UAE initiates landmark cross-border digital dirham payment

Ethiopian Investment Holdings, the largest sovereign wealth fund in Africa, has announced the signing of a memorandum of understanding (MoU), which is suspected to involve a deal on Bitcoin mining. Deal uncertaintyTaking to LinkedIn on Feb. 15, the sovereign wealth fund outlined details of a partnership with Data Center Service, a subsidiary of Hong Kong’s West Data Group. Separately, Kal Kassa, CEO of Ethiopian operations at Hashlabs Mining, posted on the X social media platform, outlining that it was a stakeholder in the project and that it involved Bitcoin mining. The matter lacks full confirmation however, given that Kassa subsequently deleted his post while the sovereign fund’s statement falls short of mentioning Bitcoin mining. Once verified, the project would signify a substantial investment of $250 million. It’s understood that the investment would be directed towards the establishment of state-of-the-art infrastructure tailored for data mining and artificial intelligence (AI) training operations within Ethiopia.Photo by Kelly on PexelsExploiting abundant energy resourcesA key component of this venture may involve the setup of Bitcoin mining operations utilizing Canaan Avalon miners. This initiative would align with Ethiopia's broader strategy to capitalize on its abundant energy resources to attract international investment and stimulate economic growth.Ethiopia has about 5,200 MW of installed generation capacity, 90% of it coming from hydropower and the remainder from wind and thermal sources. While the official confirmation from the government is pending, the ambitious project has sparked both excitement and skepticism within the industry. Concerns linger regarding the energy-intensive nature of Bitcoin mining and its potential strain on the local electricity supply, an issue of particular relevance in a nation where energy accessibility remains a pressing challenge for many. Bloomberg reportEarlier this month, a report from Bloomberg highlighted Ethiopia as being a new haven for Chinese crypto miners. Following the imposition of a mining ban in China in 2021, many operations were redeployed overseas. Kazakhstan in particular was a popular choice. The Eurasian country wasn’t prepared for the influx, leading to power blackouts.Hashlabs Mining co-founders Jaran Mellerud and Alen Makhmetov both featured in the article. Mellerud outlined the difficulty, stating:“Firstly, countries can run out of available electricity, leaving no room for miners to expand. Secondly, miners can suddenly be deemed unwelcome by the government and be forced to pack up and leave.”Makhmetov outlined that he had a 10 MW facility in Kazakhstan which still sits idle today as curbs and taxes enforced in Kazakhstan on miners “basically killed the industry.” Despite these difficulties in Kazakhstan and China's official ban on cryptocurrency trading, the legalization of Bitcoin mining in Ethiopia in 2022 has spurred a notable influx of Chinese miners seeking new investment avenues. Ethiopia will need to be mindful of the difficulties experienced in Kazakhstan. With that, the Ethiopian government's move towards regulating cryptographic products, including mining activities, reflects a measured yet optimistic approach towards harnessing the economic potential of Bitcoin mining. This regulatory framework aims to strike a balance between fostering sector growth and safeguarding the country's energy security and environmental commitments.  

Dubai Regulator Suspends BitOasis’ Crypto LicenseDubai’s pioneering cryptocurrency exchange, BitOasis, has had its operating license suspended by the city’s cryptocurrency regulator for failing to meet key conditions within the required timeframes. The Virtual Assets Regulatory Authority (VARA) took enforcement action against BitOasis and initiated a review of the Dubai-based firm.BitOasis was granted a conditional license on April 12, which allowed it to operate on the condition that it met specific requirements within 30 to 60 days. However, the exchange has failed to fulfill these conditions, leading to the suspension of its license. VARA did not disclose the exact nature of the unmet conditions, but it stated that until they are satisfied, BitOasis’ “License for Institutional and Qualified Retail Investors” will remain non-operational.Photo by iridial on UnsplashFirst MVP broker-dealer license holderBitOasis had received the first “minimum viable product operational license” from VARA, enabling it to offer broker-dealer services to qualified institutional and retail investors in Dubai. This license represents a crucial step towards obtaining a full market product (FMP) license, but as of now, no firm has been issued an FMP license by VARA.To become eligible for the FMP license, BitOasis must fulfill the conditions specified in its current license, as outlined by VARA. The regulatory authority has emphasized its commitment to monitoring the situation for compliance remediation.OPNX reprimandThis recent development follows VARA’s reprimand of Su Zhu and Kyle Davies, the co-founders of the now-defunct crypto hedge fund Three Arrows Capital, in April. The duo had operated and promoted their new OPNX crypto exchange in Dubai without the necessary license, catching VARA’s attention.BitOasis addressed the regulatory concerns in a blog post on Tuesday, affirming its collaboration with VARA to meet the remaining conditions for the Operational MVP License. The exchange clarified that the issue with its license does not impact other services provided, such as broker-dealer services for existing retail users. It also took to Twitter on Tuesday to clarify the situation. The company has suspended new user registrations until further notice, presumably as it works towards meeting VARAs licensing requirements.BitOasis stated: “You can continue to use BitOasis with the assurance that your assets are safe, secure, and held at their full value on our platform, and our team will continue to cooperate with the Virtual Asset Regulatory Authority and fulfill all post-operational license terms, as well as working towards a full market product license.”The firm referred to the “unique challenges” that are associated with licensing and suggested that it is determined to address them and to “be a leader in the virtual assets sector.”The suspension of BitOasis’ license highlights the stringent regulatory environment in Dubai’s cryptocurrency sector. VARA is demonstrating that it remains committed to enforcing compliance and ensuring that crypto exchanges meet the necessary requirements. BitOasis must rectify the issues and meet the conditions of its license to regain its operational status and proceed towards obtaining the coveted full market product license in the future.

The Financial Supervisory Commission (FSC) of Taiwan has disclosed its intention to introduce a fresh draft of digital asset regulations for the nation come September 2024. The forthcoming draft bill seeks to establish more robust regulations for digital asset markets, prioritizing investor safety, as announced by Huang Tien-mu, the chairman of FSC. That’s according to a March 4 report by local media outlet, United Daily News (UDN).Photo by Kelly Sikkema on UnsplashAddressing customer protectionIn October, Taiwanese legislators introduced the Virtual Asset Management Bill to parliament, a move aimed at fortifying customer protection and ensuring effective industry supervision. The bill encompasses provisions that could impose fines ranging from two million Taiwanese dollars ($63,000) to 20 million Taiwanese dollars on unlicensed virtual asset service providers (VASPs). Around that time, the authorities had a particular concern with regard to the operation of foreign and offshore VASPs within the Taiwanese market. Like Hong Kong, Taiwan also had seen some negative impact due to the fraudulent activity of the Dubai-based JPEX crypto platform.The FSC has already barred foreign VASPs from operating in Taiwan without requisite approvals from the regulator. These measures were instituted following the establishment of a self-regulatory association by major cryptocurrency exchanges in the country, aiming to foster collaboration with regulators. Stricter regulationsPer the latest report, Chairman Huang Tien-mu outlined the FSC's plan to propose a draft bill targeting virtual currencies in September of the current year. This initiative seeks to bolster investor safeguarding and enhance regulatory oversight over the virtual currency sector. Concern has also been raised relative to native exchanges, in addition to offshore VASPs. In November, an investigation was opened into the Bitgin exchange, amid alleged money laundering activity. Shortly afterwards, another probe was launched into the ACE Exchange, amid allegations of money laundering and fraud. Highlighting the imperative for stricter regulations, Huang underscored the potential fraud risks tied to digital currencies. He issued a stern warning, signaling severe administrative penalties for merchants engaged in fraudulent activities aimed at investors. Moreover, the regulator expressed concerns about the growing interconnection between digital assets and the conventional financial system. He emphasized the need for laws to shield the stability of traditional financial systems from the inherent risks posed by digital assets. Addressing apprehensions regarding the misuse of virtual currencies for fraudulent endeavors, Huang cautioned of stringent administrative penalties awaiting both domestic and foreign currency traders found guilty. ETF considerationsTaiwan's Chamber of Commerce is poised to unveil a study on Bitcoin exchange-traded funds (ETFs) in April. Gao Jingping, Deputy Director of the Securities and Futures Bureau at the Financial Supervisory Commission, indicated Taiwan's contemplation of endorsing spot Bitcoin ETFs under regulatory oversight. However, he advised against investing in foreign crypto-based exchange-traded products. Reports from local media in December suggested that the FSC will closely monitor Bitcoin ETFs to assess their potential and gauge public demand. The FSC intends to release research findings in April, which will influence the fate of Bitcoin ETFs in Taiwan. Positive findings may pave the way for Taiwanese investors to resume acquiring overseas Bitcoin ETFs. This initiative unfolds amid heightened global demand for Bitcoin ETFs, which recently contributed to Bitcoin's surge to almost $69,000.