Pakistan establishes authority to regulate crypto

Hana Securities chooses Itcen and INF Consulting as security token platform developersSouth Korea’s major securities company, Hana Securities, has recently chosen Itcen and INF Consulting to spearhead the development of its security token offering (STO) platform. After initial discussions in July about the project, the decision to bring these main partners on board is set to accelerate the launch of Hana Securities’ STO operations.Photo by Dave Weatherall on UnsplashComprehensive STO platformItcen and INF Consulting offer a spectrum of services from conceptualizing to building platforms. Hana Securities, in collaboration with these key partners, aims to create a comprehensive platform that manages the entire lifecycle of security tokens, encompassing everything from their issuance to circulation, by the latter half of next year. Following this development, the securities company intends to create an environment that allows various asset holders to issue security tokens. Hana Securities is also poised to orchestrate the development of the broader security token ecosystem.Choi Won-young, Head of Digital Division at Hana Securities, has expressed the firm’s commitment to the seamless development of an STO market. He mentioned that Hana Securities will engage in a range of activities, including platform development, to establish itself as a frontrunner in the STO space. The company plans to engage in dialogue with various businesses to explore collaborative opportunities that promise mutual growth.Expanding collaborative networkIn its pursuit to shape the STO market, Hana Securities has expanded its collaborative network by partnering with several entities, including Oasis Business, a prop fintech startup; Print Bakery, an art-centric platform; and Danal Entertainment, a distributor of digital content. These collaborations are centered around fractional investments and the creation of security tokens backed by diverse assets, including real estate, art pieces, precious metals like gold and silver as well as mobile content. Additionally, Hana Securities is a participant in the Next Finance Initiative (NFI) consortium alongside Mirae Asset Securities and SK Telecom via the Hana Financial Group. This alliance aims to solidify the STO market’s foundation and advance STO-related ventures.In line with this development, Hana Securities also forged a partnership with Finakle, a prop-tech enterprise that runs Rebit, a platform enabling fractional investments in commercial properties. Through this partnership, Hana Securities will manage accounts for transactions and aims to further this cooperation to refine business models going forward. Finakle, on its part, will concentrate its efforts on creating products and platforms for the issuance of security tokens tied to commercial real estate.Speaking on the joint initiative, Hana Securities’ Choi highlighted the company’s plans to widen their cooperative ventures with Finakle. This strategy is aimed at developing an array of business models and enriching the pool of commercial real estate investment options available to clients.

Japan's Financial Services Agency (FSA), the nation's primary financial regulator, has recently proposed a series of measures aimed at safeguarding users against "unlawful transfers" to cryptocurrency exchanges. This move, however, may pose significant challenges to the peer-to-peer (P2P) transactions market. Bolstering user protection measuresCiting findings from the National Police Agency, which highlight that damages resulting from specialized fraud involving unlawful money transfers are predominantly facilitated through cryptocurrency, the FSA has urged financial institutions to bolster user protection measures. The agency emphasized the importance of assessing risks associated with transfers to crypto-asset exchange service providers. In a request published on Wednesday directed towards Japanese banks, the FSA underscored the persistently high incidence of fraudulent transactions in the country, facilitated through crypto. To address this concern, the FSA and the National Police Agency have proposed various initiatives. One such initiative entails directing banks to enhance monitoring of unlawful transfers to cryptocurrency exchange service providers.Photo by Jayjayli on UnsplashPeer-to-peer (P2P) market implicationsHowever, another proposal from the regulator may have a profound impact on the P2P market. The FSA suggests halting transfers to cryptocurrency exchange service providers if the sender's name differs from the account name. This recommendation, explained in the Japanese version of the press release using the term "reject," implies the suspension of such transfers from both individual and corporate accounts. For users of P2P platforms, where transactions often involve different names between the sender's and receiver's fiat and crypto accounts, this directive could significantly disrupt the market. Rejecting transactions from an individual's bank account to another individual’s crypto wallet could undermine the functionality of P2P transactions. Positive crypto developmentsDespite this potential issue needing to be clarified and resolved and the East Asian nation not having a comprehensive regulatory framework for cryptocurrencies in place, Japan is showing indications of gearing up for broader adoption. The Bank of Japan (BoJ) is preparing to pilot a Japanese central bank digital currency (CBDC) pegged to the Japanese yen.In June of last year, the country established a legal framework for stablecoins. Additionally, the FSA has proposed a legislative amendment to support the development of decentralized autonomous organizations (DAOs) in Japan. The proposed amendment aims to designate potential DAO tokens as "Limited Company Type DAO Employee Rights Tokens," granting holders legal rights akin to regular limited liability company (LLC) members. Last December the Japanese government considered and later acted on revising crypto tax policy to exempt unrealized crypto gains from being taxed. This proposal was originally put forward by the FSA earlier in 2023. In another development, authorities in the city of Kochi signed an agreement on Feb. 7 to virtualize the city on the Start Lands metaverse application, with plans to welcome online tourists later this summer. Despite these most recent recommendations from the FSA potentially signaling a less crypto-friendly stance, the Japanese authorities have otherwise demonstrated that they’re working towards creating workable conditions for the development of crypto and Web3 within the country.

MAS Offers Guidelines for Banks Handling Crypto-Related ClientsThe Monetary Authority of Singapore (MAS) has released a comprehensive set of guidelines to assist banks in managing clients who are involved in digital assets, such as cryptocurrency exchanges or individuals whose wealth is derived from cryptocurrencies.Photo by Meriç Dağlı on UnsplashIndustry working groupAccording to a report in local media source, The Straits Times, these non-mandatory guidelines, developed by an industry working group, aim to provide best practices for financial institutions to address concerns related to money laundering, terrorism financing, and sanctions risks associated with cryptocurrencies.The working group suggests that enhanced due diligence may be necessary for firms closely connected to facilitating crypto transactions. For instance, conducting site visits or walk-throughs of a client’s anti-money laundering and anti-terrorism financing processes and controls could be required.During the onboarding process, banks should request information documenting the customer’s crypto exposure and the intended usage of the account. Additionally, banks are advised to establish the source of the client’s funds or wealth.To evaluate the regulatory status of a merchant customer’s crypto-related counterparties, especially if they contribute significantly to the merchant’s transactions, banks should conduct thorough assessments.The working group also highlights the use of blockchain screening tools to review the on-chain activity of digital token payment service providers. Regular screening of new and existing wallet addresses owned or controlled by these providers against the sanctions list and designated wallets is also recommended.Comprehensive guidelinesLoretta Yuen, Head of Legal and Compliance at Oversea-Chinese Banking Corp (OCBC), a Singapore-headquartered bank, describes the guidelines as one of the most comprehensive in the world, providing insights into banks’ management of crypto-related money laundering, terrorism financing, and sanctions risks.She believes the guidelines will raise awareness among prospective customers regarding the key risk considerations banks prioritize and enable customers to proactively fulfill banks’ customer due diligence requirements during the onboarding process.Evy Theunis, DBS Bank’s Head of Digital Assets, views the guidelines as a codification of best practices across the industry, aligning with the bank’s existing protocols. United Overseas Bank (UOB) also acknowledges the benefits of the best practice paper, particularly given the diverse range of digital assets with varying levels of risk.Eight participating banksThe working group responsible for developing these guidelines includes representatives from eight banks, MAS, the Commercial Affairs Department, and Big Four audit firm Ernst & Young. Formed in August 2022 under the anti-money laundering and countering the financing of terrorism industry partnership (ACIP), the group aims to identify, assess, and mitigate money laundering and terrorism financing risks in Singapore through a collaborative private-public partnership involving the financial sector, regulators, law enforcement agencies, and other government entities.Singapore is vying to establish itself as a hub for digital asset business in Asia, alongside other centers such as Hong Kong. The Chinese autonomous territory has been making greater progress over the course of the past year.However, a report in The Wall Street Journal on Monday suggests that banking remains a difficulty for crypto businesses in Hong Kong. Hong Kong’s difficulty may be Singapore’s opportunity, given the work that this working group has carried out in smoothing the way for the banking of digital asset-related businesses.