Last Friday, the Web3 project team of Japan's ruling Liberal Democratic Party published its 2024 Web3 white paper.
With a call to "make our country the center of Web3," the paper advocates for key measures to support the growth of the Web3 industry in Japan, such as according legal status to DAOs, considering local bitcoin ETF issuance, promoting the distribution of permissionless stablecoins and security tokens, tax reforms, and continued regulatory leadership that supports responsible innovation.
🇭🇰 Hong Kong green lights spot Bitcoin and Ether ETFs
On Monday, Hong Kong green lit the local issuance of several spot crypto ETFs.
China Asset Management, a major Chinese fund manager, said that its Hong Kong arm had received Securities and Futures Commission (SFC) approval to “offer retail asset management services related to spot crypto ETFs,” working with OSL and Bank of China International. Local asset manager Harvest Global Investments announced that its two spot crypto ETFs, which will be issued in collaboration with local crypto trading platform OSL, had received in-principle approval from the Hong Kong SFC. Similarly Bosera Asset Management and HashKey Capital also told The Block that they had received conditional approval for a spot Bitcoin ETF and a spot Ether ETF. The approval of spot Ether ETFs comes ahead of a pending US decision on the same product.
💡TRM Insights: As TRM’s Senior Policy Advisor Angela Ang told The Block, the approvals are “a significant milestone in Hong Kong's journey to become a leading crypto hub.” While other Asian jurisdictions like Singapore have eschewed local issuance of spot crypto ETFs, Hong Kong has pushed ahead to be the one of the world’s first jurisdictions to offer the instrument. If the ETFs take off, it could give the city’s crypto hub aspirations a leg up.
🇺🇸 US Senate unveils stablecoin legislation
On Wednesday, US Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) unveiled narrowly tailored payment stablecoin legislation. So what’s the TLDR?
Definition – A payment stablecoin is a dollar-pegged digital asset "that is, or is designed to be, used as a means of payment or settlement."
Issuers "obligated" to convert to dollars.
Asset itself is NOT a security.
Issuers would either have to be non-depository trust companies registered with the Fed or a depository institution "authorized as a national payment stablecoin issuer."
Allow banks and non-bank trust companies to issue stablecoins through dedicated subsidiaries.
Ban “unbacked, algorithmic” stablecoins.
Introduce capital and one-to-one reserve requirements.
Direct the FDIC to develop a regulatory regime to address the failures of stablecoin firms.
Permit state financial regulators to authorize and supervise stablecoin-issuing trust companies below USD 10 billion, a figure based on the outstanding value of a firm’s issued coins.
Give the Federal Reserve power to issue enforcement actions unilaterally against stablecoin firms larger than USD 10 billion but be required to take “joint” action with state authorities below that threshold.
Stablecoin legislation has long been seen as having the best shot of passage given the relative state of agreement between regulators and industry on the need for a clear framework that includes one-to-one reserve requirements. However, it has been slow going. House Financial Services Chair Patrick McHenry (R-NC) and Ranking Member Maxine Waters (D-CA) have worked on stablecoin legislation for years with a bill finally voted out of Committee last year.
Read TRM’s deep dive on stablecoin regulation here.
🇬🇧 And, UK stablecoin rules coming by summer
Stablecoin legislation is not only proceeding in the US as the UK government announced this week that it is set to put forward legislation for stablecoins as well as for crypto staking, exchange and custody by June or July.
On Monday Economic Secretary Bim Afolami, explained, "We are now working at pace to deliver the legislation to put our final proposals for our regime in place. Once it goes live, a whole host of crypto asset activities, including operating an exchange, taking custody of customers’ assets and other things, will come within the regulatory perimeter for the first time."
🇩🇪 Germany’s largest state backed lender to offer crypto custody
On Monday, Germany’s largest state-backed lender, Landesbank Baden-Württemberg (LBBW), announced a partnership with Austrian exchange Bitpanda to offer crypto custody services.
According to reporting by Coindesk, the two firms have entered into a strategic partnership, which would see LBBW provided with “Investment-as-a-Service” infrastructure to “store and procure cryptocurrencies,” including Bitcoin and Ether. The service will launch later this year and is an example of how traditional financial institutions, in collaboration with crypto businesses, can offer crypto assets and services to clients in a safe, secure, and compliant manner.
👮♀️ FBI disrupts ISIS-inspired attack on churches in Idaho
Earlier this month the FBI arrested an Idaho teenager for planning to kill churchgoers during Sunday services in the name of the Islamic State.
According to a federal criminal complaint filed on Saturday, April 6, Alexander Scott Mercurio, 18, from Coeur d’Alene, ID, was "attempting to provide material support and resources to ISIS," by actively planning to attack churches using "weapons, including knives, firearms, and fire.” The affidavit spells out the involvement of a “confidential informant” – likely a cooperator or undercover agent to whom Mercurio laid out his plan.
"Stop close by the church, equip the weapon(s) and storm the temple, kill as many people as possible before they inevitably disperse/scatter, then burn the temple to the ground and flee the scene," Mercurio allegedly wrote. He said he would then repeat this for all 21 churches in the town.
In preparation for the attack, Mercurio purchased weapons, accelerants, and other items to facilitate the attack.
According to reporting by NBC News, the FBI said it became aware of Mercurio during an investigation into a fundraising network that uses cryptocurrency and other fundraising methods to support ISIS in Syria and its Afghan affiliate ISIS-K.
Over the last few years, TRM has identified a number of ISIS and pro-ISIS fundraising efforts in cryptocurrencies, including multiple focused on recruiting Tajik nationals. In the wake of the deadly March 22, 2024 attack on a Moscow theater, for which ISIS took credit, TRM wrote a report on the use of cryptocurrencies by ISIS-K. For much more read it here.
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