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The Philippines Forging Crypto Reg. Path US Could Learn FromThe Philippines has demonstrated best practice in operating a sensible regulatory framework relative to cryptocurrency while the United States has erred by engaging in regulation via enforcement while responding after the horse has bolted in relation to a string of crypto company collapses. That’s according to Robert De Guzman, Head of Legal Compliance at Philippines-based cryptocurrency exchange Coins.ph.©Unsplash/C BuezaIn an opinion piece published in Forkcast News on Tuesday, De Guzman lays out his view as to what’s required in terms of regulation, while drawing comparisons between the application of regulation relative to crypto in both jurisdictions.The need for “sensible” regulationDe Guzman believes that the crypto industry’s recent failures are a wake-up call for the whole sector. Losses of billions of dollars affected Celsius Network, BlockFi, Voyager Digital, Genesis, and FTX, and led to Silvergate, Silicon Valley Bank (SVB), and Signature banks’ collapse in a week. To maintain consumers’ trust, he believes that sensible regulation is necessary for the crypto exchanges dealing with digital assets.The legal compliance expert cites the FTX collapse. FTX’s Sam Bankman-Fried’s empire was among the largest collapses. FTX pretended to support regulation, but its true nature was an offshore exchange for global clients. Nonetheless, some businesses act on their regulation support by acquiring licenses and complying with central bank audits in the countries of operation.State-level and industry-level regulationThe crypto industry being open to self regulation is one element of the solution, he says. Regulators must proactively protect their consumers from scams and business failures, not just clean up the mess after millions of people have been harmed.Regulatory failuresDe Guzman points the finger at reactionary regulatory action. Regulators filed charges against crypto industry founders after their collapse. Previously, they missed the problems of the largest companies. FTX, based in the Bahamas, was mismanaged, and American regulators only responded after customer issues. Regulations by enforcement, preferred in several countries, wait for failure to happen before taking action. Over-regulation through enforcement pushes platforms offshore, where Wild West-type environments thrive, with clear consequences.Regulators in some countries focus on surface-level questions, like which tokens should be considered securities, while others, like in the Philippines, prioritize execution-level details to protect consumers. Anti-money laundering measures and custody are core issues, with the G-7’s Financial Action Task Force’s Travel Rule likely to be more strictly applied. Active regulation and audits are needed to ensure financial platforms act responsibly with customer deposits. Basic rules need to be put in place through a licensing regime, followed by regulation of market practices like commingling of assets, self-dealing, and trading against customers.The Philippines sensible approach to regulationThe Coins.ph legal guru holds out his home country as exemplary in terms of its approach to regulation. The Philippines’ regulatory regime requires a virtual asset service provider (VASP) license to operate a crypto exchange, as well as additional licenses for other services. The country’s central bank, BSP, directly regulates all crypto exchanges and expands its crypto regulations to adapt to market needs. KYC processes in the Philippines require recognition of valid ID documents from across 82 provinces.Additionally, the BSP expects the industry to cooperate in quarterly audits where they share balance sheet information and disclose digital assets in hot and cold wallets. Regulators in the Philippines are proactive and knowledgeable about the crypto space, which sets a sensible framework based on customer protection.

Japan's Financial Services Agency (FSA) is proposing new legislation in an effort to prevent the assets of Japanese investors held on crypto exchanges from being transferred overseas. According to local news outlet Jiji Press, the Japanese regulator recently put forward the idea of drafting such a bill. It’s thought that the move suggests that the Japanese regulators have learned from the collapses of cryptocurrency exchanges Mt. Gox and FTX. Photo by Jaison Lin on UnsplashLearning from past failuresWhile Japan already had a higher standard of regulation in place prior to the FTX collapse, likely as a consequence of the authorities having experienced the downfall of Mt. Gox in February 2014, there is still room for improvement.  While funds had been ring-fenced for FTX Japan users, those who accessed services advertised in Japan through the FTX app were deemed to have been accessing a service which fell under an international jurisdiction, denying them the same protections otherwise offered to FTX Japan platform users as a consequence of the regulations that had been put in place. Incorporating a holding orderJapanese media outlet Nikkei described this latest move by the Japanese FSA as follows: “The Financial Services Agency is moving towards creating a new ‘holding order’ in the Payment Services Act, which regulates cryptocurrency exchanges, that will order them not to take domestic assets entrusted to them by customers overseas.” Consequently, the regulator is looking to add this as the latest proposed amendment to the Payment Services Act. Back in September it emerged that amendments to that existing legislation were being looked at with a view towards making it easier for businesses to incorporate digital assets into their service offerings. The regulator has also been mulling over the reclassification of crypto as a financial instrument by amending the Payment Services Act accordingly. Additionally, a more generous tax policy is being proposed. Currently, the Japanese authorities impose a tax rate of up to 55% on cryptocurrency-related revenues. Corporate holders of digital assets have to apply a 30% tax rate, irrespective of income or profits. With that, a 20% tax rate is being considered. The matter became a political issue prior to the East Asian nation’s recent elections, with the leader of the Democratic Party for the People (DPP) backing the application of a 20% crypto tax rate. The application of a holding order has applied previously to companies that have been registered under the Financial Instruments and Exchange Act. This proposed amendment would see it applied to virtual asset trading platforms as part of the Payment Services Act. Guarding against bankruptcy lossesIf applied, the amendment would prevent loss of Japanese investor funds in circumstances where a crypto exchange platform goes into bankruptcy. Legal precedent set in the FTX bankruptcy in the United States means that if a user’s funds go into a non-individually segregated hot wallet belonging to an exchange, any property rights, even if explicitly outlined in the terms of service, are lost.  A company can make a case to go into bankruptcy in any international jurisdiction, which means that this precedent has potential implications for all market participants. The proposed amendment from the Japanese FSA would serve to protect investors from such an eventuality.

As the 2024 F1 season gears up for its launch on March 2, leading NFT marketplace and crypto exchange OKX is set to take center stage by showcasing its logo on McLaren F1 cars.Photo by Jesper Giortz-Behrens on UnsplashThe move, outlined in a recent press release, will see the OKX brand on the side of McLaren’s cars in 20 high profile races. Going beyond a mere branding endeavor, the sponsorship initiative has been put together in an effort to energize the blockchain-centric world of F1, enhancing track-side aesthetics and elevating the visibility of the Web3 company. ‘Stealth Mode’The collaboration will see OKX's branding appear on various elements of McLaren cars, from side pods and rear wings to mirrors, drivers' helmets and team apparel. OKX's logo will be prominently featured during 20 out of the 24 races in the upcoming F1 season. The primary 2024 livery of the vehicle draws inspiration from the OKX-McLaren "Stealth Mode" design showcased during the Singapore and Japan Grand Prix races in 2023. According to Haider Rafique, the Chief Marketing Officer at OKX, the decision to expand the sponsorship deal with McLaren aligns with the increased brand awareness achieved through their partnership. Building upon existing sponsorship dealThe collaboration between McLaren and OKX isn't new. OKX's initial partnership with McLaren commenced in May 2022 as a primary partner to its F1 team and laid the foundation for this continued collaboration. The crypto platform’s livery featured on McLaren MCL60 F1 cars at the Singapore and Japan Grand Prix races in 2023.  Surveys conducted post-event revealed that 80% of attendees expressed interest in learning more about the exchange, indicating a curiosity within McLaren's fan base about Web3 and digital finance. This resonance with the audience aligns with OKX's mission to make the crypto economy accessible to everyone and educate the public about the benefits and opportunities within this space. Looking ahead, Rafique expresses OKX's intent to pursue a long-term partnership with McLaren, emphasizing the value derived from longevity and growth over time. He envisions the McLaren-OKX partnership as potentially spanning decades, fostering generational associations akin to his own fondness for Ayrton Senna and McLaren from his youth. Broader crypto sector marketingThe broader trend of the cryptocurrency sector's increased involvement in F1 is evident, with partnerships like Crypto.com creating NFTs for every lap and Kraken's marketing collaboration with the Williams Formula One racing team. Earlier this month, crypto gambling platform Stake signed a sponsorship deal with the Sauber F1 team. Crypto.com has been a prominent sponsor of Formula 1 since 2021, showcasing its logo at Grand Prix circuits globally and sponsoring the Aston Martin Aramco Cognizant F1 team. The other high profile sports sponsorship forum for crypto businesses appears to be the English Premier League (EPL). In this arena too, OKX has been active, having an ongoing deal in place with Manchester City which it strengthened last year. Singapore-based crypto trading platform BingX recently followed suit, securing a sponsorship deal with Chelsea Football Club.