This week in crypto policy, the UK is on track to pass the Economic Crime and Corporate Transparency Bill giving law enforcement authority over confiscating crypto funds linked to criminal activities, meanwhile, the European Parliament launches a paper on rethinking regulations in non-EU countries.
In APAC, Thailand’s revenue department is setting to tax foreign income from 2024, including crypto, and both the Monetary Authority of Singapore (MAS) and the Hong Kong Monetary Authority (HKMA) have intensified their efforts to enforce anti-money laundering laws.
European Parliament Re-thinks Regulation for Financial Stability
Meanwhile, the European Parliament has recently issued a handy paper, where the EU Commissioner Mairead McGuinness has reiterated her concern over financial stability with regards to the lack of regulation in third countries. The paper discusses current regulation in non-EU countries and raises questions about financial stability.
However, the European Parliament said that “tighter regulation in the EU as compared with that in third countries may have adverse effects on the development of crypto-asset markets.”
Bringing the EU’s regulatory intentions into focus, the paper said, “The EU’s regulatory action should bring benefits overall, while third-party policy action is still needed to complement and strengthen financial stability.” The European Parliament also confirmed that the EU Regulation on markets in crypto-assets – also known as the Markets in Crypto-assets Act (MiCA) – that was adopted in June 2023, will come into application by December 2024.
Drawing comparisons from the US approach to crypto, the European Parliament observed that until the US Congress passes legislation, the country will have a fragmented regulatory landscape with wide variation in state-level requirements and an evolving degree of clarity as to what is under the jurisdiction of the SEC. “From the point of view of legal clarity and regulatory certainty, this is a drawback for the prospects of the US market and capacity of federal agencies to regulate, even as the vast majority of crypto assets remain backed by the US dollar,” the paper stated.
Furthermore, talking about the global regulatory landscape, the European Parliament said that “countries are taking a great variety of approaches to the rise of crypto-assets and at least 19 sovereign jurisdictions have taken action on them.”
Brussels Hosts the Fifth Annual Blockchain for Europe Summit
Brussels hosted the Fifth Annual Blockchain for Europe Summit on the 26th and 27th of September 2023, where experts, EU representatives, and industry leaders gathered to discuss pivotal blockchain topics including MiCA, anti-money laundering, DeFi, smart contracts, global regulatory coordination, and blockchain’s societal impact.
The big names from the crypto world including, Nicolas Wellinger – Global Public Sector Lead at BSV Blockchain, Erwin Voloder – Head of Policy at the European Blockchain Association, and representatives from the European Parliament, and the European Commission, were present at the event.
New UK Bill Allows Freezing and Confiscating Crypto Linked to Crime
To bolster efforts to curb crypto-related criminal activities, the UK is set to turn its Economic Crime and Corporate Transparency Bill into a law later this year. The bill empowers law enforcement on crypto assets as the UK gears up to streamline the process for local authorities to freeze and confiscate cryptocurrency tied to criminal activities.
The bill proposes to eliminate some legal constraints, including the need for an arrest or conviction before seizure. This move comes as a response to the rapid movement of crypto assets, which can hinder the efficiency of law enforcement actions. It is estimated that illicit crypto transactions linked to the UK amounted to around £1.24 billion ($1.53 billion) in 2021.
Taiwan Introduces Crypto Exchange Guideline
Taiwan’s Financial Supervisory Commission (FSC) has unveiled its long-awaited virtual asset services providers (VASPs) guidelines, emphasizing customer safety. The newly introduced guidelines require domestic cryptocurrency platforms to segregate company and client assets, set criteria for listing and delisting virtual assets, and bolster information transparency.
Notably, offshore exchanges looking to operate in Taiwan have to register with the FSC and comply with the country’s anti-money laundering regulations. Binance is reportedly seeking registration in Taiwan for anti-money laundering regulation compliance.
Following the guidelines, Taiwanese crypto platforms are anticipated to form an industry association and establish self-regulation. A working group comprising nine significant crypto exchanges, including MaiCoin, BitoGroup, and ACE, is already in place, aiming to apply for association establishment by mid-October.
Thailand to Tax Foreign Income, Including Crypto
Thailand’s revenue department is gearing up to tax foreign income from 2024, encompassing gains from crypto trading. This change focuses on residents trading in foreign stock markets via overseas brokerage, crypto traders, and citizens with offshore accounts.
The updated rule makes it mandatory for individuals to declare overseas income, irrespective of its utilization in the local market. Previously, only foreign income remitted to Thailand during the year it was earned was taxable.
This move aligns with Thailand’s increasing oversight of the crypto sector. However, with the election of the new prime minister, Srettha Thavisin, a shift in the crypto regulatory landscape is anticipated, given Thavisin’s previous involvement in crypto-related ventures.
Hong Kong and Singapore Crypto Policy Update
Hong Kong’s Securities and Futures Commission (SFC) will provide guidance on the tokenization of authorized investment products soon. Christina Choi, the Executive Director of Investment Products, highlighted the SFC’s role in safeguarding investors and ensuring market integrity at the Bloomberg Buy-Side Forum. Choi used a machine learning analogy to emphasize the importance of regulation.
According to SFC, tokenization’s benefits include the potential to increase product efficiency, reduce costs, and expand market reach through new channels.
With a technology-neutral regulatory approach, the SFC believes that primary dealing with tokenized SFC-authorized products is more fitting to be permitted initially. Secondary trading, on the other hand, presents more challenges, such as the need for instant record maintenance in a 24/7 trading setup and liquidity concerns.
Furthermore, both the Monetary Authority of Singapore (MAS) and the Hong Kong Monetary Authority (HKMA) have decided to tighten their grip on regulatory vigilance and intensify their efforts to enforce anti-money laundering.
Singapore has spotlighted the need for strict compliance in the asset and wealth management sectors, especially after recent money laundering cases where assets worth over $1.8 billion were seized.
Concurrently, HKMA has also emphasized on anti-money laundering and counter the financing of terrorism regulations following challenges posed by a surge in digital fraud, with over 70% of money laundering cases in Hong Kong being fraud related.
As digital assets continue to gain traction across Asia, both authorities are sending a clear message: regulatory compliance in the digital age is paramount.