Zodia Markets Achieves Crypto Broker-Dealer Approval in UAE

First Digital to Introduce USD-Backed USD StablecoinFirst Digital Trust, a Hong Kong-based qualified custodian and trust company, is set to introduce a new stablecoin called “First Digital USD,” with the short-code $FDUSD. This stablecoin will be pegged to the US dollar but regulated within Asia.Photo by Alexander Grey on UnsplashIntroducing $FDUSDAccording to First Digital, $FDUSD will be backed by one US dollar or an asset of equivalent fair value on a one-to-one basis. The reserves supporting FDUSD will be held in segregated accounts at institutions in Asia.$FDUSD aims to provide stability and will be programmable, enabling the execution of financial contracts, escrow services, and insurance without the need for intermediaries. In a statement published on Thursday, First Digital emphasized its commitment to full compliance with current and future laws and regulations. The company also expressed its intention to participate in shaping the regulatory landscape for $FDUSD and First Digital itself.The announcement of $FDUSD is particularly significant in light of the new “Guidelines for Virtual Asset Trading Platform Operators” set to take effect in Hong Kong on June 1. These guidelines outline rules for safe asset custody, client asset segregation, conflict of interest avoidance, and cybersecurity standards, as mandated by Hong Kong’s Securities and Futures Commission (SFC).Hosted on BNB Smart ChainFDUSD will operate on the BNB Smart Chain and will be issued by First Digital Labs, a subsidiary of First Digital Trust, a regulated digital asset custodian under the Hong Kong Trustee Ordinance. The law ensures that $FDUSD will be fully backed by US dollar reserves or highly liquid, high-quality assets held in regulated Asian financial institutions, with no commingling with other assets of First Digital.Vincent Chok, CEO of First Digital, emphasized the company’s commitment to regulatory compliance and setting a new standard for legitimacy in the industry. First Digital intends to comply with all applicable laws and regulations and actively contribute to the shaping of regulatory regimes for $FDUSD and First Digital in the future.The $FDUSD stablecoin will be redeemable for US dollars, providing users with a reliable bridge between the digital and fiat currencies.Biden administration's own goalAs regulatory uncertainty persists in the United States, some industry players are expressing concerns about losing the country’s leadership position in the crypto sector. They warn that the industry may be offshore to more favorable jurisdictions.News of First Digital Trust’s US dollar stablecoin intentions brought scathing criticism of US policy from US commentators within the crypto space. Austin Campbell, Managing Partner at Zero Knowledge Consulting, a firm that advises on crypto payments and stablecoins, stated that the US government and US regulators had created a paradigm where they now have less control over distribution and regulation while the product they were suppressing continues to exist and scales elsewhere.Nic Carter, Partner at venture capital firm Castle Island Ventures, wrote that “the wise sages in US government took one look at the onshore registered stablecoin market and decided they’d much prefer unaccountable offshore crypto-eurodollars.”Macro-economist Luke Gromen described this consequence of US policy as the “monetary equivalent of deciding they would prefer making their goods in China rather than paying US workers and deal with union labor.” Meanwhile, Caitlin Long, Founder and CEO of digital asset-focused Custodia Bank, suggested that US federal regulators “thought they could kill USD stablecoins” but that “they miscalculated.”

Japan’s financial sector is poised for a significant change as the Financial Services Agency (FSA) unveils new tax reform guidelines for fiscal year 2025. This marks the first time virtual currency transactions will be addressed within Japan's tax framework, signaling a pivotal shift in the country’s stance on cryptocurrency taxation. Current taxation issuesPresently, Japan imposes a maximum tax rate of up to 55% on cryptocurrency revenues, a figure that has been criticized for deterring investment in the growing crypto market. Crypto profits are taxed as miscellaneous income, with the highest rate applying to earnings over 200,000 Japanese yen. Corporate holders of crypto assets face a flat 30% tax on their holdings, irrespective of their income or profits. These high tax rates contribute to Japan's relatively low cryptocurrency adoption rate, placing the country 18th in the 2023 Global Crypto Adoption Index by Chainalysis.Photo by Tobias Wilden on UnsplashIn response to rising demands from both investors and businesses, there is strong advocacy for a more favorable tax structure. The new proposal suggests reducing the crypto tax rate to 20%, aligning it more closely with the tax rates applied to traditional financial assets like stocks. This reform is viewed as essential for rejuvenating the industry, especially given Japan’s increasing engagement with cryptocurrencies. Japan's interest in cryptocurrencies extends beyond individual investors. Major institutions are making notable advancements in the field. Ripple, a key player in the crypto space, has teamed up with over 50 Japanese financial institutions to develop a new payment infrastructure leveraging blockchain technology. Meanwhile, private companies like Metaplanet are also expanding their crypto investments, recently securing a loan of 1 billion Japanese yen ($6.8 million) at an annual percentage rate of 0.1%.  Impending tax changesThe FSA's decision to include crypto assets in the 2025 tax reform proposal represents a significant departure from previous reluctance to formally recognize the industry. The proposed changes would expand loss offset provisions, potentially aligning crypto assets with the tax treatment of public bonds and listed stocks. This adjustment could offer relief to investors by allowing them to offset losses against their crypto gains. Despite these promising developments, the implementation of these proposals remains uncertain. A previous proposal to reduce the crypto tax burden has failed to produce policy changes. Nevertheless, the inclusion of crypto assets in the FSA’s reform agenda is a positive step toward a more supportive regulatory environment. Japan’s current high tax rates contrast sharply with other crypto-friendly regions in Asia. For instance, the United Arab Emirates (UAE) has become a major hub for crypto businesses by imposing no taxes on crypto profits. Similarly, countries like Hong Kong, Singapore, Thailand and Indonesia have attracted significant crypto activity due to their progressive regulations and lower tax rates. Conversely, India’s 30% flat tax on crypto has prompted many companies to relocate to more favorable jurisdictions such as Dubai. As Japan considers transitioning to a more crypto-friendly tax regime, there is cautious optimism about its potential impact on the industry. If successfully implemented, the proposed changes could boost adoption and growth, making Japan a more appealing location for crypto businesses and investors. The ultimate effect will depend on the government’s reception and execution of these proposals in the coming years. For now, the inclusion of crypto assets in the tax reform agenda marks a promising step toward a more balanced and supportive regulatory landscape for the cryptocurrency industry in Japan. 

NS Studio and Factor Labs to Enhance Military Security with Blockchain TechnologyKorean game developer NS Studio announced on Thursday its collaborative research effort with blockchain-based security solutions company Factor Labs to boost the security system of its specialized virtual reality simulator used in military training centers and multinational security firms.Photo by Filip Andrejevic on UnsplashProtecting special combat forcesThe two companies signed a memorandum of understanding (MOU) to develop a blockchain-based security system to be integrated into military training equipment that aims to safeguard the identity and behavioral data of special combat forces. Factor Labs’ security technology and blockchain expertise will be integrated into NS Studio’s military training programs, facilitating safer training sessions.“Given the fact that special combat forces are important assets whose identities are considered national secrets, we want to amp up the security of the simulation programs that keep a record of their identities and behavioral patterns using blockchain technology,” the two companies said in a joint statement.“We have begun developing the necessary technology for this project and are preparing to implement the security program starting in the latter half of this year.”Blockchain’s role in military securityThis collaboration underscores the increasing role of cutting-edge technologies like blockchain in ensuring the security and privacy of sensitive data not just in the financial context but also in military and security contexts. The combined efforts of NS Studio and Factor Labs are poised to contribute to the advancement of secure training simulations for special operations personnel.