Circle President visits Seoul for stablecoin talks with exchanges and central bank

Binance Explores Stablecoin Issuance on MUFG Progmat Coin PlatformMitsubishi UFJ Trust and Banking Corporation (MUTB), the trust arm of Japan’s largest bank, Mitsubishi UFJ Financial Group (MUFG), has announced a collaborative effort with Binance Japan to investigate the issuance of public blockchain stablecoins denominated in Japanese yen and other currencies.Photo by Aditya Anjagi on UnsplashProgmat blockchain platformAccording to a press release published on Tuesday, the development is centered around MUFG’s Progmat blockchain tokenization platform, which encompasses the Progmat Coin stablecoin platform. Notably, Progmat now counts among its stakeholders some of Japan’s major financial institutions, including the second and third largest banks, SMBC and Mizuho.The scope of this venture extends beyond the confines of Japanese users, potentially transforming Japan into Binance’s stablecoin issuance hub. The initiative has emerged against the backdrop of recent regulatory events in the United States, notably the New York State Department of Financial Services (NYDFS) instructing Paxos Trust to halt the issuance of the Binance USD (BUSD) stablecoin earlier this year. The timeline for the launch of Japanese Binance stablecoins is set for 2024, contingent upon Binance Japan obtaining an Electronic Settlement Methods Transaction Business Provider license.Japan has been making strides in its regulatory landscape to accommodate various types of stablecoins, including those issued by banks and trusts. Under this framework, stablecoins issued by trusts like Mitsubishi UFJ Trust enjoy some unique advantages, such as exemption from licensing requirements and the absence of Know Your Customer (KYC) protocols for stablecoin transfers. Furthermore, these stablecoins are backed by ring-fenced reserve assets, mirroring the approach taken by Paxos Trust.The underlying Progmat blockchain technology is rooted in the Corda enterprise blockchain. However, MUFG has been actively collaborating with DataChain and TOKI technology to facilitate stablecoin issuance on multiple public blockchains, allowing for cross-chain transfers. The initial plan encompasses blockchain platforms like Ethereum, followed by Cosmos, Polygon, Avalanche, and others. This development raises questions about the potential elevation of Binance’s BNB Chain in the broader blockchain ecosystem.Tatsuya Saito, Founder and CEO of Progmat, remarked on the collaboration, stating:“We believe that the new stablecoin from this collaboration will be a step forward in advancing the Web 3.0. Progmat is a neutral infrastructure that enables the issuance of various brands of stablecoins with the greatest flexibility of use and the least risk of de-pegging, it does not compete with players issuing their own stablecoins.”Saito also hinted at other stablecoin projects in the pipeline with Japanese financial institutions and partners, underscoring Binance’s dominant position in the cryptocurrency trading world.Expanding presence in JapanBinance Japan, which recently acquired an existing crypto exchange and rebranded it as Binance Japan, currently lists 34 tokens. In addressing the WebX conference in July, Binance Founder and CEO Changpeng Zhao (CZ) recognized the positive regulatory environment that exists in Japan relative to Web3.From Binance’s perspective, this latest collaboration represents a substantial win, especially after the loss of its own stablecoin. Binance has been promoting lesser-known stablecoins on its exchange by reducing transaction costs, a strategy with inherent risks. In contrast, the alliance with MUFG, a globally significant bank, adds credibility and a different level of assurance to stablecoins.

In a widening crackdown on overseas crypto exchanges operating illegally in India, the Financial Intelligence Unit (FIU) has issued “compliance show-cause” notices to some of the leading global crypto platforms. In a statement published by the FIU on Thursday, the agency outlined that it has issued compliance show-cause notices to nine offshore virtual digital assets service providers. These include Bitfinex, Bittrex, Binance, Bitstamp, Gate.io, Huobi, Kraken, Kucoin and MEXC Global.Photo by Naveed Ahmed on UnsplashRequest to block URLsThe FIU has also called on the information ministry to block the URLs of these entities, citing their non-compliance with Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) frameworks. The FIU is a national agency tasked with receiving, analyzing and disseminating information to enforcement agencies where suspect financial transactions are concerned. The move comes as part of India’s broader efforts to tighten oversight of the digital asset sector. Earlier this year, the government imposed money-laundering provisions on the crypto industry, aligning its regulations with those of other nations. In 2022, local crypto exchanges were dealt a significant blow with the introduction of a transaction tax, leading to a sharp decline in trading volumes. Unregistered platformsAccording to the FIU statement, offshore entities, despite serving a substantial number of Indian users, were operating without proper registration under AML and CFT frameworks. To address this, the FIU issued show-cause notices — a formal request for entities to demonstrate compliance with Indian laws when suspected of misconduct. It emerged earlier this month that in excess of 28 crypto platforms had registered with the FIU. Those compliant platforms were largely native Indian businesses. If the FIU’s recommendation is followed and in due course, URL access to the cited overseas exchanges is blocked, this could potentially be a boon for complaint platforms like WazirX, CoinDCX and ZebPay, at least in the short term. India’s actions against Binance, in particular, are not new. In 2021, the country’s anti-money laundering agency was reportedly investigating Binance’s potential involvement in a case related to betting apps. Binance, the world’s largest crypto exchange, has faced increasing regulatory pressure globally. In November, the company agreed to a $4.3 billion settlement, pleading guilty to anti-money laundering and U.S. sanction violations. As part of the settlement, CEO Changpeng Zhao agreed to step down. Community reactionNews of this development has caused some disquiet among Indian crypto advocates. However, taking to social media, Web3 marketer Abhinav Kumar wrote: “This isn’t a sign that crypto trading is suddenly going to be banned. . . . It’s a routine thing. The government wants to make sure foreign companies play by the same rules as Indian ones. That’s fair enough! Also remember India has over 20 million crypto investors now.” Leading crypto adoptionDespite regulatory challenges, India has emerged as a significant player in the global crypto market. Chainalysis’ 2022 global crypto adoption index ranked India as the top country by raw estimated transaction volume, second only to the United States. Responding to the growing crypto adoption, India is actively working on a regulatory framework based on joint recommendations from the International Monetary Fund and the Financial Stability Board. The government’s actions underscore its commitment to ensuring compliance within the crypto sector and aligning with international standards.  

Japan’s New Tax Amendment Sparks Optimism for Crypto IndustryJapan’s National Tax Agency has recently announced a revision to corporate taxation rules regarding crypto assets, according to a report by local media outlet Coinpost. The amendment states the exemption of companies from taxes on unrealized gains with cryptocurrencies.Photo by Nataliya Vaitkevich on PexelsPrevious tax burden on crypto profitsPreviously, corporate tax at a rate of approximately 30% was imposed on profits from cryptocurrency holdings, including unrealized gains, as per the Japan Times. This regulation has been criticized for burdening companies and impeding innovation in the blockchain industry. In response, some companies had opted to conduct their business operations overseas. However, with the new amendment, the rules have been relaxed for virtual assets issued and held by their companies.Two conditions for tax exemptionThe National Tax Agency clarified the two conditions under which virtual assets issued by a company would be exempt from taxation. Firstly, the crypto asset must have been issued by the company and continuously held since its issuance. Secondly, the virtual asset must have remained under continuous transfer restrictions since its issuance, which can be achieved through either implementing technical measures to prevent the transfer to other parties or holding the assets in a trust that meets specific requirements.This revision in corporate taxation rules is expected to provide relief for businesses in Japan that deal with cryptocurrencies and encourage innovation in the domestic blockchain industry. The relaxation of taxes on unrealized gains may also incentivize companies to keep their operations within the country rather than seeking alternatives abroad.