Japan’s New Tax Amendment Sparks Optimism for Crypto Industry

During a National Policy Committee audit, South Korean lawmakers pressed financial regulators on their oversight of the domestic crypto market, focusing on Binance’s acquisition of local exchange Gopax, risks from order-book sharing with foreign platforms, and weaknesses in anti–money laundering (AML) controls.Photo by Kanchanara on UnsplashQuestions over Gopax compensationAccording to Kuki News, Democratic Party lawmaker Min Byeong-dug has urged regulators to reach out to Binance for details on its plan to compensate Gopax creditors following its acquisition of the local exchange. One of the nation’s five fiat-to-crypto exchanges, Gopax suspended withdrawals from its GoFi service, a yield-bearing product, in November 2022 after the collapse of the Bahamas-based FTX crypto exchange and the bankruptcy of Genesis, a U.S.-based crypto financial services firm. Citing investor losses estimated at 10 billion to 50 billion won (about $7 million–$35 million), Min said Binance had agreed to cover the shortfall as part of its cashless acquisition of Gopax, but full repayment to Korean users remains unresolved. He noted that the deal had faced delays due to concerns raised by the Financial Services Commission’s (FSC) Financial Intelligence Unit (FIU) over Binance’s eligibility as a major shareholder, and urged the FSC and FIU to ensure a clear and timely resolution for affected investors. Concerns over order-book sharingPeople Power Party (PPP) lawmaker Lee Heon-seung raised additional concerns about order-book sharing tied to the Binance–Gopax deal, warning it could create regulatory blind spots. According to Dailian, he asked the FIU about risks such as possible gaps in AML oversight at foreign exchanges and the potential exposure of Korean user data. FIU head Park Gwang said inadequate AML systems at overseas platforms can hinder fund tracing. He noted that separate approval is required before a domestic exchange can share its order book with a foreign platform, adding that no such request was under discussion. Park said the FIU would closely examine the matter and ensure protection of personal data. Lee also questioned how effectively regulators can supervise the crypto market given its scale, pointing to the Bithumb exchange as an example, where he had raised similar concerns about order-book sharing. Bithumb serves about 3.8 million users and records roughly 605 trillion won (approximately $426 billion) in annual trading volume. He said order-book sharing with major global exchanges such as Binance could complicate AML compliance, data protection, and regulatory oversight, and called for stronger enforcement. In response, Park said that the agency would ensure proper supervision to address these risks. Allegations of AML loopholes and illicit useAnother PPP lawmaker, Kim Jae-sub, flagged a potential AML loophole involving Binance, saying the exchange had allegedly been used by Cambodia’s Prince Group, which is linked to fraudulent schemes to conceal illicit funds. Last week, the U.S. Department of Justice filed a civil forfeiture complaint to seize roughly 127,271 Bitcoin linked to Prince Group’s operations, marking the largest seizure in its history. Kim also cited past allegations connecting Binance to illicit transactions involving Hamas and North Korea, and said the exchange’s founder faces related charges. He urged the FSC to conduct a thorough examination to determine the extent of any involvement if the claims prove accurate. As the parliamentary audit continues, lawmakers from both parties are pressing regulators to clarify standards, tighten oversight, and prioritize investor protection while maintaining fair and predictable rules for market participants. 

Japan’s largest bank, MUFG, has teamed up with KlimaDAO Japan, the provider of a digital reserve currency backed by carbon credits, to explore the use of the JPYC stablecoin for settling tokenized carbon credit transactions on the Progmat blockchain platform. Settlement on ProgmatProgmat provides the infrastructure to enable the issuance of various stablecoins. Last September, MUFG announced a collaboration with Binance geared towards stablecoin issuance. The JPYC stablecoin, operational since 2021, functions as a prepaid money instrument, similar to a prepaid card, due to its existence before Japan’s stablecoin legislation. Under new regulations, JPYC can either obtain a money transmitter license or issue a trust-style stablecoin with a bank like MUFG acting as the trustee for the stablecoin's reserves. Last year, JPYC formed a partnership with MUFG implicating the use of the Progmat platform.  This partnership, along with the involvement of Kansai Electric subsidiary Optage as the integration partner, sets the stage for the KlimaDAO stablecoin experiments. Optage will provide the corporate infrastructure required to manage the carbon credits added to the blockchain and provide a means for funds settlement to be achieved via bank transfer. Through the use of various local stablecoins for the purpose of settlement, it’s hoped that improved liquidity on a global basis may be achieved.Photo by Dan Meyers on UnsplashInitially recognized for making tokenized carbon credits accessible on public blockchains, KlimaDAO's functionality extends beyond this. The organization also offers the capability to retire credits. Last year, KlimaDAO expanded its reach by launching Carbonmark, an enterprise-focused marketplace.  This platform, which utilizes blockchain technology, namely Polygon, and smart contracts, offers a user-friendly experience by integrating traditional payment methods like bank transfers and SAP integration.  J-CreditsJapan operates a national scheme known as J-credits, and the Tokyo Stock Exchange has introduced a secondary market for these credits. J-credits are designed to certify the amount by which greenhouse gas emissions have been reduced through the use of carbon sinks in Japan. However, the volume of J-credit transactions remains low, reflecting the broader state of Japan's voluntary carbon market.  KlimaDAO aims to address this by launching the KlimaDAO Japan Market, simplifying the process for domestic companies to purchase and utilize carbon credits. This initiative will involve tokenizing J-credits, referred to as D-Carbons.  Andrew Bonneau, KlimaDAO co-founder, outlined on X that “@KlimaDAO is in a unique position to facilitate an efficient J-Credit market on chain, while serving as the base infrastructure for integrating these assets with 3rd party services.” While the initial phase will use traditional bank payments, the ultimate goal is to transition to using stablecoins, particularly the JPYC stablecoin. Norbert Gehrke, an observer of developments within the Japanese fintech scene, outlined on Medium that the Japanese carbon credit market is likely to reach three trillion yen ($19.15 billion) by 2030. Meanwhile, the global carbon credit market has a current value of 39 trillion yen ($249 billion). KlimaDAO Japan has mentioned the use of a permissionless blockchain for this initiative but has fallen short of confirming that the Polygon network will be relied upon. Japan has several homegrown blockchains, which might be considered for this project.  At the time of writing, the KLIMA token had risen 31% over the course of the previous 24 hours, with a unit price of $3.53 according to CoinGecko. 

Chinese City Unveils Plan to Develop MetaverseThe city of Zhengzhou in China recently announced a set of policy proposals aimed at supporting the growth and development of metaverse companies in the region. These initiatives, introduced by the municipal government, include the establishment of a dedicated fund worth 10 billion yuan ($1.42 billion) to facilitate the advancement of the metaverse industry.Photo by Jéan Béller on UnsplashDraft policy proposalsAccording to the government’s draft which was published on Wednesday, metaverse companies that choose to relocate their headquarters to Zhengzhou will have the opportunity to receive a startup capital investment of up to 200 million yuan ($28.34 million). In addition, these companies will be eligible for various other benefits, such as rent subsidies, to help facilitate their operations.It’s worth noting that the policy extends beyond companies with headquarters in Zhengzhou. Any company engaged in metaverse-related use case development within the city, regardless of their headquarters location, can apply for funding. Projects certified as viable by the municipal government can receive up to 5 million yuan ($710,000) in financial support.While the specific date for fund allocation has not been disclosed yet, the municipal government of Zhengzhou has outlined its long-term vision for metaverse development in the city. It anticipates that metaverse-related industries in Zhengzhou will generate an annual revenue exceeding 200 billion yuan ($28.34 billion) by the end of 2025.Stimulating metaverse developmentThese policies apply to local enterprises operating in two distinct areas. Firstly, research endeavors focused on metaverse-related technologies, such as virtual reality, augmented reality, and brain-computer interfaces, are eligible for support. Secondly, the utilization of metaverse technologies in real-world industries, including education, entertainment, and commerce, can also qualify for funding.In addition to the dedicated fund, the government of Zhengzhou plans to collaborate with other governmental agencies and investment firms to secure an additional 50 billion yuan ($7.08 billion) in funding. This funding will be allocated to support various metaverse-related development projects. Furthermore, the city intends to provide cash rewards to metaverse companies upon their listing on China’s primary stock exchanges, aiming to incentivize growth and market participation.The comprehensive plan encompasses crucial technologies in the metaverse industry, such as blockchain, next-gen computer rendering, human-computer interfaces, and artificial intelligence. Furthermore, it strives to establish a digital asset market leveraging non-fungible token (NFT) technology.Broader metaverse strategyZhengzhou joins a growing list of Chinese cities and provinces that aspire to become leaders in the country’s metaverse development. The metropolis of Shanghai, located in the southeastern region, is actively pursuing its own metaverse aspirations. It predicts that its metaverse industry will achieve annual revenues of 350 billion yuan ($49.6 billion) by the year 2025.Elsewhere in China, there has been plenty of activity relative to Metaverse development. Zhengzhou belongs within Henan Province, and at a provincial level, administrators established a metaverse fund earlier this month. Around the same time-frame, Alibaba Cloud, the cloud division of the Chinese e-commerce giant, partnered with layer one blockchain project Avalanche with a view towards creating a metaverse launchpad.As the metaverse continues to evolve and gain prominence worldwide, it will be intriguing to observe the progress and impact of the policies implemented by Chinese cities like Zhengzhou. The concerted efforts to foster metaverse development reflect a broader global trend of recognizing the significance of virtual environments and their potential to reshape various aspects of society.