Dunamu Loses Lawsuit Seeking $19M in Corporate Tax Refunds After Venture Status Removal

In a recent blog post, Christopher Hui, Hong Kong's Secretary for Financial Services and the Treasury Bureau (FSTB), announced a stringent deadline for unlicensed virtual asset service providers (VASPs) to submit licensing applications, as well as outlining the intention to develop a regulatory framework for over-the-counter (OTC) venues.Photo by Manson Yim on UnsplashUnlicensed VASP deadlineThe Hong Kong government's financial services department has set Feb. 29 as the cutoff date for applications from VASPs that are currently unregistered and unregulated. Those not approved must cease operations by May 31. The move comes as the Securities and Futures Commission (SFC) established a licensing system for VASPs, acknowledging a transitional period for those operating before its implementation. Midway through last year, the SFC issued a stern warning to unlicensed crypto trading platforms engaging in what it termed as “improper practices.” Hui emphasized that VASPs wishing to continue operations in Hong Kong must submit their license applications by the end of this month. Failure to meet the relevant requirements outlined by the SFC could result in the issuance of a "no-deeming notice" for existing service providers. This notice mandates that they must halt operations either by May 31 or three months after receiving the notice. Service providers failing to submit their applications by the February deadline are also expected to cease operations by the end of May. As the deadline approaches, Hui highlighted that the SFC is actively preparing for enforcement work, including issuing notices to disapproved service providers and intensifying publicity efforts. Proposed regulatory framework for OTCsHighlighting the specific role OTC venues played in some fraud cases involving unlicensed VASPs in 2023, Hui announced that the SFC plans to launch a consultation on a proposed regulatory framework for OTC crypto venues. The consultation will encompass virtual-asset outlets, including shops and online platforms. Hui emphasized the necessity of regulating OTC venues to prevent investor deception and protect against fraudulent activities. This move aligns with Hong Kong's ongoing efforts to create a vibrant sector and ecosystem for virtual assets. The city implemented a licensing regime for crypto companies in June of the previous year, with companies requiring approval before June of the current year to continue operations. Cautioning investorsHui also took the opportunity to caution investors about the volatility and value of virtual assets. He stressed that many digital assets lack intrinsic value and exhibit price volatility, urging investors to thoroughly understand details and assess associated risks before engaging in related investments. Furthermore, Hui emphasized that only platforms officially licensed by the SFC should be used for virtual asset transactions. Additionally, Hong Kong is exploring a regulatory regime for stablecoin issuers, proposing that fiat-backed stablecoin issuers obtain a license from the Hong Kong Monetary Authority. As Hong Kong strengthens its regulatory framework, it aims to create a secure and compliant environment for the evolving landscape of virtual assets.  

UAE Starts to Accept Crypto License ApplicationsEarlier this week, the United Arab Emirates (UAE) announced that it has commenced the process of accepting license applications from crypto companies.©Pexels/Andrea PiacquadioThe announcement was made by the Middle Eastern country’s Securities and Commodities Authority (SCA) on Monday. The decision comes in the wake of last year’s UAE Council of Ministers opting to regulate the country’s crypto sector as per Decision №111.VASP approval processAs part of the process, virtual asset service providers (VASPs) are obliged to apply to the SCA for approval with those already licensed within the UAEs financial-free zones not required to undertake the process.When it comes to the individual Emirates of Dubai and Abu Dhabi, both have already implemented their own licensing process relative to crypto service providers. In the case of Dubai, it already has its Virtual Assets Regulatory Authority (VARA) and its procedures have been deemed to be unified with the process now being implemented by the UAE.The SCA suggested that the initiative offers the opportunity for crypto companies to “regularize their status.”Key rulesThe SCA has set out nine articles as part of the process it is asking crypto companies to apply for and sign up to. Article 3 stipulates that VASPs can only trade digital or virtual assets that have been accepted and approved within an official list of virtual assets.Article 4 sets out the tasks and responsibilities of the virtual assets platform operator. It considers the need for integrity, transparency and professional behavior. Service access must be organized through procedures that facilitate access only for permitted persons.Article 5 highlights the obligations of VASPs relative to seven areas. These include operational efficiency and flexibility, and the provision of operational rules. That incorporates the need for the setting and maintenance of operational business rules and meeting operational rules according to a predefined set of standards.The policy sets out the right of the SCA to request provision of documents and data from a VASP and their receipt within a specified time period.Jurisdictional arbitrageThe UAE and particularly its Abu Dhabi and Dubai emirates are demonstrating that they’re open for business where the digital assets sector is concerned. It’s one location that’s on the rise in terms of coming to global prominence in competing for crypto business alongside places like Singapore and Hong Kong.The Biden administration in the United States has shifted policy relative to digital assets to the down side. On Wednesday it emerged that leading US exchange Coinbase has received approval to operate in Bermuda. It’s being speculated that negotiations are also underway in Abu Dhabi to secure a license for the company to trade there.On the day in which Securities and Exchange Commission (SEC) Chair Gary Gensler received a harsh grilling in front of the House Financial Services Committee on Capitol Hill, Coinbase CEO Brian Armstrong confirmed that the company is prepared to move overseas if the regulatory environment doesn’t improve in the United States.Meanwhile, earlier on Thursday, the European Union officially passed its Markets in Crypto-Assets (MiCA) legislation in the European Parliament, providing clarity for the digital assets industry in Europe. In moving forward with crypto licensing, the UAE is jockeying for position among a field of global centers that are vying for crypto business while the US falls behind.

The Stacks Asia DLT Foundation, an organization associated with the Stacks Bitcoin layer-2 network, has become the first Bitcoin-based foundation to establish itself within, and be recognized by, the Abu Dhabi Global Market (ADGM). ADGM is a free zone and international financial centre located on Al Maryah Island within the capital of the United Arab Emirates (UAE). In a press release published on April 28, the foundation set out that it has established itself within the ADGM in an effort to further grow the adoption of the Bitcoin layer-2 network within Asia and the Middle East, while leveraging the positive regulatory environment that has been established by the ADGM with regard to distributed ledger technology (DLT).Photo by Joshua Woroniecki on UnsplashAttracting DLT foundationsThe ADGM has played a significant role in positioning the UAE as a go-to location for crypto startups and projects. The Berlin-based IOTA Foundation, developer of the IOTA DLT project, was among the first to establish a foundation within the ADGM to promote use of its network in the Middle East region back in November 2023.Since then, others have followed. In 2024 DLT foundations were established related to blockchain projects such as Kaia, Aptos and Beam. Last month DeFi protocol project NEOPIN announced that it had established a DLT foundation within the ADGM.  The free zone has proven popular not just among DLT foundations, but among crypto startups too. Projects such as Polygon Labs, Chainlink Labs and TON have established a presence there. Regulatory frameworkThe ADGM has its own regulator, the Financial Services Regulatory Authority (FSRA), and it established a framework for blockchain foundations in 2023. In establishing the Stacks Asia Foundation within the ADGM, the project would have had to register as a DLT Foundation, while meeting all local legal and regulatory requirements.Kyle Ellicott, interim Executive Director of the Stacks Asia DLT Foundation, commented on the development, providing an insight into why the ADGM was chosen:”We chose to establish our presence in ADGM because of its unparalleled commitment to fostering innovation in the blockchain space. Their forward-thinking approach to policy-making aligns perfectly with the Stacks ecosystem’s history of creating pathways for Bitcoin builders.”  Bitcoin programmabilityThe foundation asserts that it will play a “pivotal role” in forging the future of Bitcoin programmability and its adoption in that respect within Asia and the Middle East.  Referring to Bitcoin while speaking at the Abu Dhabi Digital Assets Forum, Ellicott said that “the once sleepy asset, seen only as a store of value, is now yielding with Layer 2s," through Stacks Bitcoin (sBTC), a 1:1 Bitcoin-backed asset hosted on the Stacks blockchain network. Stacks believes that the next wave of growth for Bitcoin will come through Bitcoin layer-2s. The project claims that unlike wrapped Bitcoin (wBTC), sBTC doesn’t rely on centralized intermediaries. The asset has been designed to extend Bitcoin’s utility, enabling Bitcoin-adjacent DeFi applications and smart contracts. While the project highlights the importance of Bitcoin layer-2 going forward, back in February, Stacks co-founder Muneeb Ali forecast that a shakeout of Bitcoin layer-2 projects will occur, with only a handful of such projects surviving over the course of the next three years.