Web3 Offers Potential for Japan to Rediscover its Mojo

Milk Partners Achieves Integration with OK Cashbag, Elevating Reward Point UtilityMilk Partners, the operator behind a South Korean blockchain-powered platform delivering an integrated service for reward points, announced yesterday that its app, MiL.k, has achieved compatibility with OK Cashbag. This integration is notable as OK Cashbag enjoys a substantial presence in the nation, with a user base exceeding 20 million.Photo by Josh Sorenson on PexelsEnhanced utilization of reward pointsThrough this collaborative initiative, MiL.k aims to facilitate enhanced utilization of reward points for customers of both entities.MiL.k allows point collectors to swap their points across diverse domains like travel, leisure, and shopping, introducing a new approach to utilizing reward points. The company has been forging collaborations with notable companies, including conglomerate Lotte, convenience store chain CU, theater franchise Megabox, travel platform Yanolja, Malaysian budget airline AirAsia, and Indonesian loyalty platform GetPlus.Expanding Web3 servicesThe point exchange service is part of a strategic partnership agreement signed by Milk Partners and SK Planet, the operator of OK Cashbag, in June. Beyond loyalty programs, the two companies plan to maintain collaboration efforts to expand Web3 services. In particular, they will cooperate to enhance the ecosystem of the UPTN blockchain, jointly developed by SK Planet and Ava Labs, utilizing Avalanche Subnet technology.Cho Jung-min, CEO of Milk Partners, said that the utility of MiL.k has increased thanks to its partnership with OK Cashbag, whose points are accepted at numerous retailers both online and in-store. He added that the company will explore more partnerships to provide a wider range of tangible benefits to both corporate partners within the MiL.k alliance and app users.

Chinese authorities are gearing up for a significant amendment to the country's anti-money laundering (AML) regulations, with a specific emphasis on cryptocurrency-related transactions. Growing concerns about cryptoThe move, reported by Chinese business and financial news media outlet Jiemian on Wednesday, comes in response to growing concerns among policymakers in China about the need for heightened scrutiny within the burgeoning crypto industry. This marks the first substantial update to China's AML rules since their introduction in 2007. In 2021, China took a decisive step by imposing a comprehensive ban on cryptocurrency use, which included prohibiting offshore exchanges from offering services and putting a stop to all forms of mining. However, despite these restrictions, mainland users have managed to find avenues to access the crypto market. The upcoming amendment to AML regulations aims to introduce more stringent guidelines to address and mitigate these activities effectively. Prime Minister Li Qiang chaired an executive meeting of the State Council on Jan. 22 to deliberate on the revised AML law. The initial draft of the AML regulations was proposed in 2021. The revised version is set to become law by 2025 after being included in the legislative agenda of the State Council for 2023.Photo by Max van den Oetelaar on UnsplashDigital assets not clearly definedUrgency was stressed in addressing cryptocurrency money laundering at the legal level, as the current laws lack a clear definition of digital assets. Although the revised draft includes measures to prevent digital asset money laundering, concerns were raised about the absence of operational guidance on subsequent actions such as asset seizure, freezing, deduction and confiscation in money laundering cases involving digital assets. Experts noted that there is room for improvement in combating digital asset-related money laundering. China's existing AML law is designed not only to deter money laundering but also to protect fiscal order and combat related crimes. As a country with a deep understanding of money laundering and terrorist financing risks, China is not included in the Financial Action Task Force's (FATF) list of AML-deficient countries. However, a 2019 FATF report suggested that China should focus more on addressing the laundering of crime proceeds and expand its resources for national risk assessment. Circumventing the banDespite the formal ban on cryptocurrency circulation and mining by Chinese authorities, there are still avenues for Chinese nationals to access the digital asset ecosystem. BitMEX founder Arthur Hayes recently indicated that wealthy Chinese individuals have access to banking in Hong Kong, serving as the gateway for mainland China to global capital markets, including the cryptocurrency markets. While many crypto miners left the jurisdiction following the ban in 2021, Chinese companies account for a significant proportion of mining equipment manufacturing. Major exchanges like Binance and OKX have Chinese roots, underscoring the nation's influence in the global crypto landscape. Before the cryptocurrency trading ban in China, trading volumes on yuan-denominated crypto exchanges surpassed those of dollar pairs. As China prepares to fortify its AML regulations, the crypto industry awaits further clarity on how these changes will shape the landscape and influence the conduct of cryptocurrency-related activities within the country.  

The Deutsche Bundesbank, Germany’s central bank, has joined Project Guardian, a collaboration established in 2022 between the Monetary Authority of Singapore (MAS) and the financial sector, with an emphasis on the use of asset tokenization to improve liquidity and efficiency within financial markets.Photo by Rachel Davis on UnsplashAssessing DLT technologyIn a press release published on Nov. 8, Bundesbank Executive Board member Burkhard Balz suggested that the central bank is aligned with MAS in that both central banks are interested in determining “how innovative technologies and concepts, such as distributed ledger technology (DLT) or blockchain, can be put to meaningful use in the financial sector.” In joining Project Guardian, the Bundesbank will take part in the Asset & Wealth Management workstream, testing an interoperable blockchain platform for tokenized and digital funds. While the German central bank has just announced details of its participation in Project Guardian, in a speech given at the Layer One Summit, an event which formed part of the Singapore Fintech Festival last week, MAS Deputy Director Leong Sing Chiong welcomed the Bundesbank, alongside the World Bank, to Project Guardian.  The MAS executive clarified that the Deutsche Bundesbank and the World Bank would join the project’s Policymaker Group. He outlined that the role of that group is to “help provide inputs on governance arrangements, guidance on how GL1 [Global Layer One] infrastructures can be developed in line with global standards, and advice on appropriate regulatory guardrails for tokenised asset transactions.” GL1 refers to an initiative that has been established to create the foundational digital infrastructure to facilitate tokenized assets. Cross-border collaborationThrough its involvement in Project Guardian, the German central bank hopes to strengthen cross-border collaboration, while at the same time, progressing matters related to the “standardisation and interoperability of digital assets.” In working towards the goal of standardization, MAS has published two comprehensive reports covering fixed income tokenization and fund tokenization. MAS believes that the use of too many individual private DLT networks is resulting in fragmentation, with a detrimental effect with regard to liquidity. Consequently, the Singaporean central bank is establishing the Guardian Wholesale Network to improve liquidity and achieve asset tokenization at scale. The network will consist of Citi, Schroders, Standard Chartered, UOB and HSBC. Additionally, it was recently announced that SBI Digital Markets, a Singapore-based affiliate company of Japan’s SBI Digital Asset Holdings (SBI DAH), intends to contribute towards greater liquidity through its involvement in a fixed income asset tokenization pilot. Meanwhile, Citi and Fidelity have developed a proof of concept for a digital foreign exchange (FX) swap, enabled within an on-chain money market fund (MMF).  Tokenization inflection pointLeong went on to claim that while nobody has succeeded yet in implementing tokenization at scale, an inflection point has been reached with regard to the use of tokenization. He added that many use cases are promising relative to tokenization but that there is a need for supporting infrastructure “to enable good use cases to scale beyond individual networks.” In the press release, Leong said that the Bundesbank’s expertise “will be invaluable as we work together to enhance liquidity and efficiency of financial markets through asset tokenisation.”