Nexo gets on regulatory ladder in Dubai with initial approval

Hong Kong’s Bricks-and-Mortar Crypto Shops Attract Chinese VisitorsHong Kong has become a thriving destination for cryptocurrency enthusiasts, particularly mainland Chinese visitors, due to the ambiguity surrounding the regulatory status of these crypto shops.Despite the illegality of cryptocurrency transactions on the mainland and the ban on overseas exchanges serving onshore clients, Hong Kong allows legal crypto trading, and according to a recent report published by the Financial Times, the autonomous Chinese territory is being accessed by residents of the Chinese mainland for the purpose of trading crypto.Photo by Chapman Chow on UnsplashSurging demandBricks-and-mortar crypto shops, lightly regulated and scattered across the city’s popular tourism and shopping districts, have flourished thanks to the surging demand from mainland Chinese visitors. These stores offer customers the convenience of purchasing digital assets with cash, often without the need to disclose the source of funds or personal information.In contrast to the strict licensing requirements imposed on online exchanges in Hong Kong’s push to become a virtual assets trading hub, these over-the-counter (OTC) crypto stores provide customers with the opportunity to buy large volumes of cryptocurrencies with minimal or no verification checks.Before the border between China and Hong Kong reopened fully in February, mainland Chinese customers accounted for less than 5% of customers at Crypto HK, an OTC crypto outfit with two branches in the city. However, this figure has now increased significantly, making up around half of their customer base.Similarly, One Satoshi, a crypto store with nine branches in Hong Kong, reported trading volumes between January and May 2023 that were 20–25% higher than the same period the previous year. They anticipate a 35–40% increase in trading for the entire year.While some store owners, like Roger Li of One Satoshi, currently decline mainland Chinese customers due to Beijing’s crypto ban, they remain optimistic that restrictions will ease. This belief is prevalent among the crypto community in Hong Kong following the city’s announcement to become a virtual assets hub in October.Regulatory anomalyHong Kong introduced a new regulatory framework for cryptocurrency exchanges in June, requiring all online platforms operating in the city to apply for a license. However, most OTC stores still operate outside the purview of Hong Kong’s Securities and Futures Commission (SFC), presenting an area of further consideration for the government.OTC stores primarily serve as a simple way for users to convert money to and from unlicensed online exchanges, according to Carlton Lai, head of blockchain research at Daiwa Capital Markets. Hong Kong’s lenient regulations and ease of starting such businesses, as long as there is sufficient capital, contribute to the higher number of OTC stores compared to other locations.While some shops welcome increased regulation in the sector, others do not require customers to provide identification, promoting quick and anonymous transactions. However, this falls short of the investor protection measures mandated for online platforms seeking licenses to trade cryptocurrencies to retail clients.The lack of scrutiny faced by Hong Kong’s OTC shops, coupled with their proximity to mainland China — a market that ranked fourth globally for crypto trading in 2022 — makes them appealing to Chinese citizens still interested in the asset class.

Taiwan Proposes New Crypto Business CategoryWith regulation having trailed the crypto innovation, more recently it seems like every day brings further developments, with the latest installment seeing Taiwan take a significant step forward. Officials in Taipei are proposing the classification of crypto regulations within their own novel business category.Photo by Jack Brind on UnsplashFostering self-regulationThe move aims to potentially allow cryptocurrency-related companies to establish industry associations, ultimately fostering the creation of self-regulatory guidelines. The Ministry of Economic Affairs, in a recent announcement, unveiled its draft amendment to the Standards of Classification of Commercial Group regulations. This proposed amendment centers on the inclusion of a distinct category for digital asset services.An official from the economic ministry informed The Block that the freshly introduced business category outlines the scope of operations within the cryptocurrency sector. This encompasses various activities, such as cryptocurrency to fiat or digital token exchanges, facilitating cryptocurrency transfers, offering services for crypto storage and management, and providing assistance related to cryptocurrency issuance or sales.The official further elaborated that cryptocurrency firms will be permitted to form industry associations once the proposed business category is successfully incorporated into the relevant regulations. Seeking public input, the ministry anticipates finalizing the amendment in collaboration with the Ministry of the Interior in either mid- or late-October.Encouraging trade associationsBy allowing the establishment of industry associations, cryptocurrency companies can proactively devise self-supervisory rules that address industry-specific challenges and concerns. This move is anticipated to bolster transparency, security, and responsible conduct within the cryptocurrency ecosystem.Taiwan’s approach to virtual asset services providers (VASPs) has mandated compliance with anti-money laundering laws since the implementation of anti-money laundering regulations by the Financial Supervisory Commission in July 2021. However, the overall industry remains relatively unregulated within the country.Binance, the world’s largest cryptocurrency exchange, has recently embarked on the process of obtaining registration for anti-money laundering compliance under the FSC.Regulatory guidelines being draftedAs the regulatory landscape evolves, Taiwan’s FSC, which assumed its role as the principal regulator overseeing the crypto industry in March, is actively formulating comprehensive guidelines. These guidelines will cover trading and payment aspects associated with cryptocurrencies for VASPs.An FSC official revealed that the agency plans to unveil the VASP guidelines by the end of September. It’s understood that the guidelines will comprise thirteen regulatory principles. It’s believed that the issuance of crypto assets will be permitted but that stablecoin issuance will be prohibited. One prerequisite for the issuance of digital assets will be a requirement to accompany that issuance with a comprehensive whitepaper, detailing fundamental and necessary information that investors can review, relative to the token offering.Taiwan’s proposition of a novel business category signifies a pivotal move towards enhanced self-regulation and industry cohesion within the cryptocurrency sector. As the regulatory framework takes shape, the introduction of self-regulatory guidelines is poised to contribute to the responsible growth of the cryptocurrency industry in Taiwan.

Blockstream, a blockchain technology firm headquartered in British Columbia, Canada, has moved to expand its activities in Japan with the opening of a new office and the announcement of a partnership with local companies. The infrastructure development company has partnered with Diamond Hands and Fulgar Ventures, CoinDesk Japan reported. Diamond Hands is a Japan-based company involved in providing Bitcoin-related products. It helps companies to integrate Bitcoin and lightning payments into their services. Based in Wilmington, Delaware, Fulgur Ventures invests in early-stage startups. It is particularly focused on Bitcoin and Lightning Network-related projects.Photo by David Edelstein on UnsplashBootstrapping brand awareness Fulgur Ventures is Blockstream’s largest shareholder. The objective is to bootstrap brand awareness within Japan using these partnerships with local companies. To that end, Diamond Hands CEO Koji Higashi will become Blockstream’s brand ambassador. It’s thought that efforts will be made going forward to further expand partnerships with local Japanese companies. Blockstream announced in a press release that it aims to drive adoption of self-custody technologies and Bitcoin layer-2 innovations within the East Asian country. Furthermore, it plans to drive adoption of real-world asset (RWA) tokenization. Commenting on the development, Blockstream Founder and CEO Adam Back stated:"With increased regulatory clarity and rising institutional interest in Bitcoin now is the moment for Blockstream to establish a direct presence in Japan, one of our most important markets." Back added that the company is looking forward to “empowering Japanese enterprises and individuals to fully harness Bitcoin as the foundation for a financial future that's secure, scalable and decentralized.” Tokyo office Another aspect to the expansion involves the opening of an office in Tokyo by Blockstream.  Adam Back is a Bitcoin OG who has often been the subject of speculation in attempts to identify pseudonymous Bitcoin founder Satoshi Nakamoto. Back proposed Hashcash, a proof-of-work-based system and forerunner to Bitcoin, in 1997. The Japanese corporate world has demonstrated its interest in Bitcoin in recent months, with local company Metaplanet launching an ambitious plan to acquire 21,000 Bitcoin by 2026, having adopted the Bitcoin playbook pioneered by American business intelligence and Bitcoin development company MicroStrategy. Blockstream’s investment arm, Blockstream Capital, has also been active in the market. Last month, the company invested $75 million into crypto custodian Komainu. Komainu is a joint venture between CoinShares, Ledger and Japanese global financial services company Nomura.  The same month, the company launched two institutional-grade Bitcoin investment funds. The funds, Blockstream Income Fund and Blockstream Alpha Fund, have been devised to cater to a growing demand from institutions for transparent, regulated and secure financial products. A third fund, Blockstream Yield Fund, is due to launch later this year. It will offer Bitcoin holders consistent, low-risk returns on their holdings. Blockstream was founded in 2014. In its earlier years, the company has served as a technology provider relative to the Liquid Network. In Core Lightning, it has developed a well-recognized implementation of the Lightning Network protocol.  To facilitate Bitcoin holders in terms of self-custody of the leading crypto asset, Blockstream developed Blockstream Jade, a hardware wallet built on open-source software. The device offers air-gapped functionality, meaning that users can perform transactions without connecting the device itself directly to the internet.