Chinese state publication calls for crackdown on crypto

Japan appears to be gearing up for the potential launch of its central bank digital currency (CBDC), the digital yen, as the government and the Bank of Japan (BoJ) collaboratively lay the legislative foundation for its rollout. While neither the BoJ nor the government has officially committed to the CBDC launch, recent developments indicate an accelerated push for its development. The BoJ's heightened focus on digital yen comes amidst concerns about falling behind China's and Europe's rapid progress in the CBDC space.Photo by Wenhao Ji on UnsplashOvercoming legal issuesAccording to a report by Japanese media outlet NHK, in a recent meeting, the Japanese government and the BoJ discussed future tasks and legal issues related to its CBDC implementation. To ensure a smooth and legally unobstructed launch, Tokyo aims to establish the necessary legal framework well in advance. Local news media Coinpost reported that the proposed legislation is set to "assume the introduction of the digital yen" and may involve amendments to key laws such as the Bank of Japan Act, the Criminal Code and the Civil Code. The goal is to finalize the list of required legal amendments by spring of the current year. In a meeting between Japan's central bank and the Finance Ministry, executives from relevant ministries and central bank directors explored various aspects of the CBDC. Discussions included the collaboration between a potential central bank digital currency and private cashless businesses, with a focus on convenience and personal data protection. Finance Ministry keen on launch ASAPLast month, the central bank received a report from a Ministry of Finance expert panel which recommended the launch of the digital yen without delay. The Ministry of Finance's December meeting addressed the division of roles between the Bank of Japan and intermediary banks, proposing a "two-tiered model" where domestic commercial banks play a pivotal role in digital yen issuance. Acting as intermediary institutions, these banks will bridge the gap between the central bank and digital yen users. The government and the BoJ are also contemplating ways to involve private businesses in the CBDC project while ensuring fair competition. Security and data privacy considerationsKey considerations in the discussions involve interoperability with other payment methods, ensuring security and handling user information safely. There is also an exploration of potential cross-border payment options. The government and the BoJ are committed to a comprehensive approach that considers various aspects of the CBDC project. Japan's unique context in the CBDC landscape is highlighted, with its continued reliance on cash and the presence of multiple private-sector tokenized money initiatives. Notably, the country boasts over 100 institutions and enterprises exploring digital currency through a digital currency forum since 2020. Separate initiatives, such as the MUFG-backed Progmat DLT platform, contribute to Japan's diverse digital currency landscape. Providing another example of progression in the digital assets arena, it emerged in September that the country is looking to permit startups to raise capital from venture capital firms using digital tokens rather than traditional equity. 

Two Russian nationals have been referred to prosecutors in South Korea for allegedly facilitating the illegal transfer of roughly 58 billion won ($42.2 million) to Russia using USDT, a U.S. dollar-pegged stablecoin. According to a report by KBS News, the Seoul branch of the Korea Customs Service (KCS) announced the charges on May 22, citing violations of the country’s Foreign Exchange Transaction Act. The suspects, a man and a woman both in their 40s, reportedly operated an unauthorized money exchange business to carry out the transactions.Photo by Polina Tankilevitch on PexelsOver 6K transactionsAuthorities suspect the pair of repeatedly using USDT to conduct cross-border transfers between South Korea and Russia. From January 2023 to July 2023, the duo allegedly completed 6,156 illegal remittance transactions, either sending funds abroad or receiving payments on behalf of others, totaling the full 58 billion won in question. Investigators revealed that the two suspects, who hold permanent residency in South Korea and have overseas Korean status, used the messaging app Telegram to solicit clients. When transferring money to Russia, they reportedly collected funds via kiosks in convenience stores that allow users to send money without a bank account. The collected cash was then used to purchase USDT to complete the remittances. According to customs officials, the suspects would either send the cryptocurrency directly to a crypto wallet specified by the customer, or forward it to accomplices in Russia. These accomplices would then convert the crypto to cash and distribute rubles to recipients through local channels. Illicit crypto use by businesses The operation also handled export payments for South Korean businesses. The suspects reportedly accepted payments from Russian importers on behalf of Korean used car dealers and cosmetics exporters. In these cases, associates in Russia would collect ruble payments from importers, convert the funds into USDT and send the cryptocurrency to contacts in Korea. The funds were then exchanged for Korean won and deposited into the accounts of the businesses. Customs officials believe that the group’s services became particularly appealing after the start of the Russia-Ukraine war in 2022. In the wake of U.S. and international sanctions against Russia, legitimate financial channels for cross-border transactions became restricted, prompting some companies and individuals to turn to illegal alternatives. The Korean export companies involved in these transactions have been fined. The Seoul Customs Office emphasized that illegal money exchange operations are often exploited for criminal activities such as drug trafficking, voice phishing and gambling. In response, the agency committed to stronger enforcement and pledged to spare no effort in combating unlawful financial operations. Scams grow inside the borderThe surge in crypto-related financial crimes in South Korea extends beyond cross-border transactions. According to a recent report by Maeil Business Newspaper, Kakao Pay—a local mobile payment platform—has detected around 70,000 cases of malicious apps linked to virtual assets over the past month. Of those, 80% were associated with Ponzi schemes, where fraudsters lure victims with promises of high returns before disappearing with the funds. A Kakao Pay spokesperson noted that new forms of security threats are emerging alongside the rapid growth of the crypto market, adding that the company is prioritizing the development of stronger security systems. 

Recent developments relative to governance of the CRO token, a native token belonging to the Cronos blockchain, have proven controversial, with many in the community unhappy with the actions of Singapore-headquartered Crypto.com.Photo by Markus Winkler on UnsplashProposal controversyThe controversy surrounds a proposal put forward by Crypto.com, which originally developed the Cronos blockchain in 2021, to mint 70 billion CRO tokens. The move would effectively roll back a CRO token burn that took place in 2021. The governance process applicable to the proposal meant that CRO token holders could vote on the proposal between March 2 and March 16. For the majority of that voting period, the outcome appeared to be uncertain. The “yes” vote had a narrow lead, but it would have been insufficient to reach the required 33.4% quorum of eligible votes. Exceeding the quorumHowever, at 14:00 UTC on Sunday, a last-minute influx of 3.35 billion tokens tipped the balance firmly in favor of the proposal while well exceeding the minimum turnout as 70.18% of eligible votes were cast. 61.18% voted in favor, with 17.61% against. Many CRO token holders who opposed the proposal are aggrieved at the manner in which this late voting surge came about. It’s understood that these last-minute votes came from blockchain validators controlled by Crypto.com. Crypto.com is understood to hold in the region of 80% of the voting power. In exercising that voting clout, many CRO holders feel that it has undermined the will of the community. Some commentators believe that increasing the token supply will result in a loss of trust in the project, damaging investor confidence going forward. Earlier this month, Crypto.com CEO Kris Marszalek responded to community pushback against the proposal. Marszalek suggested that the proposal ties in with an overall strategy for the success of the Cronos blockchain and its CRO token in the long term.  He pointed to four items that are relevant in achieving success for an altcoin like CRO. These included finding product-market fit, the need to redeploy free cashflows, successfully launching exchange-traded funds (ETFs) and participating in reserve-building initiatives.  ‘Free to vote and free to sell’The strategy relies upon building demand in order to achieve longer-term success. On X, Marszalek wrote: “People who do not agree that this is the right approach are free to vote & free to sell. We will stay laser focused on building towards new ATHs [all-time-highs].” In another X post on March 19, the Crypto.com CEO outlined that the company generated $1.5 billion in revenue in 2024 while servicing the needs of 140 million users on the platform. The company spent $700 million on branding, user acquisition and user incentives in 2024. Its operations turned a net profit of $300 million.  Crypto.com has also made further headway on the compliance front over the course of the past week. The company received licensing approval in Dubai to offer derivatives from the Virtual Assets Regulatory Authority (VARA). On March 17 the company announced that it had successfully achieved Virtual Asset Service Provider (VASP) registration with the Argentine regulator.