Hong Kong releases ‘LEAP’ framework for digital assets

WEMIX Foundation launches omnichain walletThe WEMIX Foundation, a subsidiary of South Korean blockchain gaming publisher Wemade, has officially launched the una Wallet, according to an official announcement on the company’s website on Thursday (KST). una Wallet is a core application of the Unbound Networking & Accelerating Growth Initiative, or “unagi,” the company’s newest innovative omnichain network and interoperable Web3 gaming platform.Photo by Shubham’s Web3 on UnsplashEasy asset managementThe wallet service offers a solution for users to conveniently earn, manage and trade their digital assets like NFTs and tokens on multiple blockchains — such as WEMIX3.0, Ethereum and Polygon — in one borderless place. The WEMIX Foundation said it would add more supported chains in the future.Effortless access and robust securityIn particular, una Wallet’s convenience and security stem from an easy login procedure utilizing connections to social media accounts and multi-party computation (MPC) technology. MPC is a cryptographic security measure that enables multiple parties to assess a computation without revealing their private information or data. This technology splits private keys, or mnemonic phrases, and allows users to easily recover their wallets through social login even if they lose their keys.The service also provides transaction route recommendations, allowing users to move or trade assets across chains with minimal costs or signature procedures. Subsequently, they can also view their transaction history on each chain and the movement of assets between different chains.WEMIX plans to add various features to make authentication and asset-tracking processes even easier. una Wallet is currently available on Google Play and the Apple App Store.

U.S. regulator, the Commodity Futures Trading Commission (CFTC), has fined Seychelles-headquartered crypto prime brokerage Falcon Labs as part of an overall settlement with the company.  The CFTC had found that the company had operated as an unregistered futures commission merchant (FCM) and furthermore, that it had enabled access to digital asset exchanges without the requisite registration.Photo by Joshua Hoehne on UnsplashSettlement termsIn a press release published to its website on May 13, the CFTC set out the nature of its settlement with Falcon Labs. The parties have agreed that Falcon Labs must discontinue its activities in acting as an unregistered FCM, with particular emphasis on it having provided U.S. individuals with access to digital asset derivatives trading.  Furthermore a fine of $1,179,008 has been applied in disgorgement and in addition, Falcon will have to pay a civil monetary penalty of $589,504. These penalties have been significantly reduced by comparison with the CFTCs original ask, on the basis that Falcon Labs cooperated fully with the CFTC’s Division of Enforcement over the course of the regulator’s investigative process into the activities of the company. In its statement the regulator set out its intent relative to enforcement going forward. Ian McGinley, the CFTC’s Director of Enforcement, stated:”The CFTC is taking the fight one step further by, for the first time, charging an intermediary that inappropriately facilitated access to those exchanges. Today’s action highlights that the CFTC will not hesitate to charge any entities—exchanges or intermediaries—who are providing customers access to digital asset products and services that require registration but have failed to appropriately register.” McGinley added that “the CFTC’s enforcement program has made clear it will not tolerate digital asset exchanges that fail to register with the CFTC or comply with the agency’s rules that maintain integrity in the derivatives markets.” No admission of guiltIn responding to the CFTCs original complaint, Falcon Labs tried to up the ante in terms of compliance. It moved to improve customer identification controls. As a consequence of its market position as a trading intermediary Falcon Labs enabled customer trading on a number of digital asset exchange platforms.  That activity included facilitating U.S.-based institutional customers relative to crypto derivatives trading. It allowed its own account with various digital asset trading platforms to be used, through a system of sub-accounts, by its customers, oftentimes without adequate customer information having been sought. In reaching this settlement with the CFTC Falcon Labs has not made any admission of guilt relative to the regulator’s findings. Alongside paying the agreed upon fines, it will voluntarily agree to adhere to the implementation of improved controls and to withhold its services from user groups that are deemed to be restricted, including all U.S. nationals. Taking to the X social media platform to comment on the matter, Mike Sellig, a partner at New York-based law firm Willkie Farr & Gallagher, claimed that the settlement demonstrated that the CFTC was following in the footsteps of the Securities and Exchange Commission (SEC), establishing “a body of widely applicable precedent.”

Korean Financial Regulator Reveals Crypto Accounting Guidelines to Prevent Inflated Company ValuationsThe Korean Financial Services Commission (FSC) has announced new regulations to address accounting uncertainties in the blockchain industry, according to local news outlet KBS News. The rapid growth of the industry and the increasing impact of cryptocurrency transactions on corporate accounting have resulted in confusion due to the lack of clear guidelines.Last month, the National Assembly’s plenary session passed the Virtual Asset User Protection Bill, emphasizing the need for improved regulation. In line with this development, the FSC has introduced practical guidelines and measures to resolve accounting uncertainties.The FSC has introduced two measures to achieve this goal: virtual asset accounting guidelines and mandatory disclosure of virtual assets in annotations within financial statements.Photo by Beatriz Pérez Moya on UnsplashAccounting guidelinesThe virtual asset accounting guidelines state that when an issuer sells virtual assets to a customer, they must fulfill all obligations, such as the sales process, in order to recognize it as revenue. Any costs incurred during the issuance of a virtual asset and the creation of its platform should be recognized as expenses, unless there is clear evidence that these activities specifically contribute to the development of the virtual asset. Additionally, any reserved virtual assets after issuance cannot be treated as assets on the company’s balance sheet. These guidelines aim to prevent companies from artificially inflating the value of their companies using virtual assets.When recognizing virtual assets as assets or liabilities, virtual asset service providers (VASPs) must consider the concept of economic control. Economic control refers to the entity’s authority to dispose of a virtual asset without needing customer authorization.Virtual assets in annotationsFurthermore, companies are obligated to disclose their virtual asset transactions and holdings in annotations to the financial statement. This requirement ensures that users of corporate accounting information have sufficient details. Public companies holding virtual assets for investment purposes must state the basis for classifying the assets as assets or liabilities. They must also provide the book and market values of their virtual assets in their financial statements.Companies that have created or issued virtual assets are required to provide comprehensive information about the quantity and characteristics of these assets. They must also explain their revenue recognition methodology in the event of asset sales. Companies must provide disclosure regarding the historical utilization of cryptocurrencies that have been issued but remain unsold. This disclosure includes various factors such as portfolios and volumes.VASPs must disclose the volume and market value of virtual assets entrusted to them by customers for each asset, regardless of whether these assets are recognized as assets or liabilities. VASPs also have to provide information about the level of protection measures they have implemented to mitigate risks such as hacking.The FSC expects that these measures will enable readers of financial statements to make meaningful comparisons between VASPs while ensuring the provision of reliable information.The accounting guidelines, after incorporating industry feedback, are expected to undergo deliberations and resolutions by both the accounting standards review committee and the Korean Securities and Futures Commission, as per local news outlet Kyunghyang Shinmun. Once the guidelines receive final approval, they will be promulgated and implemented immediately. This process is anticipated to take place between October and November.Meanwhile, the inclusion of virtual asset disclosures in the annotations of financial statements will be enforced next January.