Korean Lawmakers Make Progress on Virtual Asset User Protection Bill

Japan's Financial Services Agency (FSA), the nation's primary financial regulator, has recently proposed a series of measures aimed at safeguarding users against "unlawful transfers" to cryptocurrency exchanges. This move, however, may pose significant challenges to the peer-to-peer (P2P) transactions market. Bolstering user protection measuresCiting findings from the National Police Agency, which highlight that damages resulting from specialized fraud involving unlawful money transfers are predominantly facilitated through cryptocurrency, the FSA has urged financial institutions to bolster user protection measures. The agency emphasized the importance of assessing risks associated with transfers to crypto-asset exchange service providers. In a request published on Wednesday directed towards Japanese banks, the FSA underscored the persistently high incidence of fraudulent transactions in the country, facilitated through crypto. To address this concern, the FSA and the National Police Agency have proposed various initiatives. One such initiative entails directing banks to enhance monitoring of unlawful transfers to cryptocurrency exchange service providers.Photo by Jayjayli on UnsplashPeer-to-peer (P2P) market implicationsHowever, another proposal from the regulator may have a profound impact on the P2P market. The FSA suggests halting transfers to cryptocurrency exchange service providers if the sender's name differs from the account name. This recommendation, explained in the Japanese version of the press release using the term "reject," implies the suspension of such transfers from both individual and corporate accounts. For users of P2P platforms, where transactions often involve different names between the sender's and receiver's fiat and crypto accounts, this directive could significantly disrupt the market. Rejecting transactions from an individual's bank account to another individual’s crypto wallet could undermine the functionality of P2P transactions. Positive crypto developmentsDespite this potential issue needing to be clarified and resolved and the East Asian nation not having a comprehensive regulatory framework for cryptocurrencies in place, Japan is showing indications of gearing up for broader adoption. The Bank of Japan (BoJ) is preparing to pilot a Japanese central bank digital currency (CBDC) pegged to the Japanese yen.In June of last year, the country established a legal framework for stablecoins. Additionally, the FSA has proposed a legislative amendment to support the development of decentralized autonomous organizations (DAOs) in Japan. The proposed amendment aims to designate potential DAO tokens as "Limited Company Type DAO Employee Rights Tokens," granting holders legal rights akin to regular limited liability company (LLC) members. Last December the Japanese government considered and later acted on revising crypto tax policy to exempt unrealized crypto gains from being taxed. This proposal was originally put forward by the FSA earlier in 2023. In another development, authorities in the city of Kochi signed an agreement on Feb. 7 to virtualize the city on the Start Lands metaverse application, with plans to welcome online tourists later this summer. Despite these most recent recommendations from the FSA potentially signaling a less crypto-friendly stance, the Japanese authorities have otherwise demonstrated that they’re working towards creating workable conditions for the development of crypto and Web3 within the country.

In a collaboration between the Dubai-based Human Institute, Hong Kong’s Animoca Brands and Polygon Labs, the launch of Humanity Protocol on Polygon CDK has been confirmed. Palm recognition technologySpearheaded by Hong Kong entrepreneur Terence Kwok and guided by a council of Founding Humans including Yat Siu, Chairman of the board at Animoca Brands, and Sandeep Nailwal, co-founder of Polygon Technology, this protocol pioneers the use of palm recognition technology as a less intrusive alternative to conventional methods like iris scans. Humanity Protocol is attempting to bring about a paradigm shift in user-centric identity verification within Web3 applications. By integrating palm recognition technology into blockchain infrastructure, it offers a streamlined and inclusive experience for users, departing from the often cumbersome and intrusive nature of existing proof-of-personhood technologies.Photo by Brett Jordan on UnsplashNon-invasive ID verificationIn an announcement on Tuesday, Yat Siu emphasized the significance of non-invasive biometrics in fostering a user-centric ecosystem. He underscored the importance of Humanity Protocol’s approach in promoting equity and inclusion while upholding the principles of digital ownership. Echoing these sentiments, Polygon’s Sandeep Nailwal highlighted Humanity Protocol’s pivotal role in enabling a diverse range of blockchain and real-world applications. Taking to the X social media platform, pseudonymous crypto trader and angel investor @Bull1shkid wrote:”Worldcoin has shown that there is a lot of interest in an identity verification mechanism in the crypto space. Humanity is applying this to crypto, making it decentralized and more convenient to use. With Polygon and Animoca on board. Proud to be an early backer!” By contrast, Worldcoin, which depends upon iris scanning, has proven to be far more controversial. The project is being investigated by multiple authorities worldwide, with the most recent probe having been launched in Hong Kong. Leveraging ZK-proofsThe Humanity Protocol leverages ZK-proofs, cryptographic protocols that enable users to prove specific information without revealing the underlying data itself. By amalgamating Sybil resistance with verifiable credentials in a decentralized validator node network, Humanity Protocol paves the way for decentralized social media platforms, enterprise DeFi solutions and beyond. The incorporation of zkEVM Layer-2 blockchain protocol, fortified by ZK proofs, not only enhances network security and efficiency but also grants users complete ownership over their data and identity. Nikita Uriupin, founder of Exverse, highlighted to Cointelegraph the potential of privacy-preserving technologies like ZK-proofs in bolstering the mass adoption of Web3 technologies. He emphasized the confidence instilled by such solutions in an era marred by widespread data breaches. According to data from IT Governance, the year 2023 witnessed 2,814 reported data breaches, compromising over 8.2 billion documents throughout the year. With the imminent launch of the Humanity Protocol Testnet, users will soon have the opportunity to experience the protocol firsthand and begin earning rewards. Positioned as the human layer for Web3, Humanity Protocol aims to onboard the first billion humans onto a Sybil-resistant network of blockchains, marking a significant milestone in the evolution of the decentralized web. By seamlessly integrating cutting-edge palm recognition technology with blockchain infrastructure, the protocol has the potential to set a new standard for user-centric identity verification, promoting equity, inclusion and genuine digital ownership in the Web3 landscape. 

Huobi Expands Crypto Trading Services in Hong KongHuobi, the Seychelles-headquartered prominent cryptocurrency exchange, is making strides in Hong Kong as its local subsidiary, Huobi HK, now offers crypto trading services to clients in the region.Following its expressed intention to apply for a virtual asset exchange license from the Hong Kong Securities and Futures Commission (SFC), Huobi HK has commenced providing crypto spot trading and virtual asset custody in Hong Kong. In order to comply with regulatory and anti-money laundering (AML) requirements, the exchange will collaborate with independent auditors, as announced by Huobi HK on Twitter.Photo by Shubham Dhage on UnsplashCrypto business licensingThis move aligns with the broader trend of crypto firms shifting their focus toward the East, where regulatory environments are becoming increasingly accommodative. A spokesperson for Huobi stated in a prepared statement: “Regulation of Web3 in Hong Kong will contribute to the widespread adoption of cryptocurrencies on a global scale.”Hong Kong, a Special Administrative Region under Chinese governance, recently introduced a regulatory framework for crypto exchanges, which took effect on June 1. Under these new regulations, retail investors in Hong Kong will be able to trade cryptocurrencies on licensed platforms, removing previous restrictions that limited trading to investors with portfolios exceeding HK$8 million (approximately $1 million).The new regulations impose requirements on virtual asset trading platforms to implement “suitable” onboarding processes and disclosures. Additionally, tokens must meet “minimum criteria” to ensure that “retail investors should be less prone to market manipulation.”Crypto sector interestHong Kong’s inviting regulatory landscape has already piqued the interest of crypto firms. The Greater China division of WeWork, a coworking provider, reported receiving 40 to 50 applications and inquiries from crypto businesses seeking to establish a presence in Hong Kong in recent months.Justin Sun, Tron founder and Huobi global adviser, drew parallels between the developments in Hong Kong and Beijing in a tweet, stating, “It is indeed fascinating to witness the Beijing government’s recent focus on Web 3.0, particularly considering the imminent June 1st developments in Hong Kong.” Sun added that this represents “a significant step towards recognizing the transformative potential of decentralized systems and blockchain-based solutions.”Huobi is actively involved in the development of Hong Kong’s Web3 ecosystem. In addition to its cryptocurrency trading license application, the firm became a significant contributor to Hong Kong’s first Web3 ecosystem fund during this year’s Hong Kong Web3 Carnival.HK Virtual Assets ConsortiumIn a separate announcement, Huobi disclosed that it has become the first member of the Hong Kong Virtual Assets Consortium (HKVAC), an organization dedicated to providing credit ratings for crypto asset exchanges and trading products. HKVAC, a collaborative effort between crypto industry players, including exchanges, institutional investors, and Hong Kong-licensed rating agencies, aims to enhance the security risk management capabilities of the crypto industry and assist authorities in establishing Hong Kong as a regional hub for virtual assets and digital finance.As a founding member of HKVAC, Huobi will serve as a reference point for the organization, leveraging its expertise in security technology and its compliance-oriented, standardized processes.