Malaysia launches operation to clamp down on crypto tax evasion

China Launches Shenzhen Park Centered on CBDC GrowthChina has been relentless in its efforts at fostering the growth of the digital yuan ecosystem, with its latest initiative involving an industrial park in the Luohu district of Shenzhen, adjacent to Hong Kong.Photo by 鸣轩 冷 on UnsplashNurturing the digital yuan ecosystemThe Shenzhen Park initiative has been launched with the district government putting forth a comprehensive set of ten initiatives designed to catalyze the expansion of the Chinese central bank digital currency (CBDC) ecosystem. According to a recent report published by Chinese media outlet China Daily, these initiatives encompass various critical areas, including payment solutions, digital yuan promotion, smart contracts, and the development of secure hard wallets.Several notable companies, including Hengbao, Wuhan Tianyu Information, and Lakala Payment, have already set up their bases in the park. Hengbao and Wuhan Tianyu Information, known for their payment cards, and Lakala Payment, a renowned payment processor with a Visa partnership, are among the pioneers in this ambitious project.Zeng Zhaoxiang, the Executive Deputy Director of Wuhan Tianyu Information, shared his optimism regarding the venture, emphasizing the potential for collaborative efforts to elevate the park’s development trajectory. Such synergies within the industrial chain, he believes, will be instrumental in driving the project’s success.Enticing incentivesOne notable feature of the Shenzhen Park project is the incentives offered to businesses. They can enjoy up to three years of rent-free accommodation. Commercial banks looking to establish operations in this pioneering facility can secure up to 20 million yuan (approximately $2.7 million) in financial support, while startups may be eligible for as much as 50 million yuan.Consequently, the total government backing for this endeavor is estimated at a substantial 100 million yuan. Furthermore, the government is offering favorable loan terms to those interested in being part of the promising venture.Driving adoption beyond ShenzhenThe efforts to promote the digital yuan extend far beyond Shenzhen’s city limits. The e-CNY is currently undergoing rigorous pilot testing in twenty-six cities across China. Impressively, the digital currency has already gained acceptance among 5.6 million merchants. Given the extent of support for CBDC promotion in China from the government, it would be reasonable to expect this figure to rise steadily in the short to medium term.To further enhance the digital yuan’s accessibility, the digital yuan app now includes a feature allowing tourists to top up their wallets using Visa and Mastercard. Despite having reached 261 million digital yuan wallets by 2022, the broader acceptance of this innovative digital currency remains somewhat gradual.International CBDC developmentAlthough the digital yuan is much further along in its development and promotion, the significance of CBDCs is not limited to China alone. Beyond its borders, the focus on CBDCs remains robust, with most central banks having delved to varying extents into exploring the possibility of both retail and wholesale CBDCs.The extent of open projects worldwide right now means that there are too many to mention but recent examples include South Korea’s wholesale CBDC pilot program which was announced earlier this month. Last month it emerged that the central banks of Hong Kong and Kazakhstan were collaborating with the SWIFT financial messaging service in the testing of a CBDC connector.

Chinese Fentanyl Producers Taking Payment in CryptoA report produced by blockchain analytics and crypto compliance solutions firm Elliptic has found that most Chinese suppliers of fentanyl precursors are accepting payments for the illicit material in cryptocurrency.In a blog post published on its website on Tuesday, Elliptic claimed that 90 percent of the 90 China-based firms, from which its researchers received offers of fentanyl precursors, accepted cryptocurrency as a form of payment. The majority of fentanyl which is trafficked into the United States is manufactured using imported fentanyl precursors like the material that the Elliptic researchers were offered.Seventeen of the suppliers even offered to provide fentanyl itself. Others still offered to supply synthetic opioids, equally or more potent than fentanyl, which are currently legal to both produce and supply within China.Photo by Hal Gatewood on UnsplashTracking blockchain transactionsIn tracing back transactions relative to these illicit suppliers, the Elliptic researchers’ analysis demonstrated that the digital asset wallets used by the rogue suppliers have received thousands of payments. The research team has estimated the net worth of those transactions to total $27 million.It appears that a move towards crypto payments is trending with this group of suppliers as there has been a 450% increase year-on-year when it comes to payments for fentanyl precursor using crypto.The study highlighted activity related to Dutch national Alex Peijnenburg. An alleged fentanyl supplier, Peijnenburg, made an $85,000 payment in crypto to one of the ninety fentanyl precursor suppliers identified by Elliptic researchers. In November of last year, the Dutchman was sanctioned by US authorities relative to his activities.Global trade and distributionThe report stated: “During our correspondence, the suppliers showed no concerns about how the chemical would be used, with some explaining that it was their best-selling product and could be used to produce fentanyl.”It went on to state that “others pointedly mentioned that they had sold it to customers in Mexico.” Mexico is a significant location in the global drugs trade, given the activity of drug cartels within the country. One supplier offered an insight to researchers as to the preferences of their nefarious Mexican clients, stating: “They always use USDT or Bitcoin to pay. It is no problem.”While it looks like these nefarious Chinese companies are able to trade into and out of crypto assets, that should be a difficulty for them as China banned the offering of crypto trading services going back a number of years already. Furthermore, foreign digital asset exchanges are prohibited from servicing the needs of Chinese clients where crypto is concerned.Elliptic’s research team uncovered that the majority of the illicit drugs trade suppliers have been using workarounds in order to gain access to overseas digital asset exchanges. The suppliers have used intermediaries in order to convert crypto into Chinese yuan.The report concludes that this part of the international fentanyl trade can be dealt with and “disrupted by the services that act as gateways into and out of crypto assets.” On arriving at that conclusion, Elliptic has acted by notifying the digital asset exchanges that these suppliers are using. “[We] have flagged hundreds of crypto addresses in our tools as being linked to this activity,” the report states.Crypto had infamously been associated with illicit activity on the dark web in its earliest years. It has moved well beyond that although due to its decentralized nature, it’s difficult, if not impossible, to control who utilizes decentralized digital currency.

Incheon Unveils Ambitious Four-Year Plan to Become a Leading Blockchain HubIncheon Metropolitan City, home to the largest international airport in South Korea, revealed on October 16 that it has successfully formulated a four-year comprehensive plan that aims to position Incheon as a blockchain hub and spearhead the digital economy sector. This ambitious strategy is slated from 2024 to 2027. The formulation of this plan was entrusted by Incheon to a third-party entity back in April.Shaping Incheon as a blockchain hub has been one of Mayor Yoo Jeong-bok’s policy objectives. Under his leadership, Incheon is dedicated to fostering an industrial ecosystem that supports the digital economy, with a special emphasis on blockchain technology — an essential component in the Web3 era.Photo by Shubham Dhage on UnsplashStrategic roadmapIncheon has crafted an action plan for the upcoming four years, with the primary aim of transforming itself into a city that promotes public involvement, fosters sustainable development, encourages cutting-edge innovation, provides a favorable environment for businesses, and advances technology.Mainnet launchAs the first step, Incheon will establish a blockchain mainnet in 2024. This infrastructure will serve as the foundation for the development of associated services and will offer citizens firsthand experiences of convenience.Through the construction of blockchain infrastructure, encompassing mainnets and testnets, Incheon strives to simplify the process for companies in need of blockchain technology. Even those without their own technological resources or substantial capital will find it more accessible to develop services utilizing blockchain within the city.Blockchain-based public servicesThe city has also discovered various blockchain-based public services for Incheon residents. One of them is constructing digital wallets that leverage resident identification cards through decentralized identifiers (DIDs). These digital wallets are designed to offer a streamlined, one-stop solution, allowing citizens to conveniently access a wide array of public services. For instance, Incheon residents will have the capability to gain entry to public facilities, access various discounts, make online reservations, and accumulate loyalty points, all through the straightforward authentication provided by these digital wallets.Furthermore, the city is looking to implement blockchain technology in the following public services. The “eco platform” will serve as an integrated system aimed at incentivizing citizens who actively engage in environment-friendly activities. The “volunteer platform” will simplify volunteer work processes, including certification and recognition. The “safety management platform” will ensure transparent and safe operations on construction sites.Incheon also plans to create a cluster for the blockchain industry in the Incheon Free Economic Zone (IFEZ). The plan is to attract a blockchain technology innovation support center in the Songdo area of Incheon to create synergies with local businesses.Support for blockchain startupsThe city seeks to create a support system for blockchain startups, assisting them from their inception to growth and global expansion. Additionally, efforts will be made to build a global cooperation network and attract foreign investment funds to further bolster the blockchain ecosystem.The four-year plan also delves into more specific objectives. Among them are the establishment of a system to nurture blockchain talent, creating a conducive environment for refining governance and policies, and initiating a branding campaign to bolster Incheon’s competitive edge in the global arena.Son Hye-young, who leads the Data Industry Division in Incheon City, emphasized that the four-year plan represents Incheon’s ambitious vision to establish itself as a blockchain technology hub. She also expressed the city’s commitment to actively support the growth of businesses in this sector and to create tangible and beneficial services.The detailed implementation strategy for the master plan will be disclosed at the Global Blockchain Incheon Conference (GBIC) 2023, a two-day event set to commence on October 30 at the Songdo Convensia.