Hang Seng Ponders Crypto Product Offering

A number of reports published by local Russian media in recent days suggest that the Russian authorities are implementing taxation and regional controls on cryptocurrency mining.Photo by Michael Parulava on UnsplashRegional mining banA report published by the Moscow Times on Nov. 19 suggests that Russia’s Deputy Prime Minister, Alexander Novak, has led a government commission that plans to implement a ban on cryptocurrency mining in specific Russian regions.  The authorities have been motivated in enacting such a ban in order to combat power shortages. With that, a ban is being implemented on a temporary basis during the heating season. The restrictions will apply to miners located within six regions within the North Caucasus, as well as the Zabaikalsky region in Siberia and territories now controlled by Russia in Ukraine. The ban will apply from December through to mid-March 2025, with this seasonal restriction to be applied subsequently each winter until 2031. Back in August, Russian President Vladimir Putin signed into law legislation which legitimized cryptocurrency mining within the Russian Federation. That law recognized mining activities and the concepts of mining pools and mining infrastructure operators. The legislation requires mining operators to register with the government. Individual miners can mine without registering so long as they stay within specified energy-use limits. Earlier this month, the authorities set a power consumption limit of 6,000 kWh per month for those unregistered miners.  The legislation also recognized the ability of stakeholders to trade in foreign digital assets on Russian blockchain platforms, with Russia’s central bank, the Bank of Russia, retaining the ability to ban specific digital assets from being traded if such trading is deemed to be a threat to Russia’s financial stability. 15% tax proposalEarlier this week Russia’s Interfax news agency reported that the Russian government had approved draft amendments to a bill concerned with the purchase and sale of digital currencies relative to crypto mining activity.  According to those proposed legislative amendments, digital assets will be classified as property from a taxation perspective. Income derived from mining activities will be assessed in terms of taxation based on market value at the time of receipt of the asset. The legislative amendments propose a 15% tax rate for cryptocurrencies. Furthermore, crypto transactions will not be subjected to value-added tax (VAT). However, income derived from such transactions will be taxable in the same way as income from transactions involving securities. Crypto mining operators will be permitted to deduct operating expenses from their taxable income. Russia’s Finance Ministry is understood to have clarified that the taxation approach would strike a balance between Russian government interests and those of commercial operators. With the introduction of legislation to recognize cryptocurrency mining activity earlier this year, Ki Young Ju, CEO of on-chain and market data analytics firm CryptoQuant, noted the country’s growing involvement and national-level engagement with digital assets. The coming months will determine if these latest crypto mining restrictions will dampen the level of involvement of Russia-based crypto miners.

Victory Securities granted approval for retail crypto trading in Hong KongHong Kong’s Securities and Futures Commission (SFC) has given the green light to Victory Securities, a well established investment firm headquartered in the Chinese autonomous territory, for retail virtual asset trading.Photo by Carlos Alberto Gómez Iñiguez on UnsplashFirst licensed corporationThe license will allow the investment firm to expand its crypto trading and advisory services to retail investors. The publicly traded company announced its crypto licensing achievement via a press release published to its website on Friday. In that statement, the company expressed the hope that “by connecting traditional finance with virtual assets, customers can configure assets in a flexible and convenient way, and [we] can provide general investors with investment advice on virtual assets and publish relevant research reports.”This approval marks Victory Securities as the first licensed corporation in Hong Kong to offer such services to the retail market, joining the ranks of already approved firms like HashKey Exchange and OSL Digital Securities. It builds upon previous licensing approval that the company received from the SFC to offer a full range of trading and advisory services in respect of virtual assets to institutional clients in November 2022.The move reflects Hong Kong’s commitment to crypto regulation, as earlier this year, the region established a framework enabling the provision of crypto services to retail clients. This development positions Hong Kong as a key player in the Asian crypto market, where firms seem to be receiving more regulatory clarity compared to their counterparts in the United States. The regulatory initiative gains significance in light of the recent JPEX scandal, involving an alleged HK$1.6 billion ($204 million) fraud.Bringing retail into cryptoVictory Securities, currently listed as an applicant on the SFC’s recently published roster of virtual asset trading firms, is navigating this regulatory landscape to bring retail investors into the crypto market. In parallel, HashKey Group, another Hong Kong-based cryptocurrency firm, has launched the city’s first SFC-approved trading app since the JPEX incident. HashKey Exchange’s app, boasting “full mobile trading capabilities,” became operational this month, a notable progression given its prior limitation to professional investors.Through HashKey’s app, local traders can now engage in bitcoin and ether transactions using funds from their Hong Kong or U.S. dollar bank accounts. In addition to pioneering retail crypto trading, HashKey has introduced its crypto over-the-counter (OTC) trading service, HashKey Brokerage, aligning with local securities regulations and the recently implemented cryptocurrency regulatory framework by the SFC.The Hong Kong regulator is also believed to be currently weighing up whether to allow retail investors the ability to access spot crypto exchange-traded funds (ETFs). Despite these advancements, the SFC maintains restrictions on retail traders engaging in stablecoin transactions until new regulatory arrangements are established. This decision follows the SFC’s consultation paper on regulating crypto activities, emphasizing the need to address risks associated with stablecoins and their regulation.The regulator aims to ensure appropriate management of stablecoin reserves to maintain price stability and safeguard investors’ redemption rights, underscoring the potential significant implications for stablecoin stability if these risks are not effectively managed.As Hong Kong solidifies its position in the evolving crypto landscape, Victory Securities’ approval signifies yet another milestone in the region’s journey toward fostering a regulated and inclusive crypto market for retail investors.

NEOPLY Receives Support from Abu Dhabi for Blockchain Expansion in UAENEOPLY, the open blockchain platform of South Korean investment holding company Neowiz Holdings, is set to receive support from the Abu Dhabi Investment Office (ADIO) in the United Arab Emirates (UAE) through its Innovation Programme, which provides incentives to a wide range of businesses in financial services, technology, and other high-growth areas, according to a press release.Photo by Kamil Rogalinski on UnsplashFinancial & non-financial supportWith the assistance of ADIO, NEOPLY will establish its global headquarters, H-Lab, for blockchain businesses in the Abu Dhabi Global Market (ADGM). H-Lab will benefit from both financial and non-financial support, including incentives, fee exemptions, and regulatory advantages concerning cryptocurrencies and blockchains. Moreover, H-Lab intends to collaborate with local universities to develop education and scholarship programs focused on Web3 and decentralized finance (DeFi).Operations in MENANEOPLY’s inclusion in the Innovation Programme of ADIO demonstrates the competitiveness of the blockchain project, providing it with the opportunity to expand its operations in the Middle East and North Africa (MENA) region. By leveraging the support, infrastructure, and talented workforce available through ADGM, the company will forge partnerships with leading global firms residing in the capital of the UAE to enhance its global presence.Korean firms in Abu DhabiAbu Dhabi has been increasingly attracting Korean companies. ADIO, an affiliate of the Abu Dhabi Department of Economic Development, was established in 2019 as part of the country’s initiative to promote non-oil industries and draw in advanced technology companies. In 2021, ADIO opened an office in Seoul to support the entry of innovative Korean firms into the UAE. Thanks to these efforts, several Korean enterprises, including cloud operations services company Bespin Global, hospitality tech company H2O Hospitality, and smart farm operating group K-BTS Consortium, have established entities or expanded their operations in Abu Dhabi.DeFi regulatory frameworkNEOPLY’s H-Lab will collaborate with ADGM to facilitate its development of a regulatory framework for DeFi, aspiring to become one of the world’s first regulated DeFi providers. The NEOPIN protocol, a centralized decentralized finance (CeDeFi) platform developed by NEOPLY, will work closely with ADGM’s Financial Services Regulatory Authority (FSRA) to establish an efficient and effective regulatory framework.Abdulla Abdul Aziz Al Shamsi, Acting Director General of ADIO, said, “Abu Dhabi’s enabling environment, coupled with the availability of world-class infrastructure and skilled talent, has positioned the UAE capital as a leading destination for investment in the Middle East. NEOPLY joins a wave of other innovative South Korean companies choosing Abu Dhabi as the catalyst for their next growth phase. They are joining a thriving innovation ecosystem and bringing new ideas and solutions to life in the UAE capital.”NEOPLY CEO Park Jin-ho stated, “With ADIO’s support, we are establishing our global headquarter in the heart of Abu Dhabi, which fills us with great anticipation for our financial innovation in the Middle East. With the active support of ADIO, the collaboration with ADGM, and the infrastructure of Abu Dhabi, we are committed to setting new standards in the global blockchain industry.”