Japanese Crypto Firm Pafin to Introduce DeFi Asset Management Platform

MAS Offers Guidelines for Banks Handling Crypto-Related ClientsThe Monetary Authority of Singapore (MAS) has released a comprehensive set of guidelines to assist banks in managing clients who are involved in digital assets, such as cryptocurrency exchanges or individuals whose wealth is derived from cryptocurrencies.Photo by Meriç Dağlı on UnsplashIndustry working groupAccording to a report in local media source, The Straits Times, these non-mandatory guidelines, developed by an industry working group, aim to provide best practices for financial institutions to address concerns related to money laundering, terrorism financing, and sanctions risks associated with cryptocurrencies.The working group suggests that enhanced due diligence may be necessary for firms closely connected to facilitating crypto transactions. For instance, conducting site visits or walk-throughs of a client’s anti-money laundering and anti-terrorism financing processes and controls could be required.During the onboarding process, banks should request information documenting the customer’s crypto exposure and the intended usage of the account. Additionally, banks are advised to establish the source of the client’s funds or wealth.To evaluate the regulatory status of a merchant customer’s crypto-related counterparties, especially if they contribute significantly to the merchant’s transactions, banks should conduct thorough assessments.The working group also highlights the use of blockchain screening tools to review the on-chain activity of digital token payment service providers. Regular screening of new and existing wallet addresses owned or controlled by these providers against the sanctions list and designated wallets is also recommended.Comprehensive guidelinesLoretta Yuen, Head of Legal and Compliance at Oversea-Chinese Banking Corp (OCBC), a Singapore-headquartered bank, describes the guidelines as one of the most comprehensive in the world, providing insights into banks’ management of crypto-related money laundering, terrorism financing, and sanctions risks.She believes the guidelines will raise awareness among prospective customers regarding the key risk considerations banks prioritize and enable customers to proactively fulfill banks’ customer due diligence requirements during the onboarding process.Evy Theunis, DBS Bank’s Head of Digital Assets, views the guidelines as a codification of best practices across the industry, aligning with the bank’s existing protocols. United Overseas Bank (UOB) also acknowledges the benefits of the best practice paper, particularly given the diverse range of digital assets with varying levels of risk.Eight participating banksThe working group responsible for developing these guidelines includes representatives from eight banks, MAS, the Commercial Affairs Department, and Big Four audit firm Ernst & Young. Formed in August 2022 under the anti-money laundering and countering the financing of terrorism industry partnership (ACIP), the group aims to identify, assess, and mitigate money laundering and terrorism financing risks in Singapore through a collaborative private-public partnership involving the financial sector, regulators, law enforcement agencies, and other government entities.Singapore is vying to establish itself as a hub for digital asset business in Asia, alongside other centers such as Hong Kong. The Chinese autonomous territory has been making greater progress over the course of the past year.However, a report in The Wall Street Journal on Monday suggests that banking remains a difficulty for crypto businesses in Hong Kong. Hong Kong’s difficulty may be Singapore’s opportunity, given the work that this working group has carried out in smoothing the way for the banking of digital asset-related businesses.

Architecture Metaverse Platform STELSI Attracts Strategic Investment from Nexus OneSTELSI, a blockchain-based metaverse construction project, has announced that it has secured a strategic investment from global crypto asset venture capital firm Nexus One.Bridging architecture and the metaverseSTELSI is a Build-to-Earn (B2E) decentralized metaverse island that provides a realistic and intuitive extended reality (XR) experience where users can design, construct, and manage their own buildings. Built with the 3D creation tool Unreal Engine, it aims to support the seamless application of blockchain technology across various fields of the construction industry, including architectural planning and design, construction, and real estate. The platform also has its own token, STELSI, which users can earn by staking building NFTs.Photo by C Dustin on Unsplash“At STELSI, we are building a metaverse platform that converts the works of architects and artists into digital assets, providing new economic value and creative opportunities that have not been experienced before,” said the platform’s CEO Ryan Shim. “I believe that our efforts to make the traditionally conservative construction industry more flexible appealed to Nexus One as an attractive investment point.”Nexus One professionally invests in blockchain and crypto projects such as Klaytn, PlayDapp, and ProBit. Through its latest investment in STELSI, Nexus One aims to contribute to the development of more diverse content related to architecture, producing economic benefits and creative value within the realms of Web3, construction, and lifestyle.On the other hand, STELSI plans to use this opportunity to expand its services to produce various copyrighted content and foster its ecosystem.Promoting the world of digital artSTELSI had previously hosted the first STELSI Media Art Biennale on its metaverse platform back in June, where the company highlighted the potential of metaverse media art, a budding artistic field. Furthermore, it is consistently striving to promote the value of art through technology, as seen in “One Earth: Art Pia,” a digital art survival show currently streaming on the Korean OTT platform Wavve.The platform is also preparing for a token airdrop event ahead of the launch of its decentralized application (dApp) on October 16.

In an effort to fortify the cryptocurrency market and safeguard investors' funds, the Hong Kong Securities and Futures Commission (SFC) has introduced a minimum insurance requirement of 50% for licensed cryptocurrency exchanges handling customers' assets.Photo by Simon Zhu on UnsplashGuarding against insolvency riskThe move came to light through a statement published recently by OSL, one of Hong Kong’s licensed virtual asset trading platforms. It’s aimed at enhancing security measures, protecting users from potential security breaches or insolvency. As part of that disclosure, OSL announced a two-year partnership with Canopius, an underwriter syndicate associated with Lloyd's of London. Under this collaboration, OSL will provide insurance coverage for an impressive 95% of its users' assets, surpassing the mandated 50%. OSL emphasized its commitment to safeguarding regulated assets under custody, irrespective of the regulatory guidelines permitting virtual asset service providers (VASPs) to reduce insurance coverage to 50%. Response to recent failuresThis decision is grounded in the acknowledgment of the volatile market conditions and the series of cryptocurrency firm collapses witnessed in recent years. 2022 saw a number of high-profile crypto platform collapses, such as the demise of FTX. HashKey Exchange, another licensed crypto exchange in Hong Kong, has also proactively secured its users' assets by entering into a crypto insurance agreement with Hong Kong headquartered fintech firm OneDegree back in September. The insurer entered the digital assets space last July, expanding into the Middle East last month. OneDegree’s arrangement with HashKey offers coverage ranging from $50 million to $400 million, extending beyond standard security breaches and insolvency to include server downtime, data back-up and load management incidents, ensuring comprehensive protection. Broader regulatory effortsThe minimum insurance requirement is part of the SFC's larger strategy to regulate the cryptocurrency industry in Hong Kong. While the Chinese autonomous territory enabled cryptocurrency trading for retail investors in August, only OSL and HashKey have obtained virtual asset trading licenses. Thirteen other entities are currently in the application process, undergoing rigorous due diligence checks, including comprehensive financial audits exceeding the scope beyond proof-of-reserve systems. This insurance mandate represents a significant step toward enhancing investor confidence in the cryptocurrency market. As digital assets gain popularity, ensuring the security of customers' funds has become paramount. The SFC's proactive approach seeks to strike a balance between fostering innovation and safeguarding investors. Products are also emerging that crypto users themselves can access. UK-based CryptoShield offers insurance protection directly to users that covers potential loss of funds on crypto platforms. The cryptocurrency landscape in Hong Kong is evolving rapidly, with the SFC playing a pivotal role in shaping the regulatory environment. Regulators aim to establish a robust framework addressing potential risks and protecting market participants while embracing digital innovation. As the regulatory landscape matures, more licensed crypto exchanges in Hong Kong may be required to meet the 50% minimum insurance requirement, further strengthening security measures and making the market a safer place for investors.