HKX latest exchange to drop out of Hong Kong market

KuCoin CEO: Privacy Not a Key Bitcoin FeatureJohnny Lyu, the CEO of Seychelles-headquartered cryptocurrency exchange KuCoin, recently shared his perspective on the role of privacy in Bitcoin, maintaining that privacy isn’t the primary feature of the leading digital asset that many believe it to be.Photo by Karolina Grabowska on PexelsUnit of exchange is coreIn an interview with Cointelegraph earlier this week, Lyu expressed his belief that privacy is not the core feature of Bitcoin. He argued that the primary benefit of Bitcoin lies in its function as a unit of exchange, enabling users to hedge against recessions.Lyu drew a connection between the creation of Bitcoin and the 2008 financial crisis, which was triggered by the subprime mortgage crisis in the United States. According to him, these events served as the catalyst for the birth of Bitcoin. However, he made it clear that privacy is just one of the features offered by the cryptocurrency.KYC safeguarding customer fundsAddressing concerns about the increasingly stringent Know Your Customer (KYC) checks being implemented by KuCoin, Lyu emphasized the importance of these measures in safeguarding user funds. While some individuals argue that stringent KYC practices compromise privacy, the CEO believes that they enhance security. He explained that KYC procedures protect users’ assets by establishing ownership and enabling asset tracking in the event of theft.As the cryptocurrency industry continues to expand and interact with the physical world, compliance becomes crucial. Lyu expressed his belief that KYC checks are an inevitable and healthy stage in the development cycle of cryptocurrencies. Compliance measures contribute to the industry’s long-term stability and promote user confidence.New restrictionsKuCoin recently announced that starting from July 15, 2023, mandatory KYC checks will be implemented for all new users. This means that without completing the KYC process, new users will be unable to access KuCoin’s products and services. Existing users who have not undergone KYC will still be able to trade but will face restrictions on depositing new funds.Lyu acknowledged that these new KYC restrictions may impact KuCoin’s trading volumes in the short term, as some customers may choose to leave. However, the exchange remains optimistic about the long-term benefits of compliance. The CEO expressed confidence that increased compliance will attract more secure funds and users to the industry, ultimately enhancing the overall security and integrity of the ecosystem.KuCoin currently boasts 27 million users, reflecting a 35% increase compared to the previous year. Following the announcement of the KYC upgrades, the exchange experienced a notable uptick in trading volumes, with figures rising from around $540 million to over $660 million at the time of writing, according to CoinGecko data.The introduction of mandatory KYC checks is seen as a necessary step to enhance user security and protect their assets. Although short-term effects on trading volumes are anticipated, the exchange remains optimistic about the long-term benefits of compliance measures for the entire industry.

Hong Kong to Issue Digital Asset Licensing Guidelines in MayAccording to Hong Kong’s Securities and Futures Commission (SFC), the Commission will issue new guidelines for virtual asset exchanges within the Chinese autonomous special administrative region (SAR).© Pexels/Jimmy ChanSFC CEO Julia Leung made that announcement while speaking at an event in the city on Thursday, indicating that the guidelines are due to be released next month. Additionally the autonomous region intends to introduce a new licensing system from June 1 onwards, enabling the retail investors among Hong Kong’s populace to trade leading cryptocurrencies like Bitcoin and Ethereum.Hong Kong authorities had provided an insight into this approach back in February, when plans to provide retail access to digital assets were first set out. At the time, they outlined the need for retail customers to pass a knowledge test relative to digital assets or otherwise only being allowed to trade such assets once the customer had completed a certain level of training relative to digital assets, provided by a regulated crypto service provider.This latest announcement has arrived amid a backdrop of a series of recent indications that signify the intent of authorities in Hong Kong to make the autonomous region a major financial hub centered around digital assets.Leung articulated that the further development of this digital assets framework follows a consultation process that attracted more than 150 responses. Although virtual asset service providers (VASPs) will need to await the complete rollout of the licensing system, a handful of crypto businesses such as OSL and Hashkey, under the supervision of the Hong Kong regulator, have already started to offer their services.Crypto as propertyA Hong Kong court recently recognized cryptocurrency as property. The ruling emerged in a bankruptcy hearing pertaining to failed cryptocurrency exchange Gatecoin. In presiding over the case, Justice Linda Chan outlined that the autonomous region takes a broad view of what constitutes property. In finding crypto to meet the definition of property, she went on to clarify that it therefore has the capability of being held in trust.The finding has particular relevance in the crypto world right now given the consequences of an “in trust” custodianship of customer’s digital assets relative to numerous ongoing bankruptcy processes involving failed crypto businesses, and the pecking order of creditors in those instances, in their efforts to recover their digital assets.Positive approachWhile mainland China remains an adverse territory relative to digital assets, Hong Kong has taken to welcoming the sector and with that, enticing crypto firms to relocate to the autonomous region from the mainland. Leadership in the city has been making all the right soundings to demonstrate that it is actively trying to nurture the nascent sector.While recent months have seen the Biden administration in the United States attempt to close off banking from the crypto sector, in contrast, Hong Kong’s largest virtual bank, ZA Bank, was recently given permission to act as a settlement bank for regulated Web3 businesses located within Hong Kong.

Japan’s New Tax Amendment Sparks Optimism for Crypto IndustryJapan’s National Tax Agency has recently announced a revision to corporate taxation rules regarding crypto assets, according to a report by local media outlet Coinpost. The amendment states the exemption of companies from taxes on unrealized gains with cryptocurrencies.Photo by Nataliya Vaitkevich on PexelsPrevious tax burden on crypto profitsPreviously, corporate tax at a rate of approximately 30% was imposed on profits from cryptocurrency holdings, including unrealized gains, as per the Japan Times. This regulation has been criticized for burdening companies and impeding innovation in the blockchain industry. In response, some companies had opted to conduct their business operations overseas. However, with the new amendment, the rules have been relaxed for virtual assets issued and held by their companies.Two conditions for tax exemptionThe National Tax Agency clarified the two conditions under which virtual assets issued by a company would be exempt from taxation. Firstly, the crypto asset must have been issued by the company and continuously held since its issuance. Secondly, the virtual asset must have remained under continuous transfer restrictions since its issuance, which can be achieved through either implementing technical measures to prevent the transfer to other parties or holding the assets in a trust that meets specific requirements.This revision in corporate taxation rules is expected to provide relief for businesses in Japan that deal with cryptocurrencies and encourage innovation in the domestic blockchain industry. The relaxation of taxes on unrealized gains may also incentivize companies to keep their operations within the country rather than seeking alternatives abroad.