Bitmain Fined by Chinese Authorities for Tax Irregularities

The focus of Thailand’s crypto market is moving towards institutional business rather than retail. That’s the view of Nirun Fuwattananukul, CEO of Binance Thailand. Changing regulatory landscapeFuwattananukul laid out his thoughts on the matter in an opinion piece published by the Bangkok Post on Oct. 25. The Binance executive believes that the regulatory conditions are changing in the country such that institutional involvement in digital assets will become more likely. Fuwattananukul pointed to a proposal that was put forward by the Thai Securities and Exchange Commission (SEC) earlier this month. The proposal, published on Oct. 9, seeks to permit mutual and private equity funds in Thailand to invest in various crypto products, including the spot Bitcoin exchange-traded funds (ETFs) that were launched in the United States earlier this year. Back in June, the Thai SEC green-lighted the launch of homegrown spot Bitcoin ETFs. In August, the regulator launched the Digital Asset Regulatory Sandbox, inviting interested parties to test crypto-related services within a controlled environment. Fuwattananukul described the SEC’s new rules opening institutional access to digital asset products as a “vital step in the maturation of Thailand’s cryptocurrency landscape.” The Binance Thailand CEO added that “by allowing more institutional funds to participate, the SEC is enabling a diverse range of investment strategies and helping digital assets gain broader acceptance in the mainstream.”Photo by Vadim Artyukhin on UnsplashPotential regional crypto hubIt’s based on this rationale that the Binance executive perceives a shift in focus within the crypto market in Thailand, with the likelihood of more money flowing into the space from institutional sources than from retail.  The entry of institutional money could lead to a “more mature ecosystem,” while further legitimizing Bitcoin and the crypto space more broadly. Extending that line of thought, Fuwattananukul suggests that this change of focus to institutional involvement could lead to positioning Thailand as a regional digital asset hub.RWA tokenizationThe Binance Thailand executive also identified the tokenization of real-world assets (RWAs) as an area that’s trending right now. He cites it as an example of the convergence of TradFi and digital assets markets. Fuwattananukul stated: “Tokenisation brings 24/7 trading, increased liquidity, and cross-border accessibility, which could reshape traditional financial markets and make investment opportunities more inclusive.” Back in January, Thailand’s SEC introduced new rules that lifted restrictions on retail investors accessing two classes of tokenized RWAs. The change affected real estate-backed tokens or tokens linked to real estate revenues. Prior to the rule change, retail investors couldn’t invest more than $8,415 in such tokenized assets. In collaboration with Gulf Innova, a subsidiary of Gulf Energy Development, Binance launched Binance Thailand as a joint venture in January. The SEC had awarded the business a trading license in 2023.

Bit Origin, the Nasdaq-listed (BTOG) pork processor turned crypto mining infrastructure firm, has acquired 40.5 million Dogecoin (DOGE), the company’s first purchase of the world’s largest memecoin by market cap since it announced that it was establishing a Dogecoin treasury. In a press release published on July 17, the Singapore-headquartered company with operations in the United States, Canada and China, set out that it would become the “first publicly listed company on a major US exchange to accumulate Dogecoin as a core asset.”Photo by Kanchanara on Unsplash$500 million treasury fundingThe firm outlined that it had entered into agreements with accredited investors, implicating the sale of $400 million in Class A ordinary shares in the company. An additional $100 million unlocked via convertible debt brought funding for its Dogecoin treasury to $500 million. Jinghai Jiang, Bit Origin’s CEO and Chairman, asserted that “what started as a joke has evolved into a globally liquid asset with a payments utility.” Jiang asserted that very few digital assets match the settlement speed and scale of community that Dogecoin offers. X Money potentialIn particular, he singled out the potential use of DOGE for X Money, a new payment system that is in the process of being established by Elon Musk’s X social media platform. Alongside many proponents of the cryptocurrency, Bit Origin is hoping that Musk will implement the use of DOGE to power X money. Jiang added:“In an age of broken institutions, Doge embodies a shared culture of optimism and resilience that transcends existing political and financial systems.” On social media, the company outlined that it believes in “Dogecoin not just as a meme, but as a future payments backbone.” Having utilized the services of Chardan Capital Markets as a placement agent, the company has already completed an initial closing of $15 million under the convertible debt facility that has been established.  On July 21, Bit Origin published another press release, detailing the acquisition of 40,543,745 DOGE with the memecoin holding having been purchased at an average acquisition cost of $0.2466 per DOGE.  Nearing inflection point for paymentsCommenting on the development, Jiang stated:“From our experience in mining, we understand the tradeoffs that define proof-of-work systems. We see Dogecoin’s utility potential for micropayments nearing an inflection point, driven by renewed developer activity and broader institutional interest in tokenization.” Dogecoin emerged in December 2013 having been developed by Jackson Palmer and Billy Markus as a joke. The project borrowed much of its code from Bitcoin. Despite having originated as a joke, the project has developed a sizeable community. The digital asset currently holds a market capitalization of $40.5 billion, according to CoinMarketCap data.  Bit Origin rebranded from China Xiangtai Food Co., Ltd. in April 2022. Up until that point, it had been involved in the pork processing business. The company pivoted to crypto mining, partnering with MineOne on a Wyoming mining facility in the United States. The facility was ordered to be shut down by the former Biden administration on the basis of it being a national security risk to have a Chinese project located within a mile of a U.S. Air Force base that houses nuclear intercontinental ballistic missiles.

BOK Staffers Assess Crypto Market Vulnerabilities and Their ImplicationsOn Thursday, the Bank of Korea’s (BOK) staff members published an assessment of the vulnerabilities in the cryptocurrency market and their potential implications. Here is the summary of the report.Photo by D Tan on Unsplash2022 crypto winterThroughout 2022, the worldwide crypto market faced a series of adverse occurrences, such as significant drops in the prices of major crypto-assets and the collapse of prominent crypto companies. These events shed light on the vulnerabilities that had accumulated during the rapid growth of the market.The first major event occurred in May 2022 when the algorithmic stablecoin TerraUSD experienced a sharp decline, resulting in substantial losses and bankruptcies for numerous retail investors and crypto firms. This incident significantly eroded confidence in the overall crypto market. The subsequent bankruptcies of prominent crypto lender Celsius and hedge fund Three Arrows Capital (3AC) further highlighted the realization of risks commonly associated with traditional financial markets, such as multiple collateral loans and maturity and liquidity mismatches, within the crypto market.In November 2022, the well-known crypto exchange FTX filed for bankruptcy, demonstrating that the activities of a large crypto company can propagate risks through moral hazard and excessive profit-seeking behavior when it operates outside the realm of regulatory oversight.Similarities with TradFiThese negative events that unfolded in the global crypto market in 2022 share similarities with issues previously observed in financial markets, such as unsustainable business models, liquidity risk, leverage, and lack of transparency in financial conditions. These parallels suggest that if the crypto markets were subjected to comparable levels of regulation as traditional financial markets, it is plausible that the triggering of these risks could have been avoided altogether, or at the very least, the resulting damage could have been mitigated to some extent.Implications for the Korean marketAt present, it is deemed unlikely that events akin to those witnessed in overseas crypto markets will transpire in the Korean market. The Korean crypto-asset market has primarily evolved through exchanges, with limited influence from other enterprises such as crypto issuers and decentralized lending platforms. In addition, Korean crypto exchanges are subject to regulation under the Act on Reporting and Using Specified Financial Transaction Information. This mandates the separation of customer deposits from exchange assets and the strict management of custodial crypto-assets through secure wallets. Additionally, Korean exchanges are prohibited from listing their own tokens on their platforms.However, there remains a dearth of information regarding the business structures of crypto companies that offer services similar to those in the traditional financial industry. This lack of information poses challenges in accurately assessing risk and providing adequate investor protection. Meanwhile, there is a potential for a deeper integration between the crypto market and users’ daily lives, particularly through major technology companies, gaming companies, and security tokens.SuggestionsIt is vital to ensure that crypto-assets are regulated based on the principle of “same activity, same risk, same regulation” through the ongoing development of crypto-asset-related legislation. The Financial Stability Board, an international body monitoring the global financial system, explained this principle in a 2022 paper: “Where crypto-assets and intermediaries perform an equivalent economic function to one performed by instruments and intermediaries of the traditional financial sector, they should be subject to equivalent regulation.”Additionally, it is necessary to stay aligned with major countries in terms of the speed and comprehensiveness of regulatory measures to prevent regulatory discrepancies across borders due to the global nature of crypto risks.Enhancing the effectiveness and efficiency of regulation requires the establishment and maintenance of a close cooperation system between authorities. This collaborative effort should encompass various aspects, including monitoring, information gathering, and supervision of the crypto-asset market. Notably, the widespread adoption of stablecoins can affect the stability of the overall financial system, including monetary systems and payment and settlement systems. Hence, it is necessary to strengthen the involvement of central banks in the monitoring and supervision framework for crypto-assets, including stablecoins, as demonstrated by legislative approaches adopted by major economies like the EU. Furthermore, imposing disclosure requirements, external audits, and documentation submission obligations on crypto-asset operators is advisable.