Editor：Colin Wu
1. Hong Kong’s weekly summary
1.1 Hong Kong to allow retail trading of major cryptocurrencies link
On May 23rd, according to Bloomberg, Hong Kong is set to announce that retail investors will be able to trade cryptocurrencies under new regulations in the digital asset industry. It is expected that individual investors will be able to trade tokens such as BTC and ETH starting from next month, subject to appropriate safeguards.
On the same afternoon, the Securities and Futures Commission (SFC) of Hong Kong released a consultation summary on the regulation of virtual asset trading platforms. The majority of respondents agreed with the proposal to allow licensed trading platform operators to provide services to retail investors. The SFC will implement a series of measures to safeguard these investors, including ensuring suitability in establishing business relationships with clients, good governance, enhanced token due diligence, and adherence to guidelines and disclosure requirements. The SFC welcomes virtual asset trading platform operators who are ready to comply with their standards to apply for licenses. As for operators who do not intend to apply for a license, they should take steps to wind down their operations in an orderly manner in Hong Kong.
1.2 Hong Kong Lawyer Wu Wenqian Highlights Three Requirements for Virtual Asset Trading Platforms to Obtain Hong Kong License link
On May 25th, Hong Kong practicing lawyer Wu Wenqian stated to Caixin that there are three main requirements for virtual asset trading platforms to obtain a license in Hong Kong. Firstly, they need to have a minimum capital investment of at least five million Hong Kong dollars and maintain liquid assets equivalent to no less than 12 months of operating expenses. Secondly, they are required to have two local Responsible Officers (ROs) in Hong Kong serving as executive directors of the virtual asset service provider, and these two ROs need to have at least 3 years of experience in the virtual asset industry. Background checks by the Hong Kong Securities and Futures Commission are also conducted on other executives. Thirdly, external evaluations are required, including governance and personnel arrangements, token listing procedures, anti-money laundering processes, and market monitoring, among others.
In his view, the most challenging aspect of obtaining a virtual asset trading license in Hong Kong is recruiting executives who meet the regulatory requirements. Hong Kong places great importance on the compliance of exchanges, and it is specifically mentioned that the responsible officers of exchanges should have at least 3 years of industry experience, preferably with compliance exchanges.
1.3 Hong Kong Kowloon City Police District Conducts Anti-Scam Operation link
From May 23rd to 25th, the Kowloon City Police District in Hong Kong carried out an anti-fraud operation. A total of 9 men and 5 women were arrested on charges of money laundering and fraud. The total amount involved in the cases was approximately 45 million Hong Kong dollars. The largest case involved a cryptocurrency investment fraud, with victims losing around 12.7 million Hong Kong dollars. The victims were recommended to a fake investment platform on a social media platform to invest in Bitcoin. They realized they had been deceived when they tried to withdraw their investments but were unsuccessful.
2. Huobi Founder Li Lin Declares: No Longer a Shareholder, Not Involved in Huobi Operations link
On May 26th, Huobi founder Li Lin made a statement on his social media account addressing inquiries about his relationship with “Huobi Hong Kong” and the re-use of the “Huobi” name in the Huobi app. He stated the following: (1) Since October 8, 2022, he is no longer a shareholder of Huobi. Any operational activities of Huobi after that date are unrelated to him. (2) According to the transaction agreement, Huobi is prohibited from using the Chinese names “火币” and “火幣” (the new company was renamed as “火必”). The Chinese name for Huobi has been changed to “火必.” (3) He requested that Huobi immediately cease its infringing use of the Chinese names “火币” and “火幣”. (4) His legal team will send a lawyer’s letter to Huobi, urging them to stop the infringement. They will consider further legal measures based on the situation to protect their legitimate rights and interests.
3. Governor of West Java, Indonesia: Exploring Opportunities to Transform Bitcoin Mining Using Geothermal and Hydroelectric Energy link
Ridwan Kamil, the Governor of West Java Province, Indonesia, expressed during Bitcoin 2023 that he is exploring transformative opportunities in Bitcoin mining. He hopes to leverage geothermal and hydroelectric potentials to convert renewable energy into economic energy. With 40% of the country’s population without bank accounts and over 12 million cryptocurrency investors, he believes that blockchain technology can bridge the gap and provide financial inclusivity to previously inaccessible communities in Indonesia.
4. Defendants in Ningbo’s Large-Scale Virtual Currency Theft Case Sentenced for Theft link
According to Pengpai News, on May 24th, the first major cryptocurrency theft case in Ningbo, China, prosecuted by the Jiangbei District Procuratorate, involved a total amount of 28 million yuan. After a court trial, seven defendants were found guilty of theft and sentenced to prison terms ranging from 3 years to 4 years and 10 months. It was reported that from June to December 2021, the gang operated by creating websites with Trojan horse software and luring others to download them. Once the download was clicked, the victim’s computer was infiltrated and remotely controlled to steal virtual currency from their accounts.
5. South Korea’s weekly summary
5.1 Korbit: “Overseas Virtual Asset Accounts” Included in Reporting Scope Starting This Year link
On May 24th, the South Korean exchange Korbit announced that starting this year, “overseas virtual asset accounts” will also be included in the reporting requirements. Failure to report information about overseas financial accounts within the designated reporting period may result in fines of up to 10–20% of the highest amount (up to 2 billion Korean won per year) based on the standards set by the National Tax Service. If the unreported amount exceeds 5 billion Korean won, the individual or entity may face public disclosure of their name and even criminal penalties.
5.2 South Korean National Assembly Unanimously Passes Two Bills Requiring Legislators and Senior Public Officials to Declare Cryptocurrency Assets link
On May 25th, according to news1, the South Korean National Assembly unanimously passed two bills that require lawmakers and senior public officials to disclose their cryptocurrency holdings. The bills are the “National Assembly Act Amendment” and the “Public Officials’ Code of Conduct Amendment.” According to the legislation, starting from the 22nd National Assembly members, they must register their ownership of cryptocurrencies in their asset declarations. Members of the 21st National Assembly are required to register their cryptocurrency holdings and any changes in holdings from the beginning of their term until May 31st of this year. Previously, South Korean lawmaker Kim Nan-guk faced criticism from the public for holding a significant amount of cryptocurrency during the legislative process on cryptocurrencies.
5.3 South Korean Prosecutors Detain and Search CELEbe Korea, the Issuer of FANC, for Alleged 500 Million KRW Bribery to List on Bithumb link
On May 26th, according to Digital Asset, the South Korean prosecutors conducted a search and seizure operation on CELEbe Korea, the issuer of the FANC (Fancy) token. They accused CELEbe Korea of allegedly bribing Lee Sang-jun, the CEO of Bithumb Holdings (the holding company of Bithumb, the second-largest cryptocurrency exchange in South Korea), with 5 billion Korean won (approximately 3.77 million USD) to list the FANC token on Bithumb. In March of this year, only Bithumb had listed FANC among the Korean cryptocurrency exchanges, and the price trend of the token raised suspicions of market manipulation. Recently, Bithumb has also been subject to a search and seizure operation by the prosecutors due to allegations of large-scale fund transfers by lawmaker Kim Nan-guk, which violated political funding laws, among others.
6. Montenegro High Court Overturns Previous Decision Granting Bail to Do Kwon, Currently Remains in Detention link
On May 24th, according to Bloomberg, the High Court of Montenegro overturned the previous decision to grant bail to Do Kwon, and he remains in custody. This decision also applies to Han Chong-joon, who served as the former CFO of Kwon. Previously, both individuals were granted release on bail with a bond of 400,000 euros by the Podgorica Primary Court, but the prosecution subsequently appealed the decision.
7. Philippine Securities and Exchange Commission: Gemini’s Derivatives Exchange Operates Without Authorization, Public Advised Against Investing link
According to Bloomberg, on May 18th, the Philippine Securities and Exchange Commission (SEC) issued a public notice on its website stating that the derivative exchange launched by Gemini Trust Co. is operating without authorization in the Philippines. The SEC advised the public not to invest and to cease all current investments in the platform. The regulatory body stated that Gemini Trust Company LLC did not register in advance, and its activities involving the issuance and/or sale of securities in the form of derivatives violate relevant regulations and are considered illegal. Penalties for violating these regulations include criminal prosecution and a maximum of 21 years of imprisonment or a fine of 5 million Philippine pesos ($89,562). A spokesperson from Gemini declined to comment on the matter.
8. Japan’s Weekly Summary
8.1 Japanese Cabinet Decides to Implement Stricter Anti-Money Laundering Measures Starting from June 1st to Track Cryptocurrency Asset Transactions link
According to Kyodo News, on May 23rd, the Japanese Cabinet decided to implement stricter anti-money laundering measures starting from June 1st. The aim is to track cryptocurrency asset transactions and align the legal framework with global standards. One key feature of the new framework is the implementation of Travel Rules, which will enhance the tracking of proceeds from criminal activities. Regulated crypto assets include stablecoins or cryptocurrencies that are pegged to currencies such as the US dollar or commodities.
8.2 Coincheck’s Plan to Go Public through Merger with Thunder Bridge May Face Further Delays link
According to CoinDesk, the plan for the Japanese cryptocurrency exchange Coincheck to go public through a merger with the special purpose acquisition company (SPAC) Thunder Bridge Capital Partners IV on NASDAQ may face further delays. The board of Thunder Bridge believes that there is not enough time to complete the merger before the July 2 deadline and has proposed extending the deadline for up to 12 months, subject to shareholder approval.
9. FBI Issues Warning to US Residents Traveling to Southeast Asia to Beware of Cryptocurrency Scams Posing as High-Paying Jobs link
On May 25th, the FBI issued a warning to US residents traveling to Southeast Asia to remain vigilant regarding “incredible job offers.” These offers could potentially be scams aimed at luring individuals into cryptocurrency fraud traps. After arriving at their destination, scammers may use threats of violence and confiscation of passports to coerce victims into participating in cryptocurrency investment fraud schemes.
10. Cryptocurrencies Will Never Be Legalized in Pakistan link
According to a report from Coindesk on May 24th, the Finance and Revenue State Minister of Pakistan, Aisha Ghaus Pasha, stated last week that cryptocurrency will never be legalized in Pakistan, and they have undertaken related efforts in this regard. It is claimed that this decision is based on a condition set by the Financial Action Task Force (FATF) to keep Pakistan off the FATF’s “gray list” of countries. However, FATF has clarified that it does not “indiscriminately” require countries to ban cryptocurrencies.
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