India’s judiciary turns down plea to formulate a crypto regulatory framework

Chinese authorities are gearing up for a significant amendment to the country's anti-money laundering (AML) regulations, with a specific emphasis on cryptocurrency-related transactions. Growing concerns about cryptoThe move, reported by Chinese business and financial news media outlet Jiemian on Wednesday, comes in response to growing concerns among policymakers in China about the need for heightened scrutiny within the burgeoning crypto industry. This marks the first substantial update to China's AML rules since their introduction in 2007. In 2021, China took a decisive step by imposing a comprehensive ban on cryptocurrency use, which included prohibiting offshore exchanges from offering services and putting a stop to all forms of mining. However, despite these restrictions, mainland users have managed to find avenues to access the crypto market. The upcoming amendment to AML regulations aims to introduce more stringent guidelines to address and mitigate these activities effectively. Prime Minister Li Qiang chaired an executive meeting of the State Council on Jan. 22 to deliberate on the revised AML law. The initial draft of the AML regulations was proposed in 2021. The revised version is set to become law by 2025 after being included in the legislative agenda of the State Council for 2023.Photo by Max van den Oetelaar on UnsplashDigital assets not clearly definedUrgency was stressed in addressing cryptocurrency money laundering at the legal level, as the current laws lack a clear definition of digital assets. Although the revised draft includes measures to prevent digital asset money laundering, concerns were raised about the absence of operational guidance on subsequent actions such as asset seizure, freezing, deduction and confiscation in money laundering cases involving digital assets. Experts noted that there is room for improvement in combating digital asset-related money laundering. China's existing AML law is designed not only to deter money laundering but also to protect fiscal order and combat related crimes. As a country with a deep understanding of money laundering and terrorist financing risks, China is not included in the Financial Action Task Force's (FATF) list of AML-deficient countries. However, a 2019 FATF report suggested that China should focus more on addressing the laundering of crime proceeds and expand its resources for national risk assessment. Circumventing the banDespite the formal ban on cryptocurrency circulation and mining by Chinese authorities, there are still avenues for Chinese nationals to access the digital asset ecosystem. BitMEX founder Arthur Hayes recently indicated that wealthy Chinese individuals have access to banking in Hong Kong, serving as the gateway for mainland China to global capital markets, including the cryptocurrency markets. While many crypto miners left the jurisdiction following the ban in 2021, Chinese companies account for a significant proportion of mining equipment manufacturing. Major exchanges like Binance and OKX have Chinese roots, underscoring the nation's influence in the global crypto landscape. Before the cryptocurrency trading ban in China, trading volumes on yuan-denominated crypto exchanges surpassed those of dollar pairs. As China prepares to fortify its AML regulations, the crypto industry awaits further clarity on how these changes will shape the landscape and influence the conduct of cryptocurrency-related activities within the country.  

Scroll’s zkEVM Launches on Ethereum MainnetScroll, the Seychelles-headquartered project behind the Ethereum layer-2 network of the same name, has officially made its debut on the Ethereum mainnet.Photo by Zoltan Tasi on UnsplashAttempting to solve for scalabilityThe project team announced the development via a press release which was published on Tuesday. The network launch signifies the latest in a series of attempts by various layer-2 projects, including Polygon and StarkWare, to address the persistent challenges of high transaction fees and network congestion that have hindered Ethereum’s usability in recent times. Speaking to layer-2 development, co-founder Sandy Peng stated:“We see a future where the vast majority of value transfer takes place on Layer 2s on Ethereum. What will drive that adoption is improved user and developer experience.”After testing and refinement on its testnet, Scroll believes that it is in a good position to play an active role within the Ethereum ecosystem by providing a general-purpose, zero-knowledge Ethereum virtual machine (zkEVM) roll-up.The project has 900,000 wallet addresses in active use on its testnet, having executed seven million transactions since August. The testnet has seen over 55 million transactions during its year-long operation.At its core, Scroll’s mission is to combine Ethereum’s network security with reduced fees and lower latency, making it an attractive proposition for existing Ethereum projects. According to Peng, Ethereum developers can seamlessly deploy their projects on Scroll and harness the groundbreaking zkEVM technology.Incorporating bytecodePeng emphasized the significance of zkEVM’s ability to batch proofs efficiently, resulting in faster transaction speeds and cost reductions, thanks to its bytecode-level compatibility.Bytecode, in the realm of computer programming, simplifies intricate machine cryptography, making code more accessible for computer hardware. Scroll allows deployed smart contracts to store the bytecode of their transactions, which is then sent to a centralized zkEVM node. This node verifies the transaction’s accuracy without revealing its content. Once verified, the transaction’s status is updated on the Ethereum network, eliminating the need for re-execution. Peng pointed out:“Thanks to this feature, Ethereum devs can leverage all the same tools they are familiar with, ensuring that everything operates seamlessly right from the start.”Scroll’s mainnet code was subject to audits conducted by four major auditing firms, namely Zellic, Trail of Bits, OpenZeppelin, and KALOS, in an effort to ensure robust security and reliability.Efforts towards greater decentralizationWhile Scroll’s current implementation offers compelling features, the team is actively researching ways to further enhance the network’s decentralization. Currently, if the sequencer goes offline, the protocol halts, creating a potential vulnerability. To address this, the Scroll team is working on a protocol upgrade that will enable “forced batches.” This update will allow permissionless publication of batches through the base layer, even in the event of a sequencer halt.Peng elaborated on the team’s vision, stating: “Mid-term, the goal is to minimize the probability of a sequencer halt through decentralization.” This approach aims to bolster the network’s resilience and ensure a smoother user experience.While headquartered in the Seychelles, the project has its origins in China through its Chinese founders, Ye Zhang and Haichen Shen, alongside Peng, with many of its 60-strong project team based in mainland China and Hong Kong.

Korea invites distinguished financial officials to discuss digital moneyThe Bank of Korea (BOK), South Korea’s central bank, announced on Friday (local time) its participation in an international conference focused on the economic impact and future prospects of digital currencies. This event, co-hosted by the BOK, the Ministry of Economy and Finance (MOEF), the Financial Services Commission (FSC), and the International Monetary Fund (IMF), is scheduled to take place in Seoul on Dec. 14 and 15.The conference, titled “Digital Money: Navigating a Changing Financial Landscape,” is set to welcome high-ranking officials such as Kristalina Georgieva, the Managing Director of the IMF; Choo Kyung-ho, the Minister of the Ministry of Economy and Finance (MOEF); Rhee Chang-yong, the Governor of the Bank of Korea (BOK); and Kim So-young, the Vice Chairman of the Financial Services Commission (FSC). This event is particularly significant as it marks the first visit of IMF head Kristalina Georgieva to South Korea.Photo by pan zhen on UnsplashCrypto, stablecoins, CBDCsDuring the conference, MOEF Minister Choo and FSC Vice Chairman Kim will kick off the event with welcome remarks, followed by a keynote speech from IMF’s Managing Director, Kristalina Georgieva. Spanning over two days, the conference will include seven sessions, covering a diverse range of topics. These sessions will delve into various aspects of digital money, such as practical use cases of digital currencies, regulatory approaches to cryptocurrencies, and discussions on stablecoins and central bank digital currencies (CBDCs).The conference will feature prominent financial officials in both its opening and closing sessions. On the first day, Thursday, a distinguished panel, including IMF Chief Georgieva; Stefan Ingves, the former Governor of Sveriges Riksbank; FSC Vice Chairman Kim; David E. Rutter, the Founder of R3; and Shin Hyun-song, the Economic Adviser at the Bank of International Settlements (BIS), will discuss the opportunities and challenges facing digital money.The final session on Friday will see another group of high-level financial authorities sharing their expertise and insights. This session will include BOK Governor Rhee; Eddie Yue, the Chief Executive of the Hong Kong Monetary Authority; Serey Chea, the Governor of the National Bank of Cambodia; and Veerathai Santiprabhob, the former Governor of the Bank of Thailand. Their discussion will focus on regulatory policies surrounding digital currencies.Live-streaming scheduledThe two sessions of this conference will be accessible to a global audience as they will be live-streamed on the BOK’s official YouTube channel. This provides an opportunity for interested individuals from around the world to tune in and gain insights into the evolving landscape of digital money and its regulatory environment.