Korean and U.S. regulators to discuss recognizing NFTs as virtual assets in May

While Russia had previously ruled out adding Bitcoin to its national reserves, the latest soundings from officials within the world’s largest country call for the creation of a crypto fund to hold and manage confiscated cryptocurrencies. According to a report published by Russian state-owned news agency TASS, Evgeny Masharov, a member of the Civic Chamber of the Russian Federation, has put forward a proposal for the formation of a special fund that would hold and manage cryptocurrencies that had been confiscated as the proceeds of crime by the Russian authorities.Photo by Artem Beliaikin on UnsplashMasharov told TASS: "Cryptocurrency confiscated in criminal proceedings should work for the benefit of the state. For these purposes, a special fund can be created, on the balance sheet of which these cryptocurrencies would be located, the capitalization of which will significantly increase over time.” In the future, Masharov proposes that the funds could eventually be used for educational, social and environmental projects. Enabling asset confiscationMasharov supported moves to define digital assets as property within the realm of criminal procedure legislation previously. Since 2021, legislation has been proposed to lay out a properly defined framework to enable the confiscation of such assets in criminal cases. As of last month, Russia’s Supreme Court is currently working towards establishing this. The Civic Chamber official expressed his willingness to discuss his proposal with other stakeholders such as crypto industry representatives and officials from Russia’s Federal Taxation Service. If this proposal was to be implemented, it would match a position taken in the U.S. with regard to a Bitcoin reserve. Earlier this month, U.S. President Donald Trump signed an executive order creating a strategic Bitcoin reserve which will be funded mainly by confiscated Bitcoin. Central bank resistanceRussia’s central bank has been largely opposed to the use of cryptocurrencies within Russia in recent years. Last December, central bank governor Elvira Nabiullina stated that the bank had no plans to invest in cryptocurrencies. Earlier that month, Anton Tkachev, a member of Russia’s State Duma, had put forward a proposal to establish a national Bitcoin reserve. With the onset of sanctions as a consequence of the conflict in Ukraine, the Russian government has softened its position with regard to cryptocurrencies. Digital assets such as Bitcoin are now seen as a mechanism to enable cross-border trade and cross-border payments, circumventing the international banking system. It was reported last year that Russia’s central bank had changed course and with that, it was leading efforts to assist Russian companies to use cryptocurrency for international trade, bypassing Western sanctions. Earlier this month, Reuters reported that Russian oil firms are now using leading cryptocurrencies such as Bitcoin, Ethereum and Tether in oil trade deals with their counterparts in China and India. In another development earlier this month, it emerged that the central bank is now allowing a limited level of crypto investment by investors. Faced with sanctions and current geopolitical realities, it’s understood that Russia had been considering the use of Bitcoin for reserve purposes, but for the time being, it has opted to concentrate on adding gold and the Chinese yuan to its sovereign wealth fund. 

Polymesh’s APAC Digital Asset Regulation Report Highlights ChallengesThe project team behind Polymesh, an institutional-grade permissioned blockchain built specifically for regulated assets, released a report on digital asset regulation within the Asia Pacific (APAC) region on Tuesday, highlighting several challenges that regulators are attempting to overcome.In a press release, the company outlined that the report covers recent regulatory developments in South Korea, Singapore, Hong Kong, and the broader APAC region.Photo by Jéan Béller on UnsplashProgressive regulatory effortsRegulators within the APAC region are currently striving to introduce legislation for digital assets, while several centers within the region are vying to establish themselves as hubs for digital asset-related business.The report explores the individual efforts of regulators in various APAC nations as they work towards crafting regulatory frameworks tailored to their jurisdictions. Those efforts encompass implementation, investigation, and enforcement of legislation in a borderless industry.Regulators in South Korea, Singapore, and Hong Kong have all embarked on formulating rules for emerging asset categories, albeit using different terminologies such as “digital assets,” “digital payment tokens,” and “virtual assets.” Their focus lies in striking a balance between consumer protection, market integrity, and industry development.Additionally, all three regulators adhere to the principle of “same activity, same regulations, same risks” when it comes to tokenized securities. They argue that regulatory requirements do not significantly differ solely because a security is in tokenized form. Each state has been actively engaged in local and global activities surrounding security tokens, including state involvement in the advancement of security token technology and cross-border transactions.Main findingsThe report’s main findings emphasize that while regulators in the APAC region are making strides in introducing digital asset legislation, the road ahead will not be without challenges.Legislating a cross-border industry poses difficulties that necessitate harmonization to foster a robust and interconnected ecosystem. Digital assets originating in Asia can be traded globally and vice versa. Merely identifying the asset’s place of origin is no longer sufficient.Although the report delves into the efforts of individual regulators, it emphasizes the need for long-term collaboration to establish a unified vision and practical implementation of regulations for this borderless phenomenon.Regulatory challengesThe regulatory challenges faced by South Korea, Singapore, and Hong Kong in driving the growth of digital assets in the APAC region are multifaceted. They include the intricacies of legislating an inherently cross-border industry. In turn, that can lead to the potential violation of legislation from other jurisdictions.The lack of harmonization among different jurisdictions, and variations in regulatory approaches among the three regulators are likely to be problematic. Furthermore, there are push-pull dynamics between the industry and regulators, with even the regulators themselves not always in agreement.However, despite these challenges, all three regulators have initiated the formulation of rules for new asset categories, with a strong emphasis on safeguarding consumer interests, maintaining market integrity, and fostering industry development.

Sun Flags Unjust Token Profits of Huobi Founder’s BrotherJustin Sun, Founder of the Tron blockchain and stakeholder in Seychelles-based global crypto exchange Huobi, has stated that the younger brother of the founder of the exchange, Li Wei, has received millions of Huobi tokens ($HT) when he shouldn’t have.Taking to Twitter, Sun wrote:“Li Lin’s younger brother Li Wei has repeatedly acquired a large amount of zero-cost HT through abnormal means. He has sold it on the Huobi platform many times in history, and has withdrawn huge amounts of cash”.Negotiating a refund and token burnSun went on to outline the action that he is in favor of taking in unison with decisions taken by the Huobi Global Advisory Committee (HGAC). “In order to protect people’s interests, the [HGAC] and the HT DAO community decided to recover and destroy the HT obtained by Li Wei at zero cost,” he wrote. “The HT destruction will be announced in the HT community. Such behavior will not be condoned,” he added.Sun complained that not only were the tokens wrongly allocated to Li Wei, he had been dumping the tokens on the market, selling them off for fiat money. In addition to the tokens being burnt, Sun says that he alongside the HGAC will “negotiate a refund” by engaging directly with Li Wei relative to the fiat money that he has already extracted through selling off the token.The Tron founder added that he doesn’t think it equitable that Wei should benefit from the token allocation as he hasn’t made any contribution to the Huobi community, stating that “fairness and the importance of rewarding those who genuinely contribute to the growth and development of HT DAO” are important.Double standardsSome in the crypto community would call double standards on Sun’s claims of a lack of fairness. At the time of the collapse of the FTX exchange in November of last year, Sun offered to help, collaborating with FTX’s Sam Bankman Fried to allow assets related to Sun’s crypto projects (TRX, BTT, JST, SUN, and HT) held by FTX customers on the exchange to be traded out of the exchange into external wallets.Trading in these assets recommenced for a time, with the price within the exchange being exorbitant relative to the regular market price outside of FTX. Many FTX customers ended up buying these tokens at excessive prices, without being able to extract them from the exchange like Sun had promised. To cap it off, those customers then had the newly installed FTX Debtor under the guidance of John J. Ray III, record their loss at the time the exchange officially went bankrupt at the normal market price for these tokens.Although originally a China-based exchange, Huobi moved out of the Chinese market due to adverse regulation, re-establishing itself in the Seychelles. The firm maintains offices in South Korea, the United States, Japan, and Hong Kong, where it has had a listing on the Hong Kong Stock Exchange since 2018.The $HT token has proven to be very volatile both in intraday trading on Tuesday and over the course of the past seven days. In both instances, it has hit high points in excess of $3.00 and low points of $2.70. At the time of publication, the token was trading at $2.90.Photo by Ant Rozetsky on Unsplash