rights.The adaptable nature of blockchain technology was emphasized, particularly its potential to incentivize social activities like volunteering. This versatility enables the broader public to actively participate in monitoring and addressing issues related to deteriorating infrastructure, thereby reducing associated management costs across society.Crypto taxationThe proposal also addressed the issue of crypto taxation, arguing for enhancements to the token investment environment to bolster blockchain-driven businesses. Currently, Japan taxes tokens held by corporations, discouraging domestic investment and stifling the growth of the Japanese Web3 ecosystem. To rectify this, the paper suggested exempting tokens issued by a third party from taxation if they are not intended for short-term trading.Moreover, the authors addressed the high taxation rates facing retail investors in Japan, which can reach up to 55% on income from crypto trading. This stricter tax regime compared to other countries has led many taxpayers to seek investment opportunities abroad. The authors suggested improvements to create a more investor-friendly environment.Token listing procedureThe proposal also included recommendations concerning token listings. In Japan, crypto exchanges are currently obligated to undergo a preliminary review conducted by the Japan Virtual and Crypto Assets Exchange Association (JVCEA) before listing tokens. It was suggested that the review process should be further refined to enhance efficiency.Yen stablecoinsThe authors emphasized the importance of introducing and circulating yen stablecoins to foster the growth of the Japanese Web3 industry, necessitating the development of a sustainable business model for these stablecoins.Content & Web3Furthermore, the proposal underscored the need for clear guidelines to discourage gambling behaviors and promote responsible usage within the NFT space. It advocated for the establishment of an industry organization bridging the content industry and the Web3 industry, which would facilitate collaboration and collective efforts towards a robust NFT ecosystem in Japan. Measures to protect Japanese content and data from unauthorized monetization by foreign entities were also recommended.According to an industry official who spoke with Tokenpost, Japan’s extensive preparations for the Web3 initiative have instilled confidence in the sector. The official highlighted that the country is currently exploring ways to establish connections between these new projects and existing industries, with the goal of maximizing their economic potential and generating fruitful outcomes.

BitMEX CEO Calls for an End to Internal Market MakersIn a recent interview, Stephan Lutz, the acting CEO and group CFO of 100x Group, the parent company of Seychelles-headquartered global crypto exchange BitMEX, expressed his belief that crypto exchanges should phase out their internal market-making teams.Photo by Joe Roberts on UnsplashProp trading desks unnecessarySpeaking with The Block, Lutz argued that with the growth of institutional liquidity providers and high-frequency traders (HFTs) in the market, proprietary trading desks are becoming unnecessary.Lutz stated: “You have enough HFTs out there and prop shops that can perform that function.” He was referring to the role of liquidity providers in filling gaps in the market. He made these comments in response to the emergence of information earlier this week that raised questions about internal trading practices at Crypto.com, a Singapore-based exchange.BitMEX, once the world’s largest crypto derivatives exchange, also used to employ internal traders who acted as market makers. However, Lutz explained that BitMEX’s internal trading team, named Arrakis Capital, now functions primarily as a “treasury desk.” He sees this transition as a natural evolution for crypto exchanges in a market that has matured and attracted more institutional liquidity providers.Arrakis Capital currently performs limited functions, including converting commission fees earned in Bitcoin into fiat currency for operational purposes, hedging BitMEX’s exposure to tokens held as inventory, and making markets for BitMEX’s token $BMEX. Lutz clarified that Arrakis’s market-making activities are limited because external market makers find the token’s liquidity insufficient.Regarding profitability, Lutz stated that Arrakis earns “very minor returns” of up to $100,000 per month from holding T-Bills, but it incurred losses last year. He noted that Arrakis used to play a more significant market-making role when BitMEX dominated the crypto futures market. However, he assured that the trading desk was always segregated, despite accusations in the past.Fee structuresLutz acknowledged that exchanges with internal trading teams have faced increased scrutiny since the controversies surrounding Alameda Research and FTX. To differentiate between benign internal trading teams and hedge fund-like operations, Lutz highlighted several factors, including the separation of client funds and house funds, access to sensitive data, and the ability to move markets on their own exchange. Fee structures also play a role, with low or no transaction fees potentially signaling a market-making motive rather than serving as a counterparty.Lutz’s perspective suggests that crypto exchanges should rely on external liquidity providers and HFTs rather than maintaining internal market-making teams. He argues that the market has evolved. At this point he feels that these teams are no longer necessary, due to the presence of established players within the digital assets space.As regulatory scrutiny grows, ensuring transparency and avoiding conflicts of interest become crucial for maintaining trust within the crypto exchange ecosystem. The digital assets industry is far from arriving at a mature stage in its development. While many in the industry have found the stance taken by regulators to be unhelpful, the industry itself must also demonstrate its ability to iteratively move towards best practice, without that being a knee-jerk response to regulatory enforcement.

Thai Opposition Party Offers Election Crypto SweetenerThailand’s opposition party, the Pheu Thai Party (PTP), has made a controversial move ahead of next month’s general election by offering 10,000 baht (approximately $300) in digital assets to citizens above 16 years old in exchange for their votes.©Unsplash/Markus WinklerThe stated intention of the policy is to spread the use of blockchain-based assets and attract international digital currencies, as well as to distribute products made in Thailand abroad using blockchain technology. Prommin Lertsuridej, who runs the party’s economic policy committee has claimed that 55 million Thai citizens will benefit from the measure if the PTP wins the election.Populist policiesThe plan will cost $15 billion and it is claimed that it will serve to revive the country’s struggling economy while providing relief to those struggling with debt. Additionally other populist measures will be pursued including an increase in the minimum wage and a minimum monthly household income guarantee.The policy has been met with mixed reactions from citizens, with some welcoming the extra cash and others accusing the party of blatant, cynical manipulation. The PTP has tried to sidestep accusations of manipulation by stating that the money will be limited to spending on local economic stimulus projects. Additionally, it cannot be used for gambling or debt repayment, and must be spent within a four-kilometer radius. The party’s chief adviser on public participation and innovation, Paetongtarn Shinawatra, called this policy an attempt to draw the attention of international currencies to Thailand.New crypto regulationsThis policy announcement comes just two months after the Securities and Exchange Commission (SEC) of Thailand issued new regulations for crypto service providers. The regulations were implemented to prevent a situation similar to the recent FTX collapse and hack, which resulted in the loss of millions of dollars’ worth of digital assets. The SEC has required service providers to establish a digital wallet management system to ensure efficient custody and to have a contingency plan in case of a security breach.Unintended consequencesWhile the PTPs policy has been met with criticism, it has also been seen as a bold move towards promoting the use of blockchain-based assets and digital currencies in Thailand. By offering citizens an incentive to use digital assets, the policy may encourage more people to explore this emerging market, which has the potential to create new opportunities for investment and economic growth.Populist politics and policy comes with a heavy longer term cost. The PTPs policy may be successful in achieving its intended goals, or it could ultimately lead to unintended consequences. Regardless of the outcome, the PTPs policy is a significant development in Thailand’s growing digital asset market and may set a precedent for other countries seeking to promote the use of blockchain-based assets and digital currencies.From an international perspective, even if the move backfires economically within Thailand, ever greater use and normalization of digital assets as in this case can only lead to greater overall adoption.