Gate.io Threatens Legal Action Against Speculators

Tether, the issuer of the USDT stablecoin, has teamed up with local partners in the United Arab Emirates (UAE) in order to launch a dirham (AED)-backed stablecoin. In a statement published to the firm’s website on Aug. 21, Tether outlined that the stablecoin is being launched in partnership with Dubai-based technology conglomerate Phoenix Group and Green Acorn Investments, a company that describes itself as “a socially responsible investment firm dedicated to supporting critical sectors and supporting the generation of sustainable wealth and financial literacy.”Photo by DrawKit Illustrations on UnsplashFully backed by AED reservesThe stablecoin issuer outlined that each token will be “fully backed by liquid UAE-based reserves.” Tether further maintained that the back-end management of the new token will adhere to the firm’s “transparent and robust reserve standards,” and that “every Dirham-pegged token is tied to the value of the AED, providing stability and confidence in its value.”  Tether dominates the stablecoin market where USDT accounts for $117 billion, against a backdrop of an overall stablecoin market valued at $169 billion.  Perennial skepticsThe company has perennially faced criticism for a lack of transparency relative to the backing of its USDT stablecoin, given its policy of providing attestation reports instead of fully comprehensive audits from a top-tier auditing firm. One of the firm’s critics, the pseudonymous X account @OccamiCrypto took to the social media platform to provide its reaction to this most recent development, stating: "This Tether UAE stablecoin 'launch' will likely be as real as Tether’s promised audit and real time reserve reporting." The Tether critic went on to claim that the announcement is nothing more than "Tether spin," and that Tether has never attempted to become regulated in any market and that nothing would come of it. Another Tether critic, freelance journalist Jacob Silverman, commented on the development on X, stating:”Russian businessmen in UAE must be rejoicing.” His comment is suggestive of a common assertion that Tether is being used to facilitate the circumvention of sanctions. According to the firm’s press release, it believes that the product will enable users locally to access the benefits of the AED in digital form. The company claims that it will “streamline international trade and remittances, reduce transaction fees, and provide a hedge against currency fluctuations, thus playing a crucial role in the financial ecosystem of the UAE and beyond.” Tether’s partner Phoenix Group has been active in the crypto-sphere in recent times through mining. In December of last year, the company sealed a $380 million deal with Chinese mining equipment manufacturer MicroBT. Earlier that month, the company went public on the Abu Dhabi Securities Exchange (ADX). On face value, this development appears positive. However, UAE-based crypto and blockchain lawyer Irina Heaver recently warned that tightening regulations within the UAE may shut down crypto payments within the country. Heaver specifically cited the use of USDT as being under threat, with the potential for stablecoin-based transactions to be prohibited as new rules are ushered in.  

India’s RBI Collaborates Internationally on Digital Rupee PaymentsIndia’s Reserve Bank (RBI) is expanding its exploration of central bank digital currencies (CBDCs) by focusing on cross-border functionality, despite its cautious approach to CBDC development.The RBI aims to experiment with various use cases for CBDCs in international payments, as it believes this can enhance the efficiency of cross-border transactions. That’s according to a report which was recently published by local media source, the Economic Times. RBI Governor Shaktikanta Das emphasized the potential benefits of quicker, seamless, and cost-effective cross-border payments. The RBI is actively engaging in dialogue with other central banks that have already implemented or are planning to introduce CBDCs.Photo by rupixen.com on UnsplashUAE collaborationIn collaboration with the United Arab Emirates (UAE), the RBI is promoting joint studies on using CBDCs for settling international payments. The partnership is driven by the high volume of remittances between the two countries, a consequence of the large number of Indian migrants in the UAE.These recent developments follow the RBI’s retail and wholesale CBDC pilot programs, which began just seven months ago. Although the retail pilot attracted 50,000 users within 60 days, the RBI remains committed to a gradual and cautious approach to mitigate potential risks.Onboarding one million CBDC usersWhile expanding the pilot program to new cities, the RBI aims to onboard one million CBDC users within the coming weeks, despite the digital rupee currently having a very low circulation level. On the wholesale side, the RBI’s pilot has shown promising results, with the digital rupee being explored for government bond transactions, money market funds, and short-term lending.RBI Deputy Governor T. Rabi Sankar emphasized the importance of exploring multiple use cases for CBDCs, including account-based CBDCs. The RBI aims to offer as many applications for CBDCs as possible while ensuring the existing National Electronic Funds Transfer (NEFT) and other systems are not disrupted.Global surge in CBDC developmentThe surge in CBDC development worldwide can be attributed to various factors. The imposition of sanctions on Russia following its invasion of Ukraine led to a significant increase in wholesale CBDC initiatives as Russia sought alternatives to bypass the sanctions.Additionally, the diminishing use of cash and the rise of dollarization and cryptocurrency adoption in local economies have motivated over 120 central banks to initiate CBDC research. These central banks are attracted by the potential benefits of financial inclusion and the opportunity to address the decline in cash usage.India has been selective in terms of the aspects of digital asset technology it wants to see further developed within its borders. At a recent conference organized by the RBI, a central bank official called on Indian banks to adopt blockchain technology. When it comes to stablecoins, the central bank is apprehensive, warning of associated risks while calling for global regulation.As India’s RBI continues its CBDC exploration, the focus on cross-border functionality underscores the growing recognition of CBDCs as a transformative tool for international payments. The ongoing collaborations and pilots demonstrate India’s level of interest in staying at the forefront of CBDC development while taking measured steps to ensure a secure and efficient transition to digital currency.

The Need to Distinguish Between Security and Non-Security Virtual AssetsWith the recent enactment of the Virtual Asset User Protection Bill in South Korea, there is a need to lay out criteria for determining whether virtual assets qualify as securities, says Kim Ja-bong, a senior research fellow at the Korea Institute of Finance, in his report titled “The Implications of Determining Which Virtual Assets Constitute Securities and Investor Protection” released on Saturday.Photo by Shubham Dhage on UnsplashThe implications of the Virtual Asset User Protection ActThe Virtual Asset User Protection Act — which will take effect in July of next year — aims to protect customer assets, establish regulations against unfair trading practices, and enforce penalties. Notably, it will target virtual assets that are not securities, deeming it necessary for regulators to determine if virtual assets qualify as securities or not in order to enforce the bill. Assets with characteristics of securities will fall under the jurisdiction of the Capital Markets Act.Therefore, if the Virtual Asset User Protection Act does not provide sufficient investor protection, issuers may be incentivized to issue non-security assets rather than security assets to avoid the regulations of the Capital Markets Act. This further necessitates the act of distinguishing between virtual assets that are securities versus those that are not.Determining if a virtual asset is a security or notThere are two approaches to do this, according to Kim: the passive approach, which avoids considering a virtual asset as a security whenever possible, and the active approach, which treats a virtual asset as a security whenever applicable.He argues that it is better to focus on whether an investment contract qualifies as a security if it is considered an investment contract, rather than simply selecting a specific approach.Furthermore, the nature of virtual assets renders them unbound by national borders, so it is necessary to establish assessment criteria that correspond with international standards, such as those used in the US and Europe.This is especially important because if the criteria differ from international standards, there is a risk of domestic investors suffering damages due to an issuer’s pursuit of regulatory arbitrage between countries.Equitable recognition and potential for security tokensAccording to Kim, the importance of determining whether virtual assets are securities lies in ensuring that security tokens receive the same recognition and trading treatment as traditional securities such as stocks. With such a measure, security token offerings can serve as an efficient and reliable method for raising funds. Although there may be concerns that such a regulation may hinder the development of virtual assets, it may well be an opportunity for security tokens to be qualified and trusted as high-quality financial instruments just like existing securities, Kim claims.Even for virtual assets that are not considered securities, there are many types of assets that are financial in nature, such as e-money tokens — therefore, it is necessary to actively protect investors in non-security virtual assets through financial regulations such as reinforcing disclosure obligations, which is being done in the EU through the Markets in Crypto-Assets Regulation (MiCA).Empowering regulators for enhanced investor protection and market integrityKim underscored that investor protection and healthy growth of the virtual asset market are made possible mainly through expanding regulators’ authority to protect economic interests and prevent damages. The author also suggested institutional reforms that grant regulators substantial authority, which would enhance their ability to protect investors effectively and provide compensation for damages.He added that regulators should also have the authority to enforce liability for damages or impose civil penalties for unfair trading practices conducted using classified information.