Japan’s Blockchain Group Requests Crypto Tax Revision for Web3 Adoption

Leading cryptocurrency exchange platform Bybit has joined a growing list of competing platforms by applying for a Virtual Asset Trading Platform Operator (VATP) license with the Hong Kong Securities and Exchange Commission (SFC). The application, submitted through the Bybit affiliate business entity Spark Fintech Limited on Jan. 31, is currently under review along with 13 similar VATP applications.Photo by Simon Zhu on UnsplashStrategic licensing playIn the dynamic landscape of cryptocurrency regulations, obtaining a VATP license in Hong Kong is a strategic move. Currently, only two crypto exchanges, OSL and HashKey Exchange, are licensed by the SFC in Hong Kong. OSL secured its license on Dec. 15, 2020, while HashKey Exchange was licensed on Nov. 9, 2022. Under a partnership agreement with OSL, Interactive Brokers has been enabled in its ability to commence trading in Hong Kong. Exchanges who have followed through on the license application process include OKX, Gate.io, and KuCoin, among others. It’s not something that is being taken on without these platforms weighing up the long term potential due to the cost implications. It emerged last year that companies were spending up to $25 million in their efforts to obtain licensing in Hong Kong. VATP vs. VASP licensingThe VATP license holds significance as it allows Hong Kong-based firms to cater to retail customers in contrast to the Virtual Asset Service Provider (VASP) license, which restricts companies to serving professional investors. In Hong Kong, investors must have portfolios valued at a minimum of eight million Hong Kong dollars ($1.03 million) to qualify for professional investor status. Hong Kong has positioned itself as a leading destination for crypto companies, particularly in 2023, owing to its favorable regulatory approach compared to mainland China's stringent crackdown on digital assets. The SFC has introduced crypto-oriented regulations, opening doors for both institutional and retail investors to participate in the crypto market. This regulatory environment has contributed to the city-state's emergence as a hub for crypto activities. Dubai-headquartered Bybit's move to seek a VATP license aligns with the growing trend of crypto companies finding a home in Hong Kong. In a statement, Ben Zhou, the founder and CEO of Bybit, emphasized the city's strategic location and established financial infrastructure as ideal for their operations and serving institutional clients across the Asia Pacific region. Institutional offeringAs part of its strategy to grow its institutional customer base, the company revamped its institutional market offering last October. With that institutional business in mind, it has also formed strategic partnerships, including collaborating with Talos, an institutional digital asset trading technology provider, and joining forces with Copper to offer custodial and settlement services for institutional clients through Copper's ClearLoop service. Bybit, launched in 2018 by Zhou, boasts a substantial user base, serving over 22 million registered users in 160 countries globally. Claiming a daily trading volume of $16.53 billion, Bybit holds the fifth-highest score among spot exchanges worldwide and is the second-ranked derivatives exchange, trailing only behind Binance, according to CoinMarketCap data. The exchange has consistently ranked in the top positions for futures and perpetuals trading throughout the last calendar year.   

CoinGecko expands data offering through Zash acquisitionCoinGecko, the Malaysian crypto data aggregator, has intensified its focus on the non-fungible token (NFT) market through the recent acquisition of London-headquartered Zash. The move forms part of CoinGecko’s initiative to enhance its API offering by providing comprehensive data on digital collectibles.Photo by Andrey Metelev on UnsplashSolving for crypto data fragmentationIn a statement published to its website on Wednesday, CoinGecko provided further details on its acquisition of the enterprise-grade NFT and blockchain analytics company. Separately CoinGecko Co-Founder Bobby Ong told Tech in Asia that the crypto data sector is fragmented. As a consequence, it leads to inefficiency as market participants are forced to navigate multiple crypto data APIs. It’s in an effort to solve that issue that Ong and CoinGecko have moved to acquire Zash.Zash Co-Founder and CEO Parit Patel expressed optimism about the evolving nature of NFTs and their potential to unlock new use cases globally, creating value for both companies and consumers. The company plans to introduce new services derived from the acquisition by the second quarter of 2024.Enriched data offeringIn its own statement, CoinGecko emphasized its commitment to offering more NFT-related metrics. The acquisition aims to enrich CoinGecko’s data offerings with information such as metadata, historical trades and lending data related to NFTs. The specific financial details of the deal were not disclosed.With the integration of Zash, users can expect access to a broader range of data across multiple blockchain networks, including Ethereum, Polygon, BNB Chain (formerly Binance Smart Chain), Bitcoin Ordinals and Solana. The extended services will cover NFT lending information indexing various marketplaces, such as Blend, X2Y2 and NFTfi.In reflecting on the acquisition, CoinGecko Co-Founder TM Lee considered the move in terms of the ongoing process of asset tokenization. Taking to the X platform, Lee wrote:“Any asset that can be tokenized, will be tokenized. Like tokens, NFT is a core primitive to the crypto economy stack. We’ve been building http://coingecko.com/nft earlier even in the bear market and I’m excited on possibilities within the NFT industry with @zash_api joining us!”Monitoring wash tradingOne notable feature introduced through Zash is the ability for users to monitor wash trading, an illegal form of market manipulation that gives the false impression of market activity. CoinGecko clarified that this feature would be available for “major collections” minted on Ethereum.Wash trading, involving the simultaneous buying and selling of assets, has been associated with the NFT bubble of 2022. Blockchain forensic firm Chainalysis reported that over 100 profitable wash traders collectively earned nearly $9 million from this activity. However, it noted that the majority of NFT wash traders have been unprofitable, resulting in losses exceeding $416,984 from more than 150 wash trades.While the NFT market has faced challenges, with total sales currently at $80.8 million, significantly lower than the peak in August 2021 when daily sales exceeded $2 billion, CoinGecko’s strategic move positions the company to provide users with enhanced tools for assessing and ranking their cryptocurrency holdings. Established in 2014, CoinGecko operates as a platform offering comprehensive data and information on digital currencies, contributing to the quantitative evaluation of cryptocurrency portfolios.

The Securities and Exchange Commission (SEC) in Thailand has made a significant adjustment to the rules governing digital token investments. The SEC has decided to eliminate the investment ceiling previously imposed on retail investors participating in initial coin offerings (ICOs) tied to real estate and infrastructure.Photo by Colton Duke on UnsplashFostering digital economy growth and developmentThe announcement, specifying the revised criteria, was officially published in the Royal Gazette, with the measure taking effect on Tuesday. This move allows retail investors greater access to ICOs involving tokens backed by real estate or linked to real estate revenues. The SEC emphasized that, in addition to ensuring appropriate investor protection, its role extends to encouraging the utilization of technology and innovation in fundraising. The objective is to foster sustainable growth in the capital market and support the development of the digital economy. Prior to this adjustment, retail investors faced a restriction of a 300,000 baht ($8,450) investment limit per offering concerning digital tokens backed by infrastructure or real estate. The SEC's decision to remove this limitation aligns with the goal of managing product risks effectively while promoting a more inclusive environment for retail investors in the realm of digital token investments. Facilitating custodial walletsFurthermore, the SEC is currently undertaking a review of criteria to facilitate the establishment of custodial wallet provider businesses for digital asset operators with common major shareholders. This initiative aims to enhance the regulatory framework and provide guidelines for businesses involved in digital asset storage. Custodial wallets will be permitted in Thailand if operated by publicly traded companies with experience in digital asset storage. All Thai citizens will have a touch point with digital wallets shortly under a government program, a $14 billion digital handout scheme, which has been approved to distribute digital currency to the public through digital wallets. DASP approvalsAs part of its supervisory role, the SEC will also be responsible for granting permissions to digital asset service providers (DASPs) to expand into new business lines. Digital asset operators seeking to diversify their operations are required to obtain approval from the SEC before proceeding. This measure is intended to ensure the effective oversight of such businesses and maintain the credibility of the digital asset industry by preventing illegal operations. It’s likely no coincidence that tokenized real estate is being embraced in Thailand, given the background of Thailand’s recently installed Prime Minister, Srettha Thavisin. In 2021, Thavisin’s company played a role in funding crypto-friendly investment management firm XSpring Capital to the tune of $225 million. His firm also introduced a real estate-backed ICO in conjunction with XSpring. While Thailand’s SEC is moving forward with tokenized real estate, it doesn’t feel the same way about exchange-traded funds (ETFs). In the wake of the recent approval of spot bitcoin ETFs in the United States, the Thai SEC responded by stating that it currently has no plans to allow asset managers to launch similar products within the Thai market.