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Abu Dhabi Approves M2 for Crypto ServicesM2, a virtual asset firm based within Abu Dhabi Global Market (ADGM) in Abu Dhabi, has received authorization from the Financial Services Regulatory Authority (FSRA) to establish a multilateral crypto trading facility in the United Arab Emirates (UAE) capital.This pivotal development, announced on Wednesday, allows M2 to provide both retail and institutional clients in the region with the capability to engage in activities such as purchasing, selling, and safeguarding digital assets, including Bitcoin.Photo by Jametlene Reskp on Unsplash2023 platform launchScheduled for a launch later in 2023, the M2 platform’s creation has been a year-long process, designed to cultivate trust, security, and integrity within the burgeoning virtual asset landscape. The company’s mission is to empower users with access to the highest level of services, including the ability to transact with cryptocurrencies using fiat currency and tap into derivative and yield offerings.Stefan Kimmil, the CEO of M2, acknowledged the significance of this regulatory milestone:“The process of obtaining the license is the first step on our journey, and we will remain in close dialogue with ADGM to ensure transparency around the custody of client assets.”Kimmil also expressed M2’s commitment to maintaining the high industry standards, as the UAE solidifies its position as a global front-runner in the virtual asset realm.Founded earlier this year, M2 claims to have a depth of credible expertise driving it, with executives having joined the firm from traditional finance giants such as Deutsche Bank, JP Morgan, and Goldman Sachs.Progressive regulationThe FSRA has taken a forward-thinking approach to digital asset regulation, having introduced a comprehensive framework for virtual assets in 2018. This framework has not only attracted numerous major cryptocurrency-focused companies to establish operations within its regulated financial and economic zone but has also fostered the region’s digital asset landscape.ADGM CEO Salem Al Darei underscored the organization’s mission of driving growth and investment opportunities in the virtual asset sector: “We remain committed to enhancing Abu Dhabi’s digital asset landscape and actively supporting the diversification of our thriving economy.”This sentiment is well-aligned with the broader vision of expanding the digital horizons of the UAE. The approval granted to M2 follows in the footsteps of significant advancements in the UAE’s cryptocurrency landscape. In November 2022, cryptocurrency exchange giant Binance secured financial services permission, bolstering its presence in the region.Furthermore, Rain, a prominent cryptocurrency exchange that serves the Middle East and North Africa (MENA), Turkey, and Pakistan, obtained regulatory approval last month to extend virtual asset brokerage and custody services to UAE residents.The emergence of M2’s platform points to the ongoing fostering of a dynamic virtual asset ecosystem that is currently ongoing in Abu Dhabi and the UAE at a national level. As the platform prepares for its forthcoming launch, it’s seeking to usher in a new era of accessibility, sophistication, and opportunity for the growing community of retail and institutional clients seeking to engage with cryptocurrencies in the UAE.

China’s Crypto Crackdown Reveals Capital Control LoopholesChinese authorities have been stepping up their efforts to crack down on cryptocurrency-related crimes, and with that, uncovering how digital currencies are being used to bypass strict capital controls imposed by Beijing.China may be a few years into a crackdown against the use of cryptocurrencies but despite that, their use and particularly their use for illicit purposes continue. That’s according to a report on Wednesday by the South China Morning Post (SCMP).Photo by Christian Lue on UnsplashCombating capital outflowsThe rising trend of capital outflows has prompted Chinese authorities to take action. Two prominent cases illustrate the extent of these illegal activities and the value of assets seized.In Jingmen, a city in Hubei province, police disclosed details of an online gambling case involving digital currencies used to evade regulation. The case has implicated over 50,000 individuals and a turnover of billions of dollars. Although the specific virtual currency was not mentioned, authorities revealed that they had frozen multiple accounts with a combined value of $160 million.Meanwhile, in Shanxi province, police solved a money laundering case linked to 380 million yuan worth of USDT, the US dollar stablecoin issued by Tether. China’s State Administration of Foreign Exchange is responsible for monitoring cross-border capital flows. Accordingly, it has taken steps to curb these illicit activities. Late last month, it fined ten firms in order to maintain order in the forex market.Digital yuan developmentThese recent cryptocurrency cases have exposed loopholes in China’s capital control system. Crypto mining and trading have long been banned by Chinese regulators. As an alternative, China has been actively developing its own central bank digital currency (CBDC), known as the digital yuan or e-CNY. 2023 has seen a raft of measures taken by various regional administrators throughout China to bring about further e-CNY adoption.However, the ban on cryptocurrencies and the launch of the e-CNY have driven many miners and traders underground or to overseas locations such as Hong Kong, which ironically, is vying to become a cryptocurrency hub. The continued depreciation of the yuan against the US dollar has intensified capital outflow pressures.Chinese bonds sell-offInternationally, fund managers have been selling significant amounts of Chinese securities since 2021. That goes against the current regional trend which sees emerging Asian markets experiencing substantial inflows of funds during the same period, according to the Institute of International Finance.That market activity has been in response to Chinese policies and escalating US-China tensions. An Atlantic Council report highlights that international institutional investors have been net sellers of approximately 1 trillion yuan in Chinese bonds since early 2022.China’s efforts to control capital outflows and stabilize the yuan’s value face ongoing challenges, as cryptocurrency-related crimes persist. While the crackdown exposes weaknesses in the country’s capital control system, it also underscores the difficulty authorities will have globally in trying to control digital currency use.

Suspects emerge in Taiwan in ongoing JPEX scandal falloutIn the ongoing saga surrounding the collapse of Dubai-headquartered cryptocurrency exchange JPEX, Taiwanese prosecutors have identified new suspects, marking a significant development in the case.The Taipei District Prosecutors Office (TDPO) has requested the custody of Chang Tung-ying, chief partner at JPEX’s Taiwan office, over allegations of fraud. That’s according to a report by local TV channel TVBS News on Thursday.Photo by Ricky Zeng on UnsplashMoney laundering and Banking Act violationsThis latest development brings a new twist to the scandal, which has largely been playing out in the Chinese territory of Hong Kong. The TDPO reportedly conducted searches at nine locations linked to the JPEX investigation. Chang, along with three other individuals, including JPEX lecturer Shih Yu-sheng (also known as Shi Yu), was summoned by the authorities. Chang and Shih are being investigated for violations of the Banking Act and the Money Laundering Control Act.During the investigation, JPEX salespersons Liu Chien-fu and Niu Keng-sheng were released, with Liu being granted bail of 50,000 New Taiwan dollars ($1,550). Niu, the registered person in charge of JPEX Taiwan, was released after questioning.Celebrity promoter focusThe report also revealed that Nine Chen, a Taiwanese celebrity and singer who previously served as a brand ambassador for JPEX, was summoned by prosecutors. He has cooperated with law enforcement in the role of a witness to the alleged fraud who has testified to illicit activity carried out by the platform. However, it is now understood that recent events have developed such that Chen is now being treated as a defendant.This action resonates with actions taken by the authorities in Hong Kong some weeks ago in the earlier stages of investigation into this affair. In September, one of the first actions taken by Hong Kong law enforcement was the arrest and detention of social media influencer and former lawyer Joseph Lam, known to followers as “Jolamchok” on the Instagram platform.Alleged liquidity crisisJPEX, once a successful crypto exchange, abruptly halted some services in mid-September, citing a liquidity crisis triggered by alleged “unfair treatment” from institutions in Hong Kong. The sudden implosion led to accusations of misleading investors regarding the application for a crypto trading license and other issues.The scandal surrounding JPEX has escalated into a major industry concern, prompting investigations by Hong Kong authorities. Over 2,000 complaints from JPEX users, reporting losses of nearly $180 million, have triggered significant regulatory attention.As investigations progressed in Hong Kong, the authorities took the decision to block access to the platform, with the platform responding by advising customers to circumvent this restriction through the use of a virtual private network (VPN).As of September 25, law enforcement has arrested at least 11 alleged suspects in the JPEX case, while the alleged masterminds remain at large. At that time, Hong Kong’s Securities and Futures Commission (SFC) pledged to renew its efforts to combat unregulated crypto platforms in Hong Kong.A survey conducted by the Hong Kong University of Science and Technology (HKUST) business school has indicated that the affair has had a negative impact on public sentiment towards crypto more recently.