Leader of Japan’s DPP commits to crypto tax cuts ahead of election

Temasek Cuts Pay Following FTX AutopsySingaporean state-owned investment firm, Temasek Holdings, has announced a reduction in compensation for executives responsible for the company’s investment in the now-defunct cryptocurrency exchange FTX. Temasek, once the second-largest outside investor in FTX, faced scrutiny after the collapse of the exchange.Photo by Emilio Takas on UnsplashNo misconduct findingOn May 29, Temasek released a statement confirming the completion of its internal review of the $275 million investment loss incurred from FTX. The review determined that there was “no misconduct” within the company. However, both the investment team and senior management took “collective accountability” and experienced a reduction in their compensation.While acknowledging the inherent risks associated with any investment, Temasek emphasized the importance of continuing to invest in new sectors and emerging technologies to understand their potential impact on the business and financial models of existing portfolios. They recognized the need to adapt to an ever-changing world and explore avenues that could drive future value.It’s worth noting that the $275 million loss from the FTX investment constituted only 0.09% of Temasek’s portfolio value, which stood at over $293 billion at the time of the collapse.Temasek maintained that it conducted extensive due diligence before investing in FTX, emphasizing its commitment to a thorough review process. Chairman Lim Boon Heng stated in a May 29 interview with Bloomberg that there was fraudulent conduct intentionally hidden from investors, including Temasek. The negative outcome of the investment has been disappointing for the company and has had a significant impact on its reputation.Reputational damageSingapore Deputy Prime Minister Lawrence Wong echoed similar sentiments, highlighting the financial loss and reputational damage caused by the FTX collapse during a parliamentary meeting in November 2022.During the due diligence process, Temasek reviewed FTX’s financial statements, assessed regulatory risks related to financial service providers in the cryptocurrency market, and sought legal advice. The company also engaged with individuals who had firsthand knowledge of FTX, including employees, investors, and industry participants.In recent news, Temasek addressed and dismissed rumors about a $10 million investment in Array, a developer of algorithmic currency systems based on smart contracts and artificial intelligence. The company clarified that such reports were incorrect, refuting the circulating news articles and tweets.Temasek’s internal review process is certainly a move towards transparency and accountability. It indicates a willingness towards addressing the matter. That said, there are FTX creditor groups who fervently disagree with Temasek’s analysis.Class action lawsuitEarlier this year a number of FTX creditors filed a class action lawsuit against a number of venture capital (VC) firms, including Temasek. The FTX customers maintain that Temasek and others played a role in a conspiracy to defraud them. Venture capital firms have countered with the view that they themselves were victims as a consequence of the FTX collapse, suffering multi-million dollar losses.The fact remains that VCs get much further involved than merely handing over a check. They get involved with marketing, operations, and many other facets of the businesses of their portfolio companies. Meanwhile, other creditors suggest that Temasek has a responsibility to do right by the 1.4 million FTX creditors (a disproportionate number of them being Singapore-based) and to invest in a restructured FTX business, an option that represents the best opportunity for FTX customers to recover their funds.Temasek may have reached certain conclusions by way of their internal report on the matter but this is not likely to be the final analysis relative to its involvement in the fall of FTX.

Hong Kong’s insurance regulator is drafting rules that would bring insurers’ cryptocurrency exposure under a risk-based capital framework. According to Bloomberg, the Insurance Authority of Hong Kong is preparing a risk-based capital framework that would impose a 100% risk charge on insurers’ crypto holdings. The proposal distinguishes among crypto exposures, assigning stablecoin investments risk charges based on the fiat currency backing the Hong Kong-regulated token rather than applying a uniform treatment. The regulator is also considering capital incentives to channel insurers’ investment into infrastructure projects supporting Hong Kong or mainland China, including those listed or issued within the city. The Insurance Authority said the regime is designed to bolster the industry while promoting broader economic development. A public consultation on the rules is scheduled to run from February to April, ahead of any legislative submission.Photo by Vlad Deep on UnsplashStablecoin licensing focuses on robust reservesSeparately, the Financial Services and the Treasury Bureau is advancing other regulatory initiatives in the digital asset space. Secretary Christopher Hui indicated that the first batch of stablecoin licenses is expected to be issued early next year. According to the Hong Kong Economic Times, Hui noted that the government had received 36 stablecoin license applications by the end of September, following the implementation of the Stablecoins Ordinance in August. Regulators are prioritizing applicants that demonstrate strong reserve management, price stability, and robust anti–money laundering (AML) controls. Hui added that the government is currently collaborating with the Securities and Futures Commission (SFC) to finalize licensing rules for virtual asset trading platforms and custodial service providers, with proposals expected to reach the Legislative Council next year. StanChart and Ant’s tokenized depositsWhile regulators refine the rulebook, the traditional banking sector is moving forward with the technology underpinning the digital pivot. Standard Chartered has collaborated with Ant International to launch a tokenized deposit solution on Whale, Ant’s blockchain-powered treasury management platform. As reported by Tech in Asia, the solution enables real-time transfers in Hong Kong dollars, offshore yuan, and U.S. dollars. This initiative falls under the umbrella of Project Ensemble, a program launched by the Hong Kong Monetary Authority in March 2024 to shape the city’s tokenization ecosystem. Market headwindsThese developments follow the crypto sector’s entry into Hong Kong’s equity market. According to Bloomberg, HashKey Holdings, a licensed exchange operator, listed on the Hong Kong Stock Exchange on Dec. 17, raising HK$1.6 billion ($206 million). While shares initially debuted above the offer price, they had fallen approximately 15% to HK$5.69 by Dec. 22. The lackluster performance coincides with a broader pullback in the crypto market. Bitcoin is currently trading below $89,000, roughly 30% off its October peak. Institutional caution is also evident in global flows. According to CoinShares, crypto investment products recorded $952 million in net outflows for the week ending Dec. 20. Ethereum and Bitcoin products led the exit with outflows of $555 million and $460 million, respectively. Conversely, altcoins XRP and Solana bucked the trend, seeing inflows of $62.9 million and $48.5 million. James Butterfill, head of research at CoinShares, attributed the negative sentiment to delays regarding the CLARITY Act, a U.S. bill designed to clarify digital asset regulation, and continued selling by whale investors. 

Animoca Brands Japan, a key subsidiary of Hong Kong-headquartered Web3 investor Animoca Brands, has welcomed Kensuke Amo as its Chief Operating Officer (COO) to spearhead the company's growth in Japan. Industry credentialsAmo, a seasoned industry veteran who previously served as the managing executive officer at Japanese bitcoin wallet and exchange service Coincheck, officially assumed his role as COO last Thursday. With a proven track record in launching NFT businesses and steering new crypto asset ventures, Amo played a pivotal role at Coincheck. During his tenure as an executive officer from 2020, he pioneered initiatives such as Japan's first NFT marketplace for crypto asset exchanges and an inaugural initial exchange offering (IEO). In a social media post, Amo stated that in the role, he “will be committed to doing [his] best to contribute [to] Web3 technology [so that it takes] root in society.” In 2022, Amo ascended to the leadership position at Coincheck, where he led the NFT business and metaverse business, heading three distinct web domains. His involvement in the expansion of "The Sandbox" and "Otherside" in Japan, stemming from the partnership between Coincheck and Animoca Brands in 2020, further underscores his influence in the sector.Photo by Richard Tao on UnsplashJapanese market expansionRegulatory headwinds in the United States in 2023 led to the company pivoting and focusing on non-U.S. markets. It became clear later in 2023 that the company had a specific interest in growing its business in Japan when Animoca Brands Japan acquired an equity share in Cool Cats Group, an NFT-related project. That deal also implicated a collaboration with Animoca’s digital experience label, KLKTN. As Animoca Brands Japan strategically aligns itself within Animoca Brands' larger framework, Kensuke Amo aims to leverage the company's extensive assets and network, including over 400 portfolio companies. His mission involves combining his expertise in business and rule-making within the Japanese Web3 industry to facilitate the integration of Web3 into society. Commenting further on his appointment, Amo expressed his commitment to advancing the Web3 landscape in Japan. He stated: “As a strategic subsidiary of Animoca Brands, Animoca Brands Japan will make the most of its assets and network, including its more than 400 portfolio companies, while combining its knowledge and experience in business and rule-making in the Japanese Web3 industry.” Established in 2021, Animoca Brands Japan has played a crucial role in supporting Japanese intellectual property and content holders in their global Web3 expansion efforts. The company secured an undisclosed investment from Mitsui & Co., one of Japan’s largest trading companies, in June. Daisuke Iwase, the CEO of Animoca Brands Japan, expressed optimism about the collaboration with Kensuke Amo, emphasizing his leadership in the realms of crypto assets, NFTs and the metaverse in Japan. Amo’s industry involvement extends beyond Animoca Brands Japan, as he currently advises the Japan Cryptoasset Business Association (JCBA), Shibuya-ku Startup Ecosystem, Web3 project "OASIS" and real estate information service company LIFULL Co., Ltd. Additionally, he is the author of "Textbook of NFT" and "Non Fungible Me."