Japan moves toward municipal blockchain bonds as crypto tax reforms face delays

Full operating license approval for Hex Trust in DubaiIn yet another instance of progress for the cryptocurrency sector, Hex Trust MENA FZE, the Dubai-incorporated subsidiary of Hong Kong-headquartered institutional-grade crypto custodian Hex Trust, has successfully secured an operating license from the Dubai regulator, the Virtual Assets Regulatory Authority (VARA).Photo by Mohammed Nasim on UnsplashExtending regional presenceThis regulatory milestone, acknowledged by the firm in a statement it made public on Wednesday, not only solidifies Hex Trust’s presence in the Middle East but also marks a strategic move to extend its crypto custodial services to institutional clients and sophisticated investors in Dubai. While based in Hong Kong, Hex Trust has offices in Dubai, Singapore, Vietnam and Italy.This full operating license signifies the successful conclusion of the approval process within VARA’s regulatory framework for crypto service providers, which came into effect earlier this year. Initially granted a minimum viable product (MVP) operational license in February, Hex Trust’s latest achievement grants it the official authorization to continue its operations in the region, marking a pivotal moment in the company’s expansion strategy.With an increased footprint in Dubai, Hex Trust is now poised to deliver comprehensive crypto custodial services to both institutional clients and sophisticated investors. This strategic move is in line with the company’s aspiration to meet the escalating demand for secure and regulated digital asset storage solutions in the Middle East.Filippo Buzzi, Hex Trust’s MENA regional director, underscored the company’s dedication to expanding its reach in the Middle East, stating:“Hex Trust is fully committed to expanding into the Middle East and sees enormous potential for digital asset growth given the progressive regulations, welcoming governments, and thriving crypto ecosystem in the region.”This statement not only highlights the favorable regulatory environment but also emphasizes the increasing interest in cryptocurrencies within the Middle Eastern market.$88 million funding roundHex Trust’s recent success in Dubai comes on the heels of its $88 million Series B funding round last year, showcasing the company’s proactive approach to securing regulatory approvals on a global scale.In August, the firm received regulatory clearance in France, enabling it to offer a spectrum of services, including digital asset custody, purchasing, selling and trading. These regulatory triumphs position Hex Trust as a reputable and compliant entity in the competitive crypto custodial space.Series of approvalsWhile Hex Trust has demonstrated its adept navigation through regulatory processes in Dubai, it’s one of many companies to obtain licensing in the emirate in recent weeks.It emerged yesterday that CRO DAX Middle East, the Dubai-registered subsidiary company of Singapore-headquartered Crypto.com, received a trading license from VARA.Last week, Korean Web3 company CarrieVerse clarified that it had joined the Dubai Multi Commodities Center (DMCC) as a metaverse service provider. The DMCC is a United Arab Emirates (UAE) government agency which has developed into a hub for investors and Web3 startups. CarrieVerse and the DMCC have not as yet revealed details regarding the roadmap for the partnership.At the start of this month, VARA awarded Singapore’s WadzPay, a business-to-business (B2B) technology firm that focuses on enabling digital asset-based transaction processing and settlement, a license to trade within the emirate. Meanwhile, on Nov. 1, it emerged that crypto wallet project Backpack had received a license from the Dubai regulator.

Bankruptcy Judge Permits Terraform Labs to Subpoena FTXIn a significant development in the bankruptcy case of defunct crypto exchange FTX, a judge has granted Singapore-based Terraform Labs the authority to subpoena information related to its ongoing case brought by the United States Securities and Exchange Commission (SEC).Photo by Bermix Studio on UnsplashHack allegationsTerraform Labs, the blockchain company that developed the Terra blockchain and failed US dollar stablecoin UST, claims that the failures of its algorithmic stablecoin and governance token were the result of an attack from short-sellers, possibly involving Alameda Research (FTX’s sister company).The order, issued by Judge John Dorsey on Monday, allows Terraform Labs to serve subpoenas to FTX Trading and FTX US, aimed at collecting evidence to support its defense against the SEC’s allegations of fraud. According to court filings, lawyers representing the FTX Debtor have not formally objected to the court order.Terraform Labs’ request for subpoena power stems from its belief that short-sellers connected to FTX entities played a role in the failure of the algorithmic stablecoin and governance token, leading to the collapse of the crypto firm. The ability to obtain information from FTX through the subpoenas could be crucial in bolstering Terraform Labs’ defense against the SEC’s fraud charges.UST collapse falloutThe collapse of the UST stablecoin in 2022 contributed to a major market crash, resulting in a significant drop in the prices of many tokens. As a result, the company filed for bankruptcy in November 2022. The Co-Founder of Terra, Do Kwon, is currently serving a four-month sentence in a Montenegrin prison for using false travel documents. He may also face extradition to the United States or South Korea on fraud charges related to Terraform Labs.Motion to dismiss deniedIn a separate high-stakes ruling, US District Judge Jed Rakoff denied Terraform Labs’ motion to dismiss the securities fraud lawsuit filed by the SEC. The judge’s decision allows the SEC’s case against Terraform Labs and Do Kwon to proceed, rejecting defense arguments that the agency lacked jurisdiction and that Terraform’s TerraUSD stablecoin did not qualify as an unregistered security.Judge Rakoff’s ruling is a significant victory for the SEC as it intensifies its enforcement actions against crypto companies involved in allegedly unlawful token sales. He found the collapse of TerraUSD, which lost its dollar peg and incurred a $40 billion loss last year, plausible as a reason to consider the token as a security that should have been registered.Moreover, Rakoff dismissed Terraform’s claim that the SEC lacked the authority to regulate stablecoins without explicit Congressional authorization, asserting that the crypto industry was significant enough to warrant application of the “Major Questions Doctrine.” This doctrine limits agency overreach into major political issues but does not apply to the crypto asset markets.The judge also rebuffed Terraform Labs’ attempts to draw parallels between the Ripple case and its own. In the Ripple case, a different judge ruled that Ripple’s XRP token sales to retail investors did not violate securities laws due to the manner of purchase on secondary markets. Rakoff firmly stated that such distinctions did not apply under the legal Howey test governing whether crypto assets qualify as securities.

Bitstamp Raises Funds to Enable Asian Market ExpansionBitstamp, one of the world’s oldest cryptocurrency exchanges, is embarking on an ambitious endeavor to expand its services within the Asian market through a fresh funding round.Bloomberg reported on Monday that the firm’s CEO Jean-Baptiste Graftieaux, stated that “our current and exclusive priority is to raise money through strategic investors to accelerate Bitstamp’s growth by providing new products and services to retail and institutional crypto customers.”Photo by Markus Winkler on UnsplashDerivatives trading and Asian expansionIn accomplishing the funding round, the company is being guided by Mike Novogratz of Galaxy Digital Holdings. Bitstamp initiated its fundraising efforts in late June. The objective behind these efforts is to secure the capital required for launching derivatives trading in Europe by 2024 and to extend the platform’s reach across various markets in Asia. Moreover, Bitstamp has its sights set on fortifying its presence in the United Kingdom, seeking to establish a more robust footing there.Bitstamp’s current endeavors to amplify its operational scale are aligned with the company’s broader ambitions announced in 2018. This was the year when the firm was acquired by NXMH, a South Korean-backed entity.Not for saleBack then, Nejc Kodrič, one of Bitstamp’s co-founders, asserted that the intention was not to sell the company or actively seek investment. Nevertheless, the acquisition was realized, and Kodrič opted to cash out a majority of his Bitstamp stock while retaining a 10% stake and continuing as the CEO.Graftieaux was emphatic in clarifying Bitstamp’s intentions, stating that the company is not actively seeking to be acquired or to sell itself. This news arrives just a few months after Ripple acquired a minority stake in Bitstamp during the first quarter of 2023. Galaxy Digital played an instrumental role as an adviser throughout that transaction, which was publicly disclosed in late May.Coinciding with this news, Bitstamp has unveiled some trading restrictions for its US user base. Effective from August 29, the exchange will temporarily halt trading for tokens such as Axie Infinity (AXS), Chiliz (CHZ), Decentraland (MANA), Polygon (MATIC), NEAR Protocol (NEAR), The Sandbox (SAND), and Solana (SOL).This pause in trading activities has been attributed to “recent market developments,” with assurances that the ability to hold and withdraw these tokens will remain unaffected. All of the projects behind the tokens that Bitstamp is planning to halt the trading of have been named by the US Securities and Exchange Commission (SEC) as unregistered securities in its lawsuit against Coinbase.Slovenian rootsHaving originated in Slovenia in 2011, Bitstamp gradually evolved into a prominent force in the cryptocurrency trading landscape. Once an alternative to the then-dominant Bitcoin exchange, Mt. Gox, Bitstamp’s reach and influence have grown substantially. It currently stands as one of the world’s largest crypto exchanges, boasting a trading volume of approximately $127 million over a recent 24-hour period, according to data published by crypto data aggregator CoinGecko.The developments at Bitstamp demonstrate that the firm continues to refine its global strategy, extending its services and product offerings to various markets globally.