OPNX Makes a Play for Struggling Crypto Lender Hodlnaut

The United Arab Emirates (UAE) is updating its tax policy such that cryptocurrency-related transfers and conversions will be exempt from value-added tax (VAT).  News of the policy change emerged via the UAE’s Federal Tax Authority (FTA), which published an Arabic version of the updated tax code on Oct. 2, followed by the publication of an English version on Oct. 4.Photo by Darcey Beau on UnsplashExemption backdated to 2018British multinational consulting firm PricewaterhouseCoopers (PwC) published a review of the UAE tax code update on Oct. 4. The auditing firm noted that virtual assets are defined within the UAE tax code as a “representation of value that can be digitally traded or converted and can be used for investment purposes.”It noted that Article 42 of the update dealt with the crypto VAT exemption. The firm suggested that entities dealing with crypto should “analyze the impact of the exemption on their (retrospective) VAT position, especially in respect to their input tax recovery,” adding that voluntary disclosures may be required to correct previous tax returns. Additionally, a VAT exemption has been introduced on services extended to fund managers relative to licensed funds. Younis Haji Al Khoori, a UAE Ministry of Finance official, stated that the amendments have been made with a view towards easing the burden on businesses. He stated:“These amendments help minimise misunderstandings, simplify procedures, and ultimately contribute to an improved quality of life for all.”  Crypto-friendlyAbdulla Al Dhaheri, CEO of the Blockchain Center in Abu Dhabi, commented on the development on X, stating:”The UAE, driven by visionary leadership, continues to set the global standard by becoming the number 1 destination for blockchain innovation. With the elimination of VAT on crypto transfers and conversions, the UAE reinforce their commitment to building a world-leading digital economy, attracting the best talent and investment from around the globe.” The UAE, and particularly Dubai and Abu Dhabi, have taken great strides forward in ensuring regulatory clarity for the virtual assets sector over the course of the past two years. Regulatory frameworks have been put in place, leading to many participants in the crypto sector praising the regulatory stance taken within the UAE.  This latest addition has equally being welcomed within the crypto sector. Many crypto sector participants have highlighted it as a wake-up call for other jurisdictions to follow suit or see crypto enterprises move to the UAE.  The Indian authorities, in particular, have an unfavorable tax policy in place relative to digital assets, with a 1% tax deducted at source (TDS) being applied. This latest development in the UAE prompted some to consider if India would learn from the UAE’s example. Earlier this year, the Indonesian tax framework, which subjects crypto assets to both income tax and VAT, was cited as the main reason for a slump in crypto trading. A recently published report by blockchain data platform Chainalysis found that the Middle East & North Africa (MENA) region accounts for 7.5% of crypto trading volume, with the report noting that the UAE, alongside Saudi Arabia, is showing a strong interest in decentralized platforms.

Abu Dhabi Approves M2 for Crypto ServicesM2, a virtual asset firm based within Abu Dhabi Global Market (ADGM) in Abu Dhabi, has received authorization from the Financial Services Regulatory Authority (FSRA) to establish a multilateral crypto trading facility in the United Arab Emirates (UAE) capital.This pivotal development, announced on Wednesday, allows M2 to provide both retail and institutional clients in the region with the capability to engage in activities such as purchasing, selling, and safeguarding digital assets, including Bitcoin.Photo by Jametlene Reskp on Unsplash2023 platform launchScheduled for a launch later in 2023, the M2 platform’s creation has been a year-long process, designed to cultivate trust, security, and integrity within the burgeoning virtual asset landscape. The company’s mission is to empower users with access to the highest level of services, including the ability to transact with cryptocurrencies using fiat currency and tap into derivative and yield offerings.Stefan Kimmil, the CEO of M2, acknowledged the significance of this regulatory milestone:“The process of obtaining the license is the first step on our journey, and we will remain in close dialogue with ADGM to ensure transparency around the custody of client assets.”Kimmil also expressed M2’s commitment to maintaining the high industry standards, as the UAE solidifies its position as a global front-runner in the virtual asset realm.Founded earlier this year, M2 claims to have a depth of credible expertise driving it, with executives having joined the firm from traditional finance giants such as Deutsche Bank, JP Morgan, and Goldman Sachs.Progressive regulationThe FSRA has taken a forward-thinking approach to digital asset regulation, having introduced a comprehensive framework for virtual assets in 2018. This framework has not only attracted numerous major cryptocurrency-focused companies to establish operations within its regulated financial and economic zone but has also fostered the region’s digital asset landscape.ADGM CEO Salem Al Darei underscored the organization’s mission of driving growth and investment opportunities in the virtual asset sector: “We remain committed to enhancing Abu Dhabi’s digital asset landscape and actively supporting the diversification of our thriving economy.”This sentiment is well-aligned with the broader vision of expanding the digital horizons of the UAE. The approval granted to M2 follows in the footsteps of significant advancements in the UAE’s cryptocurrency landscape. In November 2022, cryptocurrency exchange giant Binance secured financial services permission, bolstering its presence in the region.Furthermore, Rain, a prominent cryptocurrency exchange that serves the Middle East and North Africa (MENA), Turkey, and Pakistan, obtained regulatory approval last month to extend virtual asset brokerage and custody services to UAE residents.The emergence of M2’s platform points to the ongoing fostering of a dynamic virtual asset ecosystem that is currently ongoing in Abu Dhabi and the UAE at a national level. As the platform prepares for its forthcoming launch, it’s seeking to usher in a new era of accessibility, sophistication, and opportunity for the growing community of retail and institutional clients seeking to engage with cryptocurrencies in the UAE.

In the Philippines, the Department of Budget and Management (DBM) has introduced an on-chain system utilizing the Ethereum layer-2 network Polygon to notarize and track documentation and the expenditure of public funds. The government contracted Manila-headquartered blockchain technology company BayaniChain Ventures in order to implement the system. The firm took to social media on July 31 to provide details on the DBM Blockchain Project.Photo by GuerrillaBuzz on UnsplashBuilding trust into infrastructureBayaniChain Ventures CEO Paul Soliman outlined that the new system “builds trust into the infrastructure itself.” The DBM Blockchain Project connects a DBM internal platform, the Action Document Releasing System (ADRS), which creates official budget documentation, with the Lumen Blockchain-as-a-Service (BaaS) system created by BayaniChain.  Lumen functions as a core framework, enabling government systems to connect securely with blockchain infrastructure. Consequently, Lumen facilitates the tokenization of government documents, managing access to those documents and publishing data to a portal. A third system, Prismo Protocol, interacts with Lumen and ADRS, determining what documentation should be shared with the public and what documentation should remain accessible exclusively to DBM staff.The upshot of the interaction of these systems is that select budget documentation is published to the Polygon blockchain. Soliman stated that the system provides transparency, enabling members of the public to “see proof, not just promises” with regard to the activity of the government department. Integrating blockchain into public governanceThe Undersecretary at DBM, Maria Francesca Montes Del Rosario, took to Facebook on July 30 to confirm that the DBM blockchain initiative had gone live. She described it as the “first ever Transparency Government Blockchain for immutable and verifiable action documents.” She added: “We are using cutting edge technology like AI, blockchain, satellite imaging to enhance how we do public policy and governance.”Del Rosario was quoted by local media as stating that the technology combats the problem of AI deepfakes and fake documents. Another stakeholder in the development of the system was Exakt IT Services, a local company that specializes in assisting government organizations in the Philippines to bring about digital transformation. Exakt was awarded a contract by DBM to act as a technology partner, supporting the project with technical expertise and infrastructure in order to bring about the implementation of the blockchain solution. BayaniChain’s Soliman believes that the new system “sets a precedent for transparency and accountability in public finance.” However, the timing of the launch of the service proved to be unfortunate, as it coincided with an outage suffered by the Polygon network. The outage, which lasted for one hour, disrupted apps running on Polygon. On X, Polygon CEO and Founder Sandeep Nailwal asserted that the incident didn’t prevent the blockchain from operating or producing blocks and with that, user transactions on the network were still being processed.In better news for the blockchain network, Crypto Analyst Lennaert Snyder reported on July 31 that Polygon has reached a yearly high of $1.2 billion in total value locked (TVL), an 80% increase since March.