Chinese Subsidiary of DBS Bank Launches e-CNY Product Offering

Turkey, a significant player in the global cryptocurrency market, has been anticipated to introduce comprehensive crypto-related legislation in 2024. Despite initial announcements suggesting an early rollout, the specifics of the anticipated regulatory framework remain pending, leaving stakeholders in anticipation. Currently, Turkey operates with limited crypto regulations. While some measures exist, such as those imposed by the Central Bank and the Ministry of Finance’s financial intelligence unit, others remain informal, such as guidance from the Capital Markets Board. These regulations primarily focus on prohibiting certain activities and implementing anti-money laundering (AML) measures.Photo by Dima Rogachevskiy on UnsplashAnticipated reforms and their purposeThe forthcoming legislation is expected to address various aspects of the crypto market, including licensing requirements for exchanges, investor protection measures and taxation. The aim is to align with international standards, potentially aiding Turkey in exiting the Financial Action Task Force's (FATF) "gray list." The regulations aim to enhance investor protection, especially in light of past incidents like the collapse of the Thodex exchange, while also providing a legal framework for crypto taxation. Timing of implementationDespite expectations for an early introduction, the exact timeline for the enactment of the crypto legislation remains uncertain. Industry observers speculate potential connections between the legislation's timing and Turkey's efforts to exit the FATF's "gray list." While some anticipate a release by mid-year, others suggest a delay until later in the year, underscoring the complexity and importance of the regulatory reforms for Turkey's crypto ecosystem. 

Laos targets crypto operators’ unpaid feesIn a bid to enhance state revenues, Laos has turned its focus to the cryptocurrency sector, revealing that operators in the country owe a total of $20 million in fees. The announcement, reported on Thursday by Chinese state news agency Xinhua News, references information from the Lao People’s Army News.Photo by Alessio Roversi on UnsplashLoss-making mining activityLaos had previously granted authorization to 15 blockchain companies to engage in crypto mining or operate as exchanges as part of a strategy to diversify government income sources. However, Prime Minister Sonexay Siphandone disclosed that two of these companies showed no progress in their operations, while others lagged behind in meeting their financial obligations to the state.It emerged in August that the national electricity supplier, Electricité du Laos, had decided to suspend the supply of energy to crypto miners amid a perfect storm of challenges. Laos has ample hydro electric resources and is a net exporter of electricity. However, a drought this year has challenged it to honor contracts for supply of electricity to the Electricity Generating Authority of Thailand.To deal with this issue, power supply to Laotian crypto miners was suspended. To compound matters, many mining operators have been struggling financially and were unable to pay their bills.Debt reliefSiphandone mentioned that since the government initially set the tax obligations, the overall value of cryptocurrencies has experienced a 50% decline. Consequently, Laos has decided to alleviate the burden on crypto companies by reducing the outstanding balance by an equivalent 50%.Following this decision, the affected companies have commenced the settlement of their fees, and it is anticipated that all outstanding amounts will be fully resolved by the year’s end, according to the country’s Prime Minister. However, he issued a cautionary note, stating that companies failing to make satisfactory progress would face consequences, including the suspension of their operations, imposition of fines or even the revocation of their licenses.Digital transformationIn May, Laos outlined key aspects of its digital transformation strategy, emphasizing the use of digital technology to generate new fiscal revenue, strengthen foreign exchange reserves, control inflation, and promote sustainable economic growth. The move to reduce crypto companies’ tax burdens amid market volatility underscores Laos’ adaptability to the challenges presented by the dynamic cryptocurrency landscape.As part of its digital transformation strategy, the Laotian government signed a cooperation agreement with Singapore’s MetaBank. Partnering with another overseas entity, the country has also relied upon the expertise of Japanese fintech developer Soramitsu with regard to a central bank digital currency (CBDC). Soramitsu has played a pivotal role in enabling the issuance of Laos’ Digital Lao Kip.Early last year, the landlocked Southeast Asian country authorized trading licenses for two crypto platforms. These included Lao Digital Assets Exchange (LDX), a joint venture between Phongsupthavy Group and AIF Group, and Bitqik, a subsidiary company of Simuong Group.

Korea unveils detailed plan for retail CBDC transaction pilot with 100K participantsThe Bank of Korea (BOK), Financial Services Commission (FSC) and Financial Supervisory Service (FSS) jointly announced on Thursday (local time) their comprehensive plan to pilot a central bank digital currency (CBDC). This pilot program will concentrate on two key areas: retail transactions and technical experiments within simulated environments.For the retail transaction aspect, the test aims to give citizens direct experience in using the new digital currency, helping them understand its advantages. This practical approach will promote public familiarity with the CBDC.In terms of technical experiments, these will be conducted in partnership with various banks. The goal is to explore and develop methods for constructing a financial market infrastructure suitable for the future, leveraging the capabilities of the digital currency.Photo by Terrence Low on UnsplashRetail CBDC test to commence in Q4 2024The initiative to examine retail transactions using a CBDC is scheduled to begin in the fourth quarter of 2024. This test will focus on improving how vouchers work. Currently, the use of vouchers faces several challenges, such as high fees, complex and slow settlement procedures and the risk of fraudulent transactions. CBDC-based deposit tokens programmed with the digital voucher functionality could help solve these problems. The exploration of digital vouchers within the realm of CBDCs is not just a concern in Korea but also a topic of global interest.Banks that will participate in the CBDC retail transaction test are to be selected by the end of the third quarter of next year, following necessary procedures such as the financial regulatory sandbox policy. These selected banks will receive the green light to issue deposit tokens within this regulatory sandbox framework. They’ll be in charge of recruiting and managing test participants, which includes both individuals and merchants. Additionally, these banks will be responsible for developing digital wallets for users and handling payment transactions. On the other hand, any bank interested in joining technical experiments in simulated environments may apply to do so until mid-December this year.Citizens who want to take part in the retail transaction test for the CBDC can apply through the banks involved in the test. However, it’s important to note that since this CBDC utilization test is a limited trial, the number of participants will be limited to a maximum of 100,000.The retail transaction test for the CBDC will involve three stages: issuance, distribution and payment. Initially, banks will issue deposit tokens with digital voucher functions upon request. Users will then use these tokens to buy goods from merchants, with the transactions being settled accordingly. Before starting, the BOK, FSC and FSS will propose pilot tasks to the banks, following consultations with relevant agencies and the review of pertinent laws. Banks will also propose tasks related to the voucher function. During the test, these tokens will be used solely for digital voucher transactions, and peer-to-peer transfers won’t be allowed.Simulated environment experiments: three use casesFor technical experiments within simulated environments, the financial authorities have selected three use cases focused on examining the technical feasibility of new types of financial instruments.The first objective is to collaborate with Korea Exchange, the only securities exchange operator in the country, to connect the CBDC system with a carbon credit trading simulation platform. This platform will be based on an external distributed ledger. The key objective here is to assess if the “delivery versus payment” (DvP) mechanism between carbon credits and special payment tokens can function smoothly. DvP is a settlement method that ensures the transfer of securities occurs only after the corresponding payment is made.The second objective will see collaboration with the Korea Financial Telecommunications and Clearings Institute (KFTC). In this scenario, a hypothetical issuer will release tokenized assets to the public through a public offering. To manage this, deposit tokens that match the subscription amount by investors will be temporarily frozen, preventing them from being liquidated. After the final allocation of these tokenized assets is determined, the system, using smart contracts, will automatically transfer funds equivalent only to the allocated tokenized assets.The last objective revolves around advancing the concept of a unified ledger introduced by the Bank for International Settlements (BIS). In this endeavor, the BOK aims to issue digital demo securities within the CBDC system. Following this, an experiment will be conducted where financial institutions will have the opportunity to trade these digital securities using the institutional CBDC. This trading will be executed using the DvP method.