Galaxia Metaverse Joins Hands with MVL Foundation to Expand Blockchain Ecosystems

China’s Crypto Crackdown Reveals Capital Control LoopholesChinese authorities have been stepping up their efforts to crack down on cryptocurrency-related crimes, and with that, uncovering how digital currencies are being used to bypass strict capital controls imposed by Beijing.China may be a few years into a crackdown against the use of cryptocurrencies but despite that, their use and particularly their use for illicit purposes continue. That’s according to a report on Wednesday by the South China Morning Post (SCMP).Photo by Christian Lue on UnsplashCombating capital outflowsThe rising trend of capital outflows has prompted Chinese authorities to take action. Two prominent cases illustrate the extent of these illegal activities and the value of assets seized.In Jingmen, a city in Hubei province, police disclosed details of an online gambling case involving digital currencies used to evade regulation. The case has implicated over 50,000 individuals and a turnover of billions of dollars. Although the specific virtual currency was not mentioned, authorities revealed that they had frozen multiple accounts with a combined value of $160 million.Meanwhile, in Shanxi province, police solved a money laundering case linked to 380 million yuan worth of USDT, the US dollar stablecoin issued by Tether. China’s State Administration of Foreign Exchange is responsible for monitoring cross-border capital flows. Accordingly, it has taken steps to curb these illicit activities. Late last month, it fined ten firms in order to maintain order in the forex market.Digital yuan developmentThese recent cryptocurrency cases have exposed loopholes in China’s capital control system. Crypto mining and trading have long been banned by Chinese regulators. As an alternative, China has been actively developing its own central bank digital currency (CBDC), known as the digital yuan or e-CNY. 2023 has seen a raft of measures taken by various regional administrators throughout China to bring about further e-CNY adoption.However, the ban on cryptocurrencies and the launch of the e-CNY have driven many miners and traders underground or to overseas locations such as Hong Kong, which ironically, is vying to become a cryptocurrency hub. The continued depreciation of the yuan against the US dollar has intensified capital outflow pressures.Chinese bonds sell-offInternationally, fund managers have been selling significant amounts of Chinese securities since 2021. That goes against the current regional trend which sees emerging Asian markets experiencing substantial inflows of funds during the same period, according to the Institute of International Finance.That market activity has been in response to Chinese policies and escalating US-China tensions. An Atlantic Council report highlights that international institutional investors have been net sellers of approximately 1 trillion yuan in Chinese bonds since early 2022.China’s efforts to control capital outflows and stabilize the yuan’s value face ongoing challenges, as cryptocurrency-related crimes persist. While the crackdown exposes weaknesses in the country’s capital control system, it also underscores the difficulty authorities will have globally in trying to control digital currency use.

Japan’s Biggest Bank Explores Global Stablecoin IssuanceMitsubishi UFJ Financial Group Inc. (MUFG), the largest bank in Japan, is currently engaged in discussions with companies involved in popular global stablecoins, as well as other firms, to explore the possibility of issuing these tokens using MUFG’s blockchain platform.That’s according to a report published by Bloomberg on Thursday. The stablecoin law in Japan, which recently went into effect on June 1, has established that only licensed banks, registered money transfer agents, and trust companies within the country are authorized to issue stablecoins.Photo by CoinWire Japan on UnsplashProgmat platformMUFG is actively in talks with various parties regarding the utilization of its blockchain platform, Progmat, to mint stablecoins linked to foreign currencies, including the US dollar, with the intention of facilitating their global use.Tatsuya Saito, the Vice President of Product at MUFG, emphasized that the implementation of the legislation provides issuers and users with a sense of security when it comes to engaging with stablecoins. However, he refrained from disclosing the specific stablecoin parties that MUFG is currently in discussions with.Stablecoins play a pivotal role within the cryptocurrency sector, serving as a reliable asset for investors to hold between trades involving more volatile tokens. These tokens are designed to maintain a consistent value, often pegged to $1, and are typically backed by reserves such as cash and bonds. CoinGecko data indicates that approximately $130 billion worth of stablecoins are presently in circulation.Stablecoin stabilityNevertheless, stablecoins have faced challenges in the past when it comes to maintaining their pegs, resulting in disruptions within crypto markets. Notably, TerraUSD, a token reliant on algorithms and trader incentives, experienced a significant crash in May 2022, leading to losses of at least $40 billion. In response to such incidents, regulators have intensified their scrutiny of stablecoins. The stablecoin law in Japan encourages the issuance of stablecoins that are fully backed by fiat cash in a corresponding currency.MUFG envisions leveraging its Progmat blockchain platform to issue security tokens on behalf of third parties, with no immediate plans to develop its own stablecoin, according to Saito. He further revealed that the bank is actively exploring stablecoin projects with entertainment firms, non-financial businesses, and a consortium of Japanese financial institutions. Furthermore, overseas financial groups have shown keen interest, and Saito believes that Japan has the potential to become a global hub for stablecoin issuance.Tether dominanceTether ($USDT) holds the position of the top global stablecoin, accounting for more than 60% of the sector’s market value, while Circle Internet Financial Ltd.’s USD Coin ($USDC) occupies the second spot. Any party intending to produce stablecoins within Japan would need to comply with the country’s legislation.Saito highlighted that the regulation’s provision allowing stablecoins to be denominated in various currencies, including the US dollar, opens up opportunities for the issuance of tokens intended for global use. He expressed his belief that this presents a significant opportunity for Japan.Prime Minister Fumio Kishida’s economic agenda, known as “New Capitalism,” includes a focus on supporting the growth of Web3 firms. While Japan has taken steps to relax certain cryptocurrency regulations, such as those pertaining to token listing and taxation, it continues to be perceived as a country with relatively strict regulations.

Speaking at the World Economic Forum in Davos, Hong Kong Financial Secretary Paul Chan Mo-po said digital assets should support the real economy, but only within a framework of strong safeguards to protect financial stability, market integrity, and investors.Photo by Ruslan Bardash on UnsplashAccording to the South China Morning Post, Chan addressed a closed-door workshop on Jan. 20, where he highlighted the advantages of digital assets, including greater transparency, improved risk management, and more efficient capital movement. Reviewing milestones in the city’s crypto sector, Chan said that since 2023, Hong Kong has issued three tranches of tokenized green bonds worth a combined $2.1 billion. He also pointed to a Hong Kong Monetary Authority pilot launched last November that enables real-value transactions using tokenized deposits and digital assets. Chan added that the city’s stablecoin licensing regime is progressing, with the first licenses expected in the first quarter. Same risks, same regulationsWhile emphasizing the necessity of financial innovation, Chan highlighted Hong Kong’s regulatory philosophy, which dictates that identical activities posing identical risks must be subject to identical regulations. He explained that this approach is designed to promote healthy, responsible, and sustainable sector development, reiterating that protective measures against financial instability remain mandatory. As Hong Kong officials continue to promote the city’s digital asset push on the international stage, a local industry body has cautioned that proposed licensing frameworks for crypto trading, advisory, and management services may have unintended consequences if rolled out without transitional measures. Industry group calls for grace periodAccording to Cointelegraph, the Hong Kong Securities & Futures Professionals Association (HKSFPA) said in a submission to regulators that existing market participants could be compelled to halt operations under the new rules unless a grace period is provided. The association called for a transitional deeming arrangement of six to 12 months for firms that file licence applications before the regulations formally take effect. No definitive start date has been set for the planned virtual asset regulatory regimes, which remain under consultation. Two days before issuing those comments, the HKSFPA had cautioned that the planned introduction of the Organisation for Economic Co-operation and Development’s (OECD) Crypto Asset Reporting Framework (CARF) and related Common Reporting Standard (CRS) amendments could create new operational and legal risks for local firms. The group said it supported the policy direction in principle but warned that uncapped per-account penalties and open-ended director liability could raise compliance risks, urging regulators to introduce clear caps and legal safeguards. The association also called for lighter requirements for entities with no reportable activity, the development of data file preparation tools from both the industry and the Inland Revenue Department (IRD), and the ability to transfer record-keeping responsibilities to third parties upon dissolution. Elsewhere in the region, Japan implemented the CARF on Jan. 1, 2026. Users of Japanese exchanges must now declare tax residence, while operators are required to submit transaction data—including trading volumes and asset breakdowns—to tax authorities by April 30 of the following year. Data regarding non-resident users is expected to be shared with foreign authorities under international agreements. Other jurisdictions are following suit, with India planning to adopt the framework by 2027.