UAE’s Royal Office Visits Korea to Further Security Token Collaboration with AIITONE

Japan is moving aggressively to cement its status as a global hub for digital assets. A decisive election victory for the ruling party has cleared the legislative runway for sweeping crypto tax reforms, while the country's largest financial institutions are simultaneously preparing to test blockchain-based securities trading. For global investors, these developments signal a deepening integration of blockchain technology into Japan's traditional financial infrastructure.Photo by PJH on UnsplashElection win seen as pro-cryptoPrime Minister Sanae Takaichi’s Liberal Democratic Party secured a majority in the recent general election. According to local media outlet CoinPost, the digital asset industry views this political stability as a positive signal, as pro-crypto initiatives such as a tax overhaul might otherwise have faced legislative obstacles. Currently, crypto profits in Japan are classified as miscellaneous income and taxed at punitive rates of up to 55%. Under the proposed framework, digital assets would be reclassified under the Financial Instruments and Exchange Act and become subject to a flat 20% capital gains tax, bringing them in line with traditional equity investments. However, officials have noted that full implementation will require a preparation period of approximately two years to ensure exchanges and self-regulatory organizations can fully adapt to the new legal framework. Additionally, Prime Minister Takaichi’s expansionary fiscal policies are expected to drive risk-on market sentiment. For foreign investors, any potential yen depreciation resulting from these macroeconomic policies could inflate yen-denominated crypto prices, creating unique arbitrage opportunities. Brokerages pilot blockchain tradingSeparately, according to a Nikkei report, Japan’s top brokerages—Nomura and Daiwa—are partnering with the nation’s three megabanks (Mitsubishi UFJ Financial Group, Sumitomo Mitsui, and Mizuho) to launch a blockchain-based securities trading platform, in a bid to modernize the country’s capital markets. The project will allow investors to buy and sell stocks, government and corporate bonds, and mutual funds using fiat-pegged stablecoins. The pilot is slated to begin this month, with a commercial rollout targeted for the coming years. This stablecoin initiative bypasses traditional exchange hours, enabling continuous trading and real-time settlement. While the U.S. recently transitioned to a next-day settlement cycle, moving to instant blockchain settlement would allow Japan to leapfrog Western markets and eliminate time-zone friction for foreign capital. The move aligns with a broader push by Japanese corporate giants to utilize stablecoins for both wholesale and retail transactions. Regulators tighten cybersecurityIn a more recent report, CoinPost noted that the Financial Services Agency has drafted new guidelines aimed at upgrading the cybersecurity posture of domestic crypto exchanges, as part of efforts to safeguard Japan’s rapidly expanding digital economy. The regulator cited a shift in the global threat landscape, warning that cold wallets alone are no longer sufficient against recent cryptocurrency breaches, which have involved hackers using sophisticated social engineering tactics and third-party partners as entry points for attacks. The proposed defense strategy centers on more rigorous security requirements, enhanced industry collaboration, and government-led stress testing. By year-end, all virtual asset service providers will be required to conduct formal cybersecurity self-assessments, while facing stricter regulatory scrutiny of third-party audits and security personnel. Additionally, regulators plan to conduct real-world penetration testing on select firms and share the findings across the sector to strengthen security overall. 

Klaytn and Incheon City’s NFT Project Set to Bring Blockchain to the PublicThe Klaytn Foundation, a non-profit organization backed by South Korean messaging giant Kakao, announced Tuesday (local time) a new collaboration with the city of Incheon to launch the Incheon Universe NFT project on the Klaytn blockchain.Photo by joon young, Park on PexelsNFTs representing seals and lighthousesSet to be issued on Wednesday, these non-fungible tokens (NFTs) are based on Incheon Heroes characters, which draw inspiration from seals, one of the country’s endangered species, and lighthouses, seen as guardians of the sea. The Incheon Universe NFT project will harness the online metaverse and decentralized autonomous organizations (DAOs) to create a space where residents can connect, sharing their preferences and values. Additionally, the project seeks to enhance the pride of those living in Incheon.The Incheon Universe NFT project is set to kick off on October 25, marking the inaugural minting of Incheon Heroes NFTs on the Klaytn blockchain. These NFTs will also serve as membership passes. For this initiative, the Klaytn Foundation has been offering technical assistance and advice.Fee delegation featureThe foundation and Incheon City plan to leverage the fee delegation feature to remove the burden of a small transaction fee typically associated with NFT minting. This move is intended to lower the entry barrier for individuals unfamiliar with participating in blockchain projects. Incheon is also orchestrating in-person events catered to NFT holders. The city is also in discussions with the Klaytn Foundation, mobile carrier LG Uplus, media commerce entity Lotte Homeshopping, marketing solutions provider Daehong Communications, and others for more collaborative endeavors.Commenting on the collaboration, Lee Se-woong, Brand Manager of Incheon City, emphasized how both parties benefit from the partnership. While the Klaytn Foundation has been at the forefront of collaborations in the global blockchain scene, leading various projects, Incheon is positioning itself for new initiatives in the Web3 era. Lee sees this partnership as a major boost for the city.Seo Sang-min, the Klaytn Foundation’s Representative Director, mentioned that the foundation is committed to working closely with the city to ensure the success of the Incheon Universe NFT project as a city-driven blockchain initiative. He emphasized that Klaytn aims to help more people experience firsthand the benefits of Web3 technology.Incheon has been at the forefront of driving blockchain initiatives. Among its recent undertakings is the Global Blockchain Incheon Conference (GBIC 2023), which is slated for October 30 to 31. The event will highlight presentations from renowned speakers representing blockchain entities like Polygon Labs, Crypto.com, and the Astar Foundation.

Korea’s Intragovernment Group Launched to Thwart Crypto-Related CrimesThe South Korean government has taken a significant step today in combating cryptocurrency crimes with the launch of a dedicated intragovernmental division. The newly established joint crypto-crime investigation division operates under the Seoul Southern District Prosecutors’ Office and comprises 30 skilled investigators from seven different government agencies.Photo by Daniel Bernard on UnsplashMulti-agency collaborationThese agencies are the Public Prosecutors’ Office, the Financial Supervisory Service (FSS), the Korea Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC), the National Tax Service (NTS), the Korea Customs Service (KCS), Korea Deposit Insurance Corporation (KDIC), and Korea Exchange (KRX).The growth of the domestic crypto market in South Korea has been remarkable since the advent of cryptocurrency exchanges in 2014, attracting approximately 6.27 million individuals and reaching a valuation of 19 trillion KRW ($14.9 billion). Daily average trading volumes have surged to three trillion KRW, involving participants from various age groups, with individuals in their 30s and 40s constituting the largest share.Regulatory absenceHowever, the absence of adequate regulations has exposed customers to unfair practices in virtual asset trading. Although the recent passage of the Virtual Asset User Protection Bill at the National Assembly is encouraging, implementing comprehensive policies to safeguard crypto investors will take a significant amount of time.The risks associated with virtual asset investments are highlighted by the frequent delisting of cryptocurrencies from the nation’s top five exchanges. In the past two years, 1,053 cryptos have been delisted, and an additional 1,010 have been flagged as risky. The prevalence of unstable cryptocurrencies has resulted in high price volatility, incurring losses for investors. This volatile environment has also given rise to various crypto-related crimes, including unlawful listings, market manipulation, illegal foreign exchange trading, and pyramid schemes.Two teamsTo address these challenges, the joint crypto-crime investigation division is structured with two teams. The research and analysis team will study virtual asset issuers and distributors, identifying suspicious transactions. Virtual assets found to be fraudulent will be reported to the investigation team, which will then conduct thorough investigations and pursue legal action against problematic projects, while also recommending regulatory enhancements. Profits obtained through illegal means will be confiscated by the Seoul Southern District Prosecutors’ Office.The division’s main focus lies on virtual assets that have been rapidly delisted, those marked as risky, and those exhibiting significant price volatility. Committed to upholding fairness and transparency in the crypto industry, the joint crypto-crime investigation division will strive to protect market participants and make valuable contributions to the Korean economy.