Huobi Falls Foul of Malaysian Regulator

In a move aimed at boosting the Web3 sector, the adoption of investment tokens and the enhancement of startup financing, the Thai government recently approved a tax break for individuals holding such tokens.Photo by Nataliya Vaitkevich on PexelsIncentivizing crypto-based fundraisingThe decision, reported by local media as having been made on March 12, signifies a significant step towards incentivizing the use of investment tokens for fundraising purposes. Under the new regulations, capital gains derived from holding investment tokens will be exempt from personal income tax calculations. This exemption applies even if a 15% withholding tax had previously been deducted. The endorsement of this tax break by Thailand's cabinet underscores the government's interest in fostering economic growth and enhancing investment opportunities in the region. Kulaya Tantitemit, Director-General of Thailand's Revenue Department, emphasized the strategic importance of these tax measures, which have been made retrospectively effective from Jan. 1. The initiative is expected to stimulate fundraising activities through investment tokens, injecting vitality into the economy and paving the way for increased investment and job creation. However, it's worth noting that the tax break will only apply to individuals who refrain from seeking full or partial refunds of the deducted tax or claiming a deducted tax credit. Additionally, the government has extended tax incentives to investment token issuers, waiving corporate income tax as announced on March 7.Last month, the Thai Finance Ministry announced the exemption of digital asset trading activity from value-added tax (VAT). The VAT exemption is similarly designed to encourage the use of digital assets as an alternative fundraising mechanism. Potential $3.7B boostDeputy Government Spokesman Rachada Dhnadirek highlighted the significance of this move in diversifying fundraising avenues for firms, complementing traditional methods. The government anticipates that investment tokens will contribute approximately $3.7 billion to the economy over the next two years. While the recent tax break signals a positive step towards fostering a crypto-friendly environment in Thailand, the country's approach to crypto taxation has faced scrutiny from industry stakeholders in the past. Efforts by the Thai Revenue Department to tighten oversight and impose taxes on cryptocurrency trading were met with resistance from industry players concerned about the potential stifling effect on the sector's growth. In January 2022, the government's proposal to impose a 15% capital gains tax on crypto traders drew significant public backlash, leading to its suspension on Feb. 1 of the same year. Despite these challenges, Thailand has demonstrated a willingness to adapt its regulatory framework to accommodate the burgeoning crypto industry. Measures such as exempting traders on authorized exchanges from a 7% value-added tax (VAT) on crypto transactions, announced on March 8, 2022, underscore the government's efforts to create a conducive environment for crypto-related activities. The political backdrop in Thailand more recently is likely to be aiding the country in taking a more progressive stance where crypto is concerned. Last year, the country elected Srettha Thavisin as Prime Minister. In a prior role as CEO of real estate developer Sansiri, Thavisin oversaw the company’s involvement in digital asset-related activities. In January, Thailand’s Securities and Exchange Commission (SEC) removed the investment ceiling imposed on retail investors relative to participation in initial coin offerings (ICOs).

Blockchain Experts Gather at KBW 2023 Side Event to Discuss Future Prospects of South KoreaBlockchain experts from various corners of the industry converged to exchange insights on industrial and technological trends during “Unveiling Prospects in South Korea,” a side event affiliated with Korea Blockchain Week (KBW) 2023. This noteworthy gathering, co-hosted by Sui, Google Cloud, CoinNess, and Bitmain, took place on September 5 at Banyan Tree Club and Spa Seoul.Blockchain compatibility and Web3 adoptionAmong the distinguished speakers at the event, Derik Han, Head of APAC Partnerships at Mysten Labs, the team behind the layer-1 blockchain project SUI, discussed how the SUI project plans to enhance blockchain compatibility through a zero-knowledge (ZK) login feature, similar to single sign-on (SSO). SSO enables users to use a single set of login credentials to gain access to various applications.Han underscored the significance of reducing technical barriers for the widespread adoption of Web3 in our daily lives, and he pointed out that SUI’s ZK login feature would contribute to this goal. Additionally, Han shed light on SUI’s intention to add on-chain features highly favored among Korean gamers.Security tokens and RWAsJo Dong-hyeon, the CEO of Undefined Labs, a developer specializing in on-chain risk rating solutions, emphasized that the Korean decentralized finance (DeFi) market is poised for growth, driven by security tokens and real-world assets (RWAs). He highlighted the significant attention received by the Financial Services Commission’s announcement regarding guidelines for security token offerings (STOs) in February.Jo observed that tokens backed by real-world assets (RWAs) would serve as a bridge between the DeFi space and traditional financial markets, facilitating the development of the former. He also noted that this development would follow the pattern seen in the Korean cryptocurrency market whose liquidity has been supported by young investors.NFT ecosystemsMeanwhile, Kim Min-gu, Head of Web3 Business Development Lab at LG Uplus, a telecom company, expressed their commitment to expanding the Moono NFT ecosystem. This venture, anchored around their octopus character, intends to advance through collaborations with similar NFT projects like Lotte Homeshopping’s pink bear character, Bellygom. Kim highlighted that the company’s primary goal for this year is to make NFTs accessible even to customers who are unfamiliar with cryptocurrencies.Kim further explained that LG Uplus aims to delve into the differences between Web3 NFT communities and their Web2 counterparts. The company’s focus lies in improving the overall usability of its services, without narrowing down its target audience. They are particularly intrigued by the potential of wallets and decentralized applications (dApps) in this pursuit.Banks’ entry into the virtual asset landscapeFollowing this, Leem Min-ho, an analyst at Shinyoung Securities, predicted a strategic expansion by Korean banks, with an emphasis on offering digital asset custody services. This endeavor has been catalyzed by recent developments, including the introduction of security token guidelines in February and the passage of the Virtual Asset User Protection Act in June. These regulatory milestones are gradually shaping a more defined legal framework for virtual assets within South Korea. Leem went on to say that banks, known to favor engaging in business activities within established regulatory boundaries, are poised to concentrate their forthcoming initiatives on approved security tokens, ensuring compliance and adherence to regulatory standards.

South Korea is expected to lift its prohibition on initial coin offerings (ICOs), permitting companies to raise funds through digital token sales for the first time since 2017. The move would mark a reversal of the country’s strict regulatory stance, which was originally implemented to curb speculation and protect investors. Regulators had imposed the blanket ban citing a proliferation of projects with unclear fundamentals, fraud, and a lack of safeguards. Authorities at the time noted that unlike initial public offerings (IPOs)—which price shares based on corporate earnings and growth potential—ICOs lacked established standards for valuing the tokens themselves, making them difficult to assess.Photo by micheile henderson on UnsplashICO limited to qualified issuersAccording to a report by Newsis, the government is preparing to allow token issuance but will restrict eligibility to corporations that meet specific thresholds. Issuers would be required to submit documentation, including white papers, to financial authorities in advance and ensure these materials are available to investors. These requirements are expected to be codified in the Digital Asset Basic Act, a second-phase crypto bill currently under preparation. The report noted that the legislation aims to protect users and mitigate market risks by clearly defining accountability for potential failures. An official from the financial regulator stated that detailed criteria, such as minimum capital requirements, would be outlined in enforcement decrees after the bill is passed. Under the proposed rules, companies would be required to file a disclosure document with financial regulators. The requirement would mirror securities filings, but with a focus on public disclosure rather than regulatory approval. The Financial Services Commission would receive the filings, while the Financial Supervisory Service would examine them. Officials are also discussing measures to hold issuing companies fully liable should problems arise after issuance, reflecting the practical challenges involved in verifying the technical aspects of token projects in advance. The regulatory shift would allow South Korean companies to issue tokens at home instead of routing offerings through jurisdictions such as Singapore or Hong Kong. Until now, Korea-based issuers have typically set up overseas entities to conduct ICOs before seeking listings on domestic exchanges. The change is expected to encourage projects that previously went offshore to return to Korea. An industry official said the return of domestic token issuance would help tech companies raise early-stage funding at home and support the launch of new businesses. The move would also intensify competition among exchanges to attract promising projects, the official said, potentially broadening product offerings and lifting trading volumes. Japan plans ETFs, industry seeks faster rolloutAs South Korea moves to allow token issuance, Japan is also easing digital asset rules, though the industry has flagged the slow pace of change. According to local media reports, Japan’s Financial Services Agency plans to revise rules governing investment trusts to allow the inclusion of digital assets. This change would pave the way for exchange-traded funds (ETFs) tracking spot crypto prices as early as 2028. Asset managers are already preparing for the shift. A Nikkei survey showed that as of last November, major firms, including Nomura Asset Management, SBI Global Asset Management, Daiwa, Asset Management One, Amova, and Mitsubishi UFJ, were considering the development of crypto-related investment trusts. However, the timeline has faced pushback. Tomoya Asakura, chief executive of SBI Global Asset Management, said on X that allowing crypto ETFs only from 2028 would be too slow for a country aiming to position itself as a global asset-management hub. He called for a faster rollout, arguing that such products could help channel household savings into investment.