Algorand Foundation and DWF Labs Partner for Ecosystem Growth

UAE strengthens regulatory oversight of virtual asset service providersThe Central Bank of the United Arab Emirates (CBUAE) and other relevant authorities in the Middle Eastern country have issued new joint guidance for virtual asset service providers (VASPs) operating within the UAE.Photo by Thomas Drouault on UnsplashPushing back against unlicensed VASPsThese guidelines aim to prevent VASPs from operating without proper licenses in the jurisdiction, demonstrative of the country’s efforts in fighting financial crimes and maintaining the integrity of its financial system.The document outlines the penalties for VASPs operating in the UAE without a valid license. They will face civil and criminal sanctions, including financial penalties against the entity, its owners and senior managers. Moreover, the guidance cautions that licensed financial institutions (LFIs), designated non-financial businesses and professions (DNFBPs) and licensed VASPs that engage with unlicensed VASPs will be subject to law enforcement actions.The National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organizations Committee (NAMLCFTC) is the specific entity responsible for having issued the guidance in conjunction with the central bank.VASP ‘red flags’As part of those guidelines, a list of “red flags” for VASPs has been included. Through reliance on these indicators, it’s hoped that bad acting VASPs can be identified by consumers and other industry stakeholders. The document refers to red flags such as the lack of regulatory licensing, no physical presence in the UAE, pressure being applied by a platform to invest quickly and a lack of regulatory disclosure as items to look out for.Otherwise, the guidance encourages stakeholders to be suspicious of unsolicited contact being employed as a means of operation by a platform, the lack of a record of compliance, poor website and communications and the offer of unrealistic promises.Lastly, the document suggests that people should be observant of any illicit use of virtual currency, the use of fake wallets, engagement in terrorist financing and a lack of consumer protection as red flag items.The new guidance instructs all LFIs, DNFBPs and licensed VASPs to report transactions involving suspicious parties. The guidance also emphasizes that information related to unlicensed virtual asset activities can be reported through whistleblowing mechanisms.Exiting FATF ‘grey list’The release of these guidelines is part of an effort by the UAE to be removed from the Financial Action Task Force’s (FATF) “grey list.” The grey list indicates deficiencies in a country’s anti-money laundering (AML) and counter-terrorist financing (CTF) regimes.Improving control mechanisms relative to crypto has been a theme for several countries who are similarly looking to exit the FATF grey list. Last week, it emerged that Turkey is crafting new regulations governing crypto in an effort towards “grey list” removal. Earlier this year, Pakistan announced a renewed ban on cryptocurrency, as part of its efforts to remain off the grey list it had been listed on over an extended period.The UAE was placed on the FATF’s grey list in March 2022 due to AML and CTF deficiencies. However, the country made a commitment to work with the global watchdog to improve its regulatory frameworks in these areas.

Former FTX COO Finds New Role at Sino GlobalConstance Wang, previously known for her executive roles at FTX, has recently joined crypto venture capital firm Sino Global Capital.That’s according to sources Bloomberg cited in a recent report as being familiar with the matter. Wang held the role of Chief Operating Officer at FTX and was also the Co-Chief Executive Officer of FTX Digital Markets, the affiliate of the now-defunct crypto exchange, which was based in the Bahamas. Her responsibilities at FTX included overseeing global business expansion, token listings, and public relations and marketing.Following the collapse of FTX and its sister trading firm Alameda Research, Wang has reportedly spent a significant amount of time in China, according to an undisclosed source.Sino Global Capital, founded in 2015 by Beijing-based American investor Matthew Graham, had revealed its early investment in FTX after the exchange’s collapse. The management team stems from a background in consulting, Wall Street, private equity, government, and corporate spheres. A year prior, the venture capital firm launched a $200 million fund with FTX as a key investor. Sam Bankman-Fried, the Founder of FTX, expressed gratitude for Sino Global’s support, stating that they believed in the FTX vision from the beginning and assisted in making it a reality.Photo by Henry Kobutra on UnsplashLawsuitGraham was quite public in his support of FTX and Sam Bankman-Fried. He appeared frequently on podcasts, always explaining that the FTX founder was a genius. On investing in FTX and in projects in general, Graham stated repeatedly that Sino Global maintained a high level of due diligence. Most of the leading venture capital investors in FTX (including Sino Global) have been subject to class action lawsuits filed by creditors. It’s claimed that many of these investors didn’t simply invest capital but also got involved in actively marketing what turned out to be a fraud.In January, the court-appointed management team overseeing the FTX bankruptcy proceedings sought permission to subpoena Wang and other former executives of the company. Court filings indicate that Wang has not been accused of any wrongdoing in relation to the collapse of FTX or Alameda.Prior to her tenure at FTX, Wang briefly worked at the crypto exchange Huobi in Singapore as a Business Development Manager. She also spent two years as an analyst at Credit Suisse.New rolesIn recent months, other former FTX employees have also reappeared in new roles. Amy Wu, who left Lightspeed Venture Partners to lead FTX Ventures, announced her joining Menlo Ventures, one of the oldest venture firms in Silicon Valley. Brett Harrison, former President of FTX US until his sudden resignation in September 2022, has founded a startup with plans to provide a “GPT-4-powered trading algorithm code generator.”The transition of Constance Wang and her fellow FTX alumni into new positions at face value seems like a logical progression. However, all of the FTX c-suite executives remain under ongoing scrutiny. Having brought charges against Bankman-Fried, Caroline Ellison, and Nishad Singh some months ago, Southern District of New York (SDNY) Attorney Damian Williams stated clearly that more arrests would follow.

Japan’s Blockchain Group Requests Crypto Tax Revision for Web3 AdoptionThe Japan Blockchain Association (JBA) has submitted a request to the Japanese government to reform the current cryptocurrency tax system, as it believes the existing framework hampers the growth of the Web 3 industry and discourages public engagement with cryptocurrencies. The association believes the tax revision would help position Japan as a leading country in the Web3 industry and boost the nation’s economy through these changes.Photo by Su San Lee on UnsplashGreater tax exemptionLast month, the Japanese National Tax Agency announced that companies would no longer be taxed on unrealized gains from cryptocurrencies they hold, provided they are the issuers of those tokens. While this represents a positive step, the JBA considers it insufficient in fostering Web3 growth. In light of this, the blockchain group urges the government to extend this exemption to also cover holdings of tokens issued by third parties.Separate taxationAdditionally, the JBA proposes a shift in the tax treatment of personal cryptocurrency transactions. It advocates for a separate taxation approach with a fixed tax rate of 20% for individual transactions, including crypto derivatives. This modification is seen as a way to adapt to the increasing prevalence of crypto asset transactions in the emerging Web3 era.Crypto-to-crypto trading tax abolitionUnder the current system, individuals trading crypto assets for other crypto assets are subject to income tax on the profits earned from each transaction. However, with the increasing variety of crypto assets and the growing prominence of crypto asset transactions in the emerging Web3 era, the JBA is advocating for the abolition of income tax on transactions between cryptocurrencies. The complexities involved in taxing such transactions within the evolving Web3 landscape have prompted the group to propose a reevaluation of the taxation approach, seeking a more favorable environment to foster the growth of the crypto industry.Japan has demonstrated its proactive approach in promoting and embracing the Web3 industry. At the annual Japanese Web3 conference, WebX, held in Tokyo last week, Prime Minister Fumio Kishida delivered a video address to mention Web3 as part of “the new form of capitalism,” acknowledging its capacity to stimulate economic growth and tackle societal challenges. Minister Kishida highlighted the Japanese government’s dedication to creating a supportive and conducive environment for the advancement of Web3 projects.