Monthly Active Users of Binance in South Korea Surpasses 230,000

While Pakistan’s Minister of State for Finance and Revenue stated back in 2023 that cryptocurrencies “will never be legalized in Pakistan,” recent events suggest that policy change is now likely.Photo by Hamid Roshaan on UnsplashAttracting foreign direct investmentIn an interview with Bloomberg TV on March 20, Bilal bin Saqib, CEO of the Pakistan Crypto Council (PCC), outlined that the South Asian country plans to move forward towards unbanning cryptocurrency within the country, while establishing a legal framework for such digital assets. The PCC itself was only established in February, with bin Saqib appointed as CEO earlier this month. The role of the PCC is to regulate and integrate blockchain technology and digital assets in Pakistan. The motivation for the proposed change in policy is a desire to attract foreign direct investment into Pakistan. The Trump effectWhen asked “why now,” bin Saqib said that “if [not] now, then never.” Expanding on that theme, he articulated that the return of U.S. President Donald Trump to office combined with his support of cryptocurrency, stands as a “bullish” catalyst for the global development of digital assets. He added: “Trump is essentially flipping the script. Trump signing an executive order instructing regulatory bodies to accommodate digital assets, forming the White House crypto advisory team, creating the U.S. strategic Bitcoin reserve,” . . . “that means that the largest economy in the world is creating it like a valuable national asset.” bin Saqib told Bloomberg that Pakistan is done with sitting on the sidelines and that the country now wants to achieve regulatory clarity on behalf of participants in the crypto sector within the country. He added that there’s a need to establish a legal framework that is pro-business. He added: “We want Pakistan as the leader in blockchain-powered finance, and we want to attract international investment.” Policy u-turnThis new stance on crypto stands in stark contrast to Pakistan’s previous position on cryptocurrencies. The country’s central bank, the State Bank of Pakistan, has warned investors of the risks of dealing in cryptocurrencies on a number of occasions previously, highlighting the fact that no entity is licensed within Pakistan to offer remittance services that implicate crypto tokens.  Earlier this month, bin Saqib outlined that Pakistan is investigating the use of blockchain technology to streamline remittances. The South Asian nation ranks within the top 10 countries in terms of total value remitted each year. At that time, he also confirmed to CoinDesk that Pakistan is exploring real-world asset (RWA) tokenization initiatives.  A report by Chainalysis in 2023 stated that Pakistan is “a world leader in grassroots cryptocurrency adoption.” Wealth preservation was identified as one catalyst for crypto adoption, given that the country has faced high inflation rates in recent years and a devaluation of its sovereign currency. That has led to stablecoins being popular despite a ban being in place on cryptocurrencies all the while. In taking matters forward from this point, bin Saqib said that the PCC is keen to learn from the experiences of jurisdictions such as the United Arab Emirates (UAE), Nigeria, Turkey, Singapore and Hong Kong in determining how best to formulate a pro-business regulatory framework for digital assets in Pakistan. 

The Hong Kong Monetary Authority (HKMA), the Chinese autonomous territory’s central bank, has launched a scheme which subsidizes projects endeavoring to issue tokenized bonds. Grants of up to $321KThe objective behind the initiative, which was announced in a statement published to the HKMA website on Nov. 28, is to nurture moves towards tokenization within Hong Kong’s capital markets. The initiative, titled the Digital Bond Grant Scheme (DBGS), can be accessed by financial services firms for up to two digital bond issuances. The grant may cover up to 50% of what the HKMA describes as “Eligible Expenses” incurred in the process of issuing and establishing the digital bond. A maximum grant level of HK$2.5 million ($321,000) has been established. Digital bond issuers are entitled to the full grant where both basic requirements and additional requirements have been met. A half grant of up to HK$1.25 million ($160,600) has been established for those issuers who have met the basic requirements. The scheme has been opened to applicants from Nov. 28 onwards, with it having been set out to run for an initial period of three years. To fulfill the basic requirements, a bond must be issued in Hong Kong and either be issued on a decentralized ledger technology (DLT) platform, or the project itself must be based in Hong Kong while being involved in the running of a DLT platform.Photo by Fidel Fernando on UnsplashAdditional requirementsThe HKMA has listed four items under additional requirements. These include a need for a digital bond to be issued on a DLT platform run by an entity that is not an associate of the issuer. The bond issuance, whether effected in one instance or in tranches, must account for a value of greater than HK$1 billion ($128.5 million).  The bond must be issued to greater than five investors who are not connected with or associates of the issuer. Finally, the bond must be issued on either the Hong Kong Stock Exchange or a virtual asset trading platform (VATP) licensed and regulated by the Securities and Futures Commission (SFC). Project EvergreenIn 2021, the HKMA launched Project Evergreen, an initiative geared towards exploring how DLT could enhance processes and efficiency within capital markets. On Nov. 28 the HKMA published an update on the project, outlining that since its foundation, tokenization had gained considerable momentum, with $10 billion in tokenized bonds having been issued globally within the last decade. The Hong Kong government carried out two tokenized bond issuances as part of the project. Due to the second issuance being seven times larger than the first one, the HKMA believes that this accounted for institutional investors being attracted to the bond issuance.  In the update, the HKMA outlined that going forward, the plan is to promote wider adoption of what is viable, within the confines of what is possible. The central bank asserted that the DBGS was established on this basis. The update stated: "To fully reap the potential of DLT, we need to keep pushing the boundaries and explore further innovation." In a related development, a report published by the Financial Times on Nov. 28 suggests that the Hong Kong government is considering offering crypto tax breaks to hedge funds and private equity funds.

In a move to enhance the oversight of cross-border wire transfers involving virtual assets, Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, is fortifying the implementation of regulations relative to crypto transfers.Photo by C Bueza on UnsplashTravel rule clarificationsLocal news outlet, the English language newspaper The Philippine Star reported that central bank memorandum 2023-042 provides clarifications on the travel rule for virtual asset service providers (VASPs). The travel rule requires financial institutions to pass on information to the next institution where a transaction takes place. The BSP aims to bring greater clarity to several aspects, including the applicability of the P50,000 transaction threshold and expectations regarding transactions involving jurisdictions without travel rules. Additionally, further interpretation is being provided concerning the extension of the Philippine travel rule to non-custodial VASPs and regulatory expectations surrounding transactions with unhosted wallets or crypto wallets controlled directly by their owners, rather than managed by third-party service providers. FATF compliance ambitionThis regulatory move is in response to the directives from the Paris-based Financial Action Task Force (FATF). In 2021 the Philippines came under greater scrutiny from the intergovernmental organization, when it was included on its "gray list," making it a candidate for increased monitoring. The FATF has called upon the Philippines to establish guidelines for the travel rule to prevent terrorists and criminals from exploiting virtual asset transfers for the unrestricted movement of their assets and to detect and prevent misuse effectively.BSP-supervised financial institutions (BSFIs) are now mandated to scrutinize specific details of virtual asset transfers, including the originator's name, account number used in the transaction, originator's physical address or national identity and the beneficiary's name and account number. International moves towards complianceThis latest move by the Philippine central bank is not unusual. In recent months, a plethora of similarly motivated central banks around the world have tightened up on crypto regulation as it relates to the FATF directives. Being on the FATF's "gray list" is bad for a country’s reputation. It has the potential to result in loss of investor confidence and lead to higher compliance costs and greater monitoring. Additionally, it may have an impact on trade relations and damage a country’s ability to access international finance.  Turkey has also found itself on the organization’s gray list. Working towards repairing that situation, Turkey is in the process of establishing a crypto regulatory framework that will be FATF compliant.In May, Pakistan went a step further in banning cryptocurrency. At the time, its Minister of State for Finance and Revenue, Aisha Ghaus Pasha, stated that the ban had been a requirement for Pakistan’s removal from the FATF gray list. A tightening of crypto regulations has also occurred in the United Arab Emirates (UAE) and in Hong Kong more recently, as those territories work towards ensuring FATF compliance. The BSP emphasizes that transactions not surpassing the P50,000 threshold or its equivalent in foreign currency must include the names and account numbers of both the originator and beneficiary. Both originating and beneficiary VASPs are required to establish and adhere to robust sanction screening procedures, ensuring compliance with sanctions lists and preventing transactions involving sanctioned individuals, entities, or jurisdictions.