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Crypto regulation in the world: weekly digest #131

UAE

The UAE Securities and Commodities Authority (SCA) has recently issued draft regulations for security tokens and commodity tokens, marking a significant development in the UAE's financial markets. This new regulatory framework aims to further integrate DLT into the country's financial sector.

The regulation comprises 18 articles covering various aspects of security and commodity tokens. It defines security tokens as digital assets created using DLT to represent financial rights or tangible assets, such as equity tokens and bond tokens. Commodity tokens are defined as digital assets based on the value of physical commodities like gold and oil.

The regulation outlines provisions for offering, issuing, promoting, and registering these token contracts within the UAE. It requires security and commodity token contracts to be recorded and managed through a distributed ledger meeting specific technical and organizational standards. Trading and settlement of these tokens are restricted to licensed markets or alternative trading systems.

The SCA has emphasized investor protection and market integrity in the regulation. Obligors must provide comprehensive information to token owners about the distributed ledger's operation, associated risks, and disaster recovery measures. The regulator can impose administrative measures for violations, including suspending offerings and cancelling subscriptions.

The draft regulation was published on the SCA website for stakeholder feedback. Stakeholders are invited to provide input by February 14, 2025. About the UAE’s crypto regulation framework you can read here.

USA

The SEC officially withdrew Staff Accounting Bulletin 121 (SAB121) on January 23, 2025, marking a significant shift in cryptocurrency regulation. Earlier, the U.S. Senate had passed a bill to cancel the rule, but it didn’t enter into force.

From now, companies, first of all banks, are no longer required to record customer crypto holdings as liabilities on their balance sheets. SAB 122 replaces SAB 121, directing registrants to use existing accounting standards for assessing obligations to safeguard crypto-assets.

The withdrawal occurred shortly after President Trump's inauguration on January 20, 2025, reflecting a new administration's approach to crypto regulation. The cancellation is expected to remove barriers for banks and financial institutions entering the crypto market. Companies must apply SAB 122 retrospectively, adjusting prior financial statements and providing disclosures about the effects of these accounting changes.

The cancellation of SAB 121 is likely to have several significant impacts on future SEC regulations regarding cryptocurrencies, first of all, a shift in regulatory approach. The rescission of SAB 121 signals a potential move towards more balanced and flexible crypto regulations. The removal of SAB 121 opens up opportunities for banks to offer crypto custody services. Future SEC regulations may need to address this new landscape, potentially leading to more specific guidelines for financial institutions in the crypto space.

Taiwan

Taiwan's Financial Supervisory Commission plans to propose a draft law on Virtual Asset Service Providers (VASPs) in June 2025. For the first time, banks will be allowed to issue stablecoins. These stablecoins will serve as a bridge between fiat currency (New Taiwan Dollar) and virtual currencies, providing investors with a stable entry point for trading.

The law will also reinforce the requirement for VASPs to complete AML with the FSC before providing services. This applies to both domestic and offshore VASPs, with the latter needing to establish a local presence.

All stablecoins issued in Taiwan will require FSC approval, including requirements for issuing qualifications and reserve funds. The FSC will coordinate with the central bank to distinguish stablecoins from Central Bank Digital Currencies.

VASPs will need to fulfill internal control mechanism obligations, implement robust information security systems, and create processes for resolving customer complaints. They must also retain business records for five years. Non-compliant VASPs may face criminal liability, including imprisonment for up to two years and/or fines up to NT$5 million for individuals and NT$50 million for legal entities.

This proposed law aims to regulate and integrate virtual assets into Taiwan's financial system, balancing innovation with consumer protection and financial stability.

News from other countries:

  • President Donald Trump signed an executive order on Thursday, January 23, 2025, focused on promoting U.S. leadership in digital assets and financial technology. The order establishes a working group on digital asset markets, chaired by the Special Advisor for AI and Crypto, to propose regulatory and legislative recommendations for the cryptocurrency industry within 180 day.

  • On January 22, 2025, the U.S. Court of Appeals for the Fifth Circuit issued a landmark ruling to reverse the sanctions previously imposed on Tornado Cash, a decentralized cryptocurrency mixer. This decision overturns the sanctions placed by the Treasury Department's Office of Foreign Asset Control (OFAC) in 2022.

We continue to highlight the news of the world of crypto regulation worldwide. Please stay with us!

The TokenScope Team
#TokenScope #CryptoNews #AML #KYT #UAE #stablecoins #mixer #Trump
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