Coinbit suspends operations, marking second crypto exchange shutdown this month

US Treasury Sanctions Gaza-Based Crypto OperatorThe Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury has imposed sanctions on a crypto operator allegedly linked to the Palestinian militant group Hamas.The move by OFAC comes as a result of greater scrutiny of terrorist financing following an attack by Hamas on Israel in early October, in which a number of Israelis lost their lives.Photo by Karolina Grabowska on Pexels“Buy Cash Money and Money Transfer Company”The entity targeted by these sanctions is a Gaza-based virtual currency exchange known as the “Buy Cash Money and Money Transfer Company.” It is operated by Khan Yunis, a resident of Gaza. According to the Treasury Department, both the exchange and Khan Yunis are alleged to have ties to Hamas. Ahmed M.M. Alaqad, the owner of the business, has also been named in the sanctions.The primary objective of these sanctions, as stated by the Treasury Department, is to disrupt the sources of revenue for Hamas. The attack on Israel served as a trigger for these actions. Treasury Secretary Janet Yellen emphasized the determination to prevent Hamas from raising funds for further acts of terror and violence against the people of Israel.This includes imposing sanctions and cooperating with international allies and partners to identify, freeze, and seize any assets related to Hamas in their respective jurisdictions. Yellen stated:“The United States is taking swift and decisive action to target Hamas’s financiers and facilitators following its brutal and unconscionable massacre of Israeli civilians, including children.”Crypto sector riskIt’s not the first time that crypto platforms have been implicated where terrorist financing is concerned. Earlier this year it emerged that Bitfinex Turkiye, the Turkish local exchange business of global crypto platform Bitfinex, was alleged to have been used for the purposes of money laundering by Hamas. Additionally, leading crypto platform Binance has found itself facing similar allegations.In the immediate aftermath of the recent attack, Israeli authorities moved to close down accounts they claimed were linked with Hamas on crypto platforms like Binance and elsewhere. The Israelis have continued where they left off in this respect, with a report emerging earlier this week that over one hundred accounts on Binance have been ordered to be shut down, with a further two hundred accounts facing scrutiny.While crypto may not account for a sizable proportion of terrorist financing means, these events open up a point of attack for those who oppose the further roll-out of decentralized money and systems.Fighting illicit finance through sanctionsNotably, the US Treasury has been employing sanctions as a tool to cut off financial support to entities suspected of being involved in terrorism or other illicit activities. In a similar vein, earlier in October, the Treasury announced sanctions against crypto wallets associated with Chinese chemical manufacturers, concurrently with an indictment from the Department of Justice related to the production of the drug fentanyl.Earlier this year, blockchain analytics firm Elliptic indicated that most Chinese suppliers of fentanyl precursors were accepting payments for the illicit material in cryptocurrency.It’s worth mentioning that this move by OFAC not only targets Hamas but also includes other entities allegedly connected to the Buy Cash Money and Money Transfer Company, including an al-Qaeda affiliate and the Islamic State of Iraq and Syria (ISIS).

Japan’s Financial Services Agency (FSA) is advancing proposals to authorize exchange-traded funds (ETFs) backed by specific cryptocurrencies, a move that fleshes out previously reported plans to apply a flat 20% separate tax to crypto gains. According to agency materials released on Dec. 26 and reported by CoinPost, the regulator has now clarified that crypto-linked ETFs and derivatives will be integrated into this new tax framework.Photo by Jakub Żerdzicki on UnsplashThe materials, part of the tax reform framework for the fiscal year 2026, indicate that the regulator intends to align the tax treatment of crypto-linked ETFs with that of stocks and foreign exchange trading. Under the current system, cryptocurrency gains in Japan are classified as miscellaneous income, subjecting investors to progressive tax rates that can reach approximately 55% when local levies are included. The proposed reforms aim to integrate crypto assets into the Financial Instruments and Exchange Act (FIEA), a legislative package slated for debate during the 2026 Diet session. Derivatives also subject to separate taxBeyond ETFs, the regulator plans to adjust the taxation of derivative products based on certain crypto assets. While these derivatives would remain classified as miscellaneous income—similar to conventional futures—the method of taxation would shift from comprehensive taxation to a separate self-assessment model. Despite the outlined tax reductions, market observers anticipate that full implementation may be delayed until 2028 due to the time required to amend the relevant laws and government ordinances. FSA restructures to better oversee cryptoIn parallel with regulatory updates, the FSA is restructuring its internal operations to better address digital finance. Nikkei reported that the agency has decided to elevate its Crypto-Assets and Blockchain Innovation Office to the status of a division beginning in the administrative fiscal year starting July 2026. This restructuring follows an August proposal in which the FSA cited the need to bolster its capacity to handle financial services transformed by financial technology, crypto trading, and generative artificial intelligence (AI). The agency noted that it faces accumulating challenges, including fraud prevention and the government's broader goal of positioning Japan as a leading asset management nation. Additionally, the establishment of a new Asset Management and Insurance Supervision Bureau is expected as part of the reorganization. The regulatory shifts coincide with broader efforts to integrate blockchain technology into Japan's financial infrastructure. A separate Nikkei report last week stated that policymakers have agreed to prepare for the issuance of local government bonds as blockchain-based security tokens. The government plans to submit the necessary legislation during the next ordinary Diet session, aiming to streamline settlement processes and enable real-time monitoring of investor data. Corporate crypto strategies persist despite concernsIn the private sector, Tokyo Stock Exchange-listed Metaplanet is proceeding with a corporate strategy focused on Bitcoin accumulation. Dylan LeClair, the company's Director of Bitcoin Strategy, said on X that shareholders at an extraordinary meeting approved proposals to raise capital for additional Bitcoin purchases, including the issuance of Class B preferred shares to overseas institutional investors. Earlier this year, Metaplanet shareholders authorized a long-term plan to acquire more than 210,000 Bitcoin by 2027, representing roughly 1% of the total supply. However, analysts warn that corporate models based primarily on asset accumulation face structural risks. According to Cointelegraph, industry figures such as MoreMarkets CEO Altan Tutar and Solv Protocol co-founder Ryan Chow have cautioned that companies relying solely on digital asset holdings may struggle to maintain valuations without developing operational businesses that generate consistent returns. 

Dubai's regulator, the Virtual Asset Regulatory Authority (VARA), has been ahead of the curve by comparison with its peers internationally in getting a crypto regulatory framework in place, and now it's moving to tweak those regulations further. In a press release published via ZAWYA on Sept. 26, VARA announced an update to its crypto regulations which specifically deals with marketing. Its addition of “Marketing Regulations for Virtual Assets and Related Activities 2024” applies to virtual asset service providers (VASPs) operating within the Emirate of Dubai. In tandem with the updated regulations, VARA has published a marketing guidance document to assist VASPs in abiding by the regulations, providing detailed instructions and outlining best practices in terms of the application of appropriate marketing activities. Photo by ZQ Lee on UnsplashMandatory disclaimerOne of the new requirements demanded by the regulator is that marketing content related to digital assets should incorporate a disclaimer outlining to investors that there are financial risks associated with digital assets. To that end, from October 1 onwards, VASPs are required to add the following disclaimer, prominently displayed, within product marketing material: “Virtual assets may lose their value in full or in part and are subject to extreme volatility.” In its guidance documentation, VARA has stipulated that any content which contains contradictory messaging or information provided to users in “small print” is not deemed to be acceptable. The rules apply to both licensed entities and any unlicensed entities that attempt to offer a service within the Emirate of Dubai.  Consumer protectionThe motivation behind the regulatory update is the protection of consumers through the prevention of the dissemination of misleading information. The regulator wants consumers to be well-informed about crypto products, such that they’re aware of both the risks and opportunities associated with digital assets. VARA has set out a schedule of fines, broken down by category, with fines of up to 10 million United Arab Emirates (UAE) dirhams (AED), around $2.7 million, applying for those who do not comply. Commenting on the updated regulations, VARA CEO Matthew White stated: “Our updated marketing regulations and the newly issued guidance document reflect our commitment to maintaining Dubai’s position as a global leader in digital finance. We believe that by providing clear and actionable guidance, we can help VASPs deliver their services responsibly, while fostering greater trust and transparency in the market." The Dubai regulator isn’t the only one to home in on the marketing approach taken by crypto service providers. Since October 2023, the UK Financial Conduct Authority (FCA) has implemented new rules which specifically deal with the marketing of crypto products and services. Many crypto platforms found the new requirements too arduous to follow. Some withdrew from the market while others did so on a temporary basis while working towards becoming compliant. Within the European Union, the Markets in Crypto Assets (MiCA) regulation came into force in June 2023. Those regulations demand that crypto service providers provide information and conduct marketing activities in a clear, fair and non-misleading manner.