Paxos scores licensing approval in Abu Dhabi

Further JPEX Controversy Due to DAO PlanDubai-headquartered crypto exchange JPEX, which has recently found itself at the center of controversy in Hong Kong, has moved forward with a plan to transition the platform into a decentralized autonomous organization (DAO).Photo by Clint Adair on UnsplashDisputed voting outcomeThe firm’s management envisages converting user assets into dividend shares, with an incentive to lock them up for two years. While the exchange claims that the majority of its users voted in favor of the plan, some users are alleging that their assets have been converted without their knowledge or consent.The company announced the outcome of its DAO Shareholder Dividend Scheme referendum on its website on Wednesday. According to JPEX, voting on the program concluded on September 28. The company alleges that 68% of users voted to support the proposed scheme.Asset conversionUnder this plan, users can convert their currently frozen assets into DAO Stakeholder dividends at a 1:1 ratio. JPEX also offers a repurchase option at 30% of the conversion price after one year and a 100% repurchase option after two years.In a prior announcement, JPEX stated that users who agreed to the scheme would receive dividends from the exchange through a new token listing, trading fees, and a distribution of JPEX Coin (JPC), the platform’s native token, in proportion to their shareholder dividends.The scheme seems to encourage users to keep their funds on the exchange, which has been grappling with liquidity issues. Previously, the exchange had taken to putting in place unreasonably high withdrawal fees to discourage users from attempting to withdraw their funds from the platform.Ongoing falloutThere has been ongoing fallout from the exchange businesses' difficulties over recent weeks. At first, a number of influencers who had promoted the exchange were arrested. Later, Hong Kong regulators suggested they were giving further scrutiny to crypto trading regulations in light of the scandal.Further arrests were made in connection with the exchange’s activities. Regulators have suggested that they would create a public listing of platforms that are actually regulated within the Chinese autonomous territory and the licensing status of those businesses. On Thursday the South China Morning Post (SCMP) reported that a further six people have been arrested in relation to the scandal, including the company’s CEO.In another report on Wednesday the SCMP had cited one platform user who maintained that her assets had already been converted to JPC tokens without her consent or prior knowledge. She and other users discovered that they could no longer withdraw their assets following JPEX’s announcement to proceed with the plan.“All of my [Tether] USDT and other cryptocurrencies are gone, all transferred to JPC,” she lamented, noting that her assets had been converted to JPC, a token with low liquidity and limited use cases. She expressed concern about the unknown price of JPC and the inability to withdraw, suggesting their assets had become worthless.On Wednesday, Hong Kong’s police and securities regulator jointly launched a crypto-focused task force aimed at combating illicit activities by cryptocurrency exchanges in the region.

Hong Kong’s Securities and Futures Commission (SFC) is gearing up to issue additional crypto exchange licenses before year’s end.  11 applicants under considerationThat’s according to SFC CEO Julia Leung. Leung commented on the matter while speaking with Hong Kong-based online news portal, HK01, on Oct. 7. She stated that 11 companies are considered as applicants for licensing and new progress is expected before the end of the year. Overall, 16 firms have applied for licenses and of these, the regulator is indicating that 11 will likely be awarded licenses at this stage. The 11 firms underwent reviews carried out by the SFC in August to determine and ensure their compliance with the current regulatory framework. The virtual asset service providers (VASPs) inspected included HKbitEX, PantherTrade, Accumulus, DFX Labs, Bixin.com, EX.IO, YAX, WhaleFin and Matrixport HK. Overseas applicants inspected included Crypto.com and Bullish. The regulator’s intention is to work towards an SFC objective of drafting these VASPs into the regulated environment established by the SFC. Leung explained that the SFC intends to award licenses in batches. Those applicants who have already had SFC on-site reviews carried out have been asked by the regulator to rectify issues identified based on the regulators findings. "Applicants who do not meet the requirements will lose their qualifications for licensing, while applicants who meet the requirements will be granted a license conditionally,” Leung told HK01.Photo by Bowen Chin on UnsplashSFC roadmapLeung also told the media outlet that relative to over-the-counter (OTC) crypto services, a new licensing system has been put in place to regulate OTC custody provision. The SFC CEO outlined that the organization’s roadmap for the period 2024 to 2026 incorporates plans to promote the tokenization of real-world assets (RWAs), further advance regulations relative to virtual asset platforms and gain further understanding of Web3 technologies and regional blockchains. Last week the regulator awarded a license to HKVAX, allowing it to join OSL and HashKey as the only fully licensed VASPs in Hong Kong thus far. While Hong Kong has made great strides over the course of the past two years to work towards becoming a regional hub for crypto businesses, it has faced criticism recently for having an overly restrictive regulatory framework.  Regulators felt the need to tighten up regulations in the aftermath of the collapse of the JPEX crypto exchange which implicated fraud and resulted in around 2,600 Hong Kong residents experiencing financial losses in the region of $200 million. The regulatory requirements have resulted in some platforms turning away from attempts to acquire licensing. In May, Gate.io’s local platform Gate.HK ceased operations in Hong Kong, while withdrawing its licensing application.In July HKX followed suit, advising its users to withdraw their funds from the platform, while notifying them that it had withdrawn its application for Type 1 and Type 7 licensing, as well as VASP licensing.

Bitay Ventures into Expanding UAE Crypto MarketTurkey’s Bitay, a cryptocurrency exchange headquartered in Istanbul, has taken the decision to enter the United Arab Emirates (UAE) market.The company announced the development via a press release published on Thursday.Bitay General Manager Niyazi Yilmaz expressed his satisfaction in having made the move, stating: “The UAE provides a stable regulatory environment for crypto exchanges. It will serve as more than just a market for Bitay, it will be our technology base, central to our global blockchain strategy.”Photo by Aldo Loya on UnsplashGovernment-aided kickstartBitay sprang to life in 2018 following the award of a research grant by the Turkish government. The business has been operational in Turkey over the course of the past five years, but took the decision to expand on a global basis in 2021. The upshot of that decision saw the company obtain a Money Services Business (MSB) license in 16 states in the United States. Beyond that, the firm has made efforts to extend its services to customers across Europe, Asia, Africa, and the Americas.Last year, Bitay entered the Indian market, and as part of that process, it established an office in Gurgaon. At that time, the company claimed that India, the Turkic countries, Eastern Europe, the Balkans, and selected countries in the Middle East and North Africa (MENA) were its priority markets.Stablecoin USPThe company feels that it has something additional to offer the UAE market by comparison with other platforms that will provide it with a unique selling proposition (USP). It will also offer AEDD, a stablecoin that is pegged to the UAE's local currency, the United Arab Emirates Dirham (AED). Yilmaz explained: “AEDD is not just a stable coin, but a testament to the investment and trust we place in the UAE’s digital future.”To further bootstrap the launch of the platform within the UAE, Bitay is offering some preliminary incentives to encourage UAE residents to use the service. To that end, it’s launching an “Advantageous 2nd Sales Period” campaign. The offering will incorporate 25% discounts on its native exchange token, accompanied by a yield bonus of up to 30% on USDT-based investments.Native token offeringThe company claims that its native token achieved a 330% surge in value within its first year. That said, exchange tokens have been the subject of controversy more recently. The reliance of failed cryptocurrency exchange FTX on its native FTT token was a key factor in the downfall of the platform in 2022. Similar concerns have been raised with regard to global crypto exchange Binance relative to its native BNB token, albeit that any such assertions remain a matter of speculation.A progressive regulatory approach to virtual assets over the course of the past 12 months in the UAE has seen proponents of digital currency heap praise on the country. It has also led to a number of sizable crypto platforms attaining licensing in Dubai and Abu Dhabi, while others have established offices or headquarters within the UAE.