Japan to classify crypto as financial instruments, seeks 20% tax rate

Hong Kong Exchanges and Clearing Limited (HKEX), the operator of the Hong Kong stock exchange, has announced plans to launch a digital asset price index. The index which the company is marketing as the HKEX Virtual Asset Index Series, will aim to provide for the developing asset class, while complimenting Hong Kong’s overarching efforts to transform itself into a regional digital assets hub. The company announced details of the new product offering in a press release published to its website on Oct. 28. HKEX indicated that the product will go live on Nov. 15, outlining that the product “provides investors with transparent and reliable benchmarks for Bitcoin and Ether pricing in the Asian time zone.”Photo by Kanchanara on UnsplashReference index for Bitcoin (BTC) and Ether (ETH)The firm claims that the Index Series will include a Reference Index for Bitcoin (BTC) and Ether (ETH) while providing a Reference Rate for the two leading digital assets. The Reference Index will be formulated using a 24-hour volume-weighted reference spot price, with that pricing coming from leading virtual asset exchanges. The Reference Rate has been devised with the settlement of financial products in mind. As a result, it will be calculated on a daily basis at 16:00 Hong Kong time. From a compliance perspective, the product complies with the European Union’s (EU) Benchmark Regulation (BMR), being the first such product to be developed in Hong Kong. Additionally, the Index Series will be administered by CCData, a UK-headquartered data and index solutions firm formerly known as CryptoCompare.  Taking to the X social media platform, CCData outlined that the product is underpinned by its data selection process, leveraging its “Exchange Benchmark methodology to provide highly robust real-time and EOD  [end-of-day] reference rates.” The firm added that the offering will introduce “essential benchmarks for the Asian market,” while enhancing transparency and reliability within the digital assets sector, broadening opportunities for market participants across the region. Enabling informed investment decisionsHKEX CEO Bonnie Chan said that the company was pleased to introduce the HKEX Virtual Asset Index Series to meet the region's growing demand for this fast-emerging asset class. “By offering transparent and reliable real-time benchmarks, we seek to enable investors to make informed investment decisions,” she added.Like many other financial services firms in TradFi, HKEX has been getting itself acquainted with the blockchain and digital assets sector. In October of last year, the firm launched a blockchain-based settlement platform called Synapse. The platform relies upon DAML-based smart contracts. Earlier this year, a number of asset management firms launched spot Bitcoin and Ethereum exchange-traded funds (ETFs) on the exchange. In April, a report published by HKEX suggested that the true potential of crypto ETFs had yet to be fully realized, pointing out that a number of regulatory tweaks would be necessary to better support digital asset-based products. HKEX itself could have a greater role to play in the expansion of the digital assets sector in Hong Kong. Last month Hong Kong Legislative Council member Lee Wai-hung called on the platform to expand its range of derivatives, including crypto derivatives.

A legislator in the Philippines has put forward a bill that, if passed and enacted, would see the Southeast Asian country establish a Bitcoin reserve consisting of 10,000 BTC. The proposed bill was filed with the House of Representatives as House Bill 421. Its proposer is Congressman Miguel Luis Villafuerte, a representative of Camarines Sur’s 5th district since 2022. Villafuerte also served as governor of the same province on two occasions, gaining recognition for becoming the youngest individual to assume the governorship in the Philippines.Photo by Michael Förtsch on UnsplashDrawing on developments overseasPrefacing the bill with an explanatory note, Villafuerte draws on developments related to Bitcoin in the United States. He drew attention to U.S. Federal Reserve Chairman Jerome Powell having referred to Bitcoin as “digital gold,” while pointing to a bill in the U.S. proposed by Wyoming Senator Cynthia Lummis to create a strategic Bitcoin reserve in the U.S., with the support of U.S. President Donald Trump. The bill itself, if passed and enacted, would provide a mandate to Banko Sentral ng Pilipinas (BSP), the country’s central bank, to acquire 2,000 BTC on an annual basis over a period of five years. According to Villafuerte’s proposal, that would result in the Philippines amassing a reserve of 10,000 BTC. 20-year minimum holding periodFollowing the achievement of this accumulation, the bill sets out that the leading digital asset would be locked in trust for a period of 20 years for the benefit of the country. A provision is included to establish a procedure that would enable the purchase schedule to be adjusted if a need arose to do so due to prevailing market conditions. Upon completion of the 20-year holding period, the proposed legislation calls on the central bank to present a report to Congress with recommendations as to whether Bitcoin should continue to be held or if some of the holdings should be sold off on a gradual basis. Following the expiration of that initial 20-year period, the governor of the central bank cannot recommend the selloff of more than 10% of the holding over any two-year period. Proof of reservesIn terms of sovereign nations, an early mover with regard to Bitcoin has been El Salvador. It became the first nation to establish Bitcoin as legal tender, while also establishing a Bitcoin reserve. However, the Central American nation has been criticized with regard to a lack of transparency surrounding that reserve. In the case of Villafuerte’s bill, the proposed legislation includes a requirement for the central bank governor to establish a system of quarterly proof of reserve attestations. It calls for attestations to be performed by an independent third-party auditor with expertise in auditing digital assets.The proposal comes as a number of nations are understood to be exploring the establishment of a strategic Bitcoin reserve. In April, a parliamentarian in Sweden proposed adding Bitcoin to the Nordic nation’s foreign exchange reserves. The Swedish parliament is set to debate the notion of a Bitcoin reserve next month. Meanwhile, Switzerland’s central bank has reportedly gained exposure to Bitcoin through a $253 million shareholding in Bitcoin treasury firm Strategy.

Incheon Joins Hands with The Sandbox to Promote City in the MetaverseIncheon Metropolitan City is partnering with global metaverse platform The Sandbox to create innovative marketing content aimed at promoting its urban landscape within the virtual realm and establishing an overseas promotional network. This move makes it the first South Korean public institution to work with a metaverse platform.Photo by Jiho Choi on UnsplashThe Sandbox’s virtual worldBuilt on the Ethereum blockchain, The Sandbox enables users to employ non-fungible tokens (NFTs) for creating play-to-earn (P2E) games that can be monetized. The ecosystem’s utility token, SAND, facilitates this mechanism as it is used for in-game purchases. Currently, the platform boasts one of the highest cumulative NFT collection volumes among virtual world projects on the world’s largest NFT marketplace, OpenSea. It has also formed partnerships with over 400 entities around the world.City marketing strategyThrough this collaboration, Incheon plans to develop and introduce engaging content for users to experience the city virtually, such as a variety of events. Furthermore, the city also intends to utilize its intellectual property (IP) for activities such as NFT donation campaigns and metaverse creator training programs to implement extensive NFT content within The Sandbox’s virtual world.“We plan to continually develop content that enables people around the world to experience Incheon through our collaboration with the global metaverse platform,” said Lee Se-woong, Head of Incheon’s City Branding Division.