Japanese Startup Drives Asian Digital Payment Network Initiative

Chinese Prosecutors Issue Warning on NFTsIn recent days, China’s top procuratorial agency, the Supreme People’s Procuratorate of China, issued a warning alongside some guidelines on non-fungible tokens (NFTs).The Supreme People’s Procuratorate is the highest office in China charged with the mandate of upholding legal integrity, safeguarding citizens’ rights, and where necessary, conducting criminal investigations. In a statement published on Monday, the agency set out an advisory, together with additional recommendations, pertaining to NFTs.Photo by Markus Winkler on PexelsNFT status in ChinaWhile all and sundry are aware of a multi-year crack-down by the Chinese authorities on crypto in recent times, exemplified by a ban on crypto trading and the operation of crypto mining facilities within the country’s borders, the status of NFTs has been discussed to a much lesser degree.NFTs remain legal within the country. When the crypto trading ban came into play in 2021, much of the local industry connected with that trading activity disappeared. However, in its place, a newly emergent trend came to the fore in the form of NFTs. With cryptocurrencies perceived as being high risk and sanctioned by the authorities, attention turned to NFTs and there has been a surge of adoption of the digital collectibles within China as a consequence.NFT risksThe procuratorial agency highlighted a number of attributes as well as risks in relation to NFTs in the report that it published. The agency finds the issue of ownership of NFTs as a troublesome one. It cites the fact that NFTs can be replicated and distributed at will on this basis as being particularly problematic. The legitimacy of the right source of the work itself is the decisive factor for the healthy and orderly development of digital works NFT transactions,” it states.It appears that the agency, like many in traditional professional circles before them, have a difficulty recognizing the model of asset ownership that NFTs incorporate. That ownership is not defined by civil law or in accordance with centralized systems but by simply the possession of the requisite private key pertaining to a given NFT within a decentralized system.Blockchain, not cryptoThe agency acknowledged that NFTs do present a novel application of blockchain technology. This is not surprising as while there might be an ongoing clampdown on decentralized cryptocurrencies in China, officials at a national level and in numerous instances within regional administrations, are demonstrating a strategy of leveraging blockchain technology for the betterment of the Chinese economy in the future.Public prosecutor Wang Xia-fen, one of the authors of the report, stated: “It’s widely recognized that digital collectibles have the potential to protect intellectual property rights, boost content creation and enrich the digital economy.” Wang encouraged public prosecutors to “find the distinction between real innovation and criminal activities” where NFTs are concerned.The upshot of its report though, is that the procuratorial agency is uncomfortable with the similarity of many of the attributes of NFTs when compared with decentralized cryptocurrencies. It issued a warning on that basis, emphasizing a need for risk assessment to be carried out and further consideration of the legal risks that are implicated.

South Korea is expected to lift its prohibition on initial coin offerings (ICOs), permitting companies to raise funds through digital token sales for the first time since 2017. The move would mark a reversal of the country’s strict regulatory stance, which was originally implemented to curb speculation and protect investors. Regulators had imposed the blanket ban citing a proliferation of projects with unclear fundamentals, fraud, and a lack of safeguards. Authorities at the time noted that unlike initial public offerings (IPOs)—which price shares based on corporate earnings and growth potential—ICOs lacked established standards for valuing the tokens themselves, making them difficult to assess.Photo by micheile henderson on UnsplashICO limited to qualified issuersAccording to a report by Newsis, the government is preparing to allow token issuance but will restrict eligibility to corporations that meet specific thresholds. Issuers would be required to submit documentation, including white papers, to financial authorities in advance and ensure these materials are available to investors. These requirements are expected to be codified in the Digital Asset Basic Act, a second-phase crypto bill currently under preparation. The report noted that the legislation aims to protect users and mitigate market risks by clearly defining accountability for potential failures. An official from the financial regulator stated that detailed criteria, such as minimum capital requirements, would be outlined in enforcement decrees after the bill is passed. Under the proposed rules, companies would be required to file a disclosure document with financial regulators. The requirement would mirror securities filings, but with a focus on public disclosure rather than regulatory approval. The Financial Services Commission would receive the filings, while the Financial Supervisory Service would examine them. Officials are also discussing measures to hold issuing companies fully liable should problems arise after issuance, reflecting the practical challenges involved in verifying the technical aspects of token projects in advance. The regulatory shift would allow South Korean companies to issue tokens at home instead of routing offerings through jurisdictions such as Singapore or Hong Kong. Until now, Korea-based issuers have typically set up overseas entities to conduct ICOs before seeking listings on domestic exchanges. The change is expected to encourage projects that previously went offshore to return to Korea. An industry official said the return of domestic token issuance would help tech companies raise early-stage funding at home and support the launch of new businesses. The move would also intensify competition among exchanges to attract promising projects, the official said, potentially broadening product offerings and lifting trading volumes. Japan plans ETFs, industry seeks faster rolloutAs South Korea moves to allow token issuance, Japan is also easing digital asset rules, though the industry has flagged the slow pace of change. According to local media reports, Japan’s Financial Services Agency plans to revise rules governing investment trusts to allow the inclusion of digital assets. This change would pave the way for exchange-traded funds (ETFs) tracking spot crypto prices as early as 2028. Asset managers are already preparing for the shift. A Nikkei survey showed that as of last November, major firms, including Nomura Asset Management, SBI Global Asset Management, Daiwa, Asset Management One, Amova, and Mitsubishi UFJ, were considering the development of crypto-related investment trusts. However, the timeline has faced pushback. Tomoya Asakura, chief executive of SBI Global Asset Management, said on X that allowing crypto ETFs only from 2028 would be too slow for a country aiming to position itself as a global asset-management hub. He called for a faster rollout, arguing that such products could help channel household savings into investment. 

Paxos gets green light from Singapore regulator for USD stablecoinPaxos, a regulated crypto infrastructure company, has announced that it has received in-principle approval from the Monetary Authority of Singapore (MAS) for its new subsidiary, Paxos Digital Singapore Pte. Ltd.The company outlined in a press release that it published on Thursday that the new entity will be able to offer digital payment token services and issue a USD-backed stablecoin in compliance with Singapore’s upcoming stablecoin laws. Stablecoins are digital tokens that are pegged to the value of fiat currencies or other assets and are designed to minimize price volatility.Photo by Carlos Alberto Gómez Iñiguez on UnsplashRegulatory framework for stablecoinsThe MAS moved to finalize its regulation of stablecoins within the city-state in August. That regulation insists on stablecoin issuers holding reserve backing for a stablecoin in low risk, highly liquid assets. The regulator also puts an onus on the issuer to provide appropriate disclosures including audit results and to process redemption requests within five business days.According to Paxos, there is a strong global demand for the U.S. dollar, but it remains challenging for consumers outside the U.S. to access dollars securely, reliably and under regulatory protections. The in-principle approval from the MAS will enable Paxos to bring its regulated platform to more users around the world.The recently finalized stablecoin regulatory framework will apply to non-bank issued tokens that are linked to the Singapore dollar or G10 currencies, such as the euro, British pound and U.S. dollar. Additionally, it applies to stablecoins whose circulation exceeds five million Singapore dollars ($3.7 million). The framework aims to ensure that stablecoins are subject to appropriate governance, risk management, disclosure and consumer protection standards.Partnering with enterprise clientsPaxos said that once it receives full approval from the MAS, it will be able to partner with enterprise clients to issue the USD stablecoin in Singapore. Paxos already has experience in issuing stablecoins, such as the Paxos Standard (PAX) and the PayPal USD Coin (PYUSD), which are both backed by the U.S. dollar and cash equivalents. Paxos also issues monthly attestations and reserve reports to verify its compliance and transparency.Responding to this latest development, Paxos Head of Strategy, Walter Hessert, stated:“Global demand for the US dollar has never been stronger, yet it remains difficult for consumers outside the US to get dollars safely, reliably and under regulatory protections. This in-principle approval from the MAS will allow Paxos to bring its regulated platform to more users around the world. Because Paxos upholds the highest standards of compliance and oversight, global enterprises partner with us to power stablecoin solutions that drive their businesses and respond to their customers’ needs.”Paxos previously issued the Binance USD (BUSD) stablecoin, but was ordered by the New York Department of Financial Services (NYDFS) to stop issuing the token after the agency declared the stablecoin an unregistered security.The partnership between Paxos and the MAS is a significant step in bridging the gap between traditional finance and the emerging crypto industry. As more institutional clients seek exposure to digital assets, it becomes essential to provide them with secure and reliable solutions that meet their specific requirements.