UK’s FCA Introduces New Financial Promotions Regime for Cryptoasset Firms

The UK’s Financial Conduct Authority (FCA) has issued a letter to cryptoasset firms outlining a new financial promotions regime. This legislation, set to be enforced from 8 October 2023, requires all entities marketing cryptoassets to UK consumers, including those based abroad, to adhere to the new regime. The scope of this regulation extends to various forms of communication such as websites, mobile apps, social media posts, and online advertisements.

The FCA has defined four legal pathways for cryptoasset promotions to UK consumers to be lawfully communicated. These include promotions conveyed by an authorised person, those made by an unauthorised person but approved by an authorised person, promotions communicated by a cryptoasset business registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs), and promotions that meet the conditions of an exemption in The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005.

The FCA has cautioned that promotions not following these pathways will violate section 21 of the Financial Services and Markets Act 2000 (FSMA). Such violations are considered criminal offences, attracting penalties of up to 2 years imprisonment, an unlimited fine, or both. The FCA has committed to taking strong action against those promoting to UK consumers illegally.

To assist firms in understanding these new regulations, the FCA has released a Policy Statement (PS23/6) and a Guidance Consultation (GC23/1). These documents aim to clarify the standards required for financial promotions to be fair, clear, and not misleading.

The FCA has encouraged all cryptoasset firms marketing to UK consumers to be ready for the new financial promotions regime by 8 October 2023. Unregistered or unauthorised cryptoasset businesses are advised to consider which of the four legal pathways they will use for their financial promotions and how they will fulfil the requirements of that pathway and the associated FCA rules.

The FCA anticipates that the main method for cryptoasset businesses to communicate financial promotions to UK consumers will be through registration with the FCA under the MLRs. The FCA has provided information about the anti-money laundering and counter-terrorist financing (AML/CTF) regime and information for firms seeking registration under the MLRs on their website.

The FCA has also clarified that it will not review or comment on draft documents as part of their assessment of an application and that submissions of poor quality or incomplete will be rejected. The FCA has emphasised the importance of full disclosure of all relevant information and has warned that it takes any non-disclosure of information that could impact their assessment very seriously.


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South Africa Sets Year-End Licensing Deadline for Crypto Exchanges

According to BloombergSouth Africa has mandated that all crypto exchanges operating within its borders must secure licenses by the end of the year. The Financial Sector Conduct Authority (FSCA), the country’s financial regulator, has already received approximately 20 applications since the licensing process was initiated a few weeks ago.

FSCA Commissioner Unathi Kamlana has warned that the regulator will take enforcement action against firms that continue to operate without a license beyond the November 30 deadline. This could result in these firms being shut down or fined. Kamlana explained that the regulatory framework was introduced due to the potential harm that financial customers could face when using crypto products.

South Africa, Africa’s most developed economy, is the first country on the continent to require digital asset exchanges to secure licenses. This move affects several major trading venues that originated from South Africa, including Luno, owned by Digital Currency Group, and Pantera-backed VALR. Global platforms such as Binance that operate in the country will also need to secure licenses.

The trend of intensifying regulations is not confined to South Africa alone. Yesterday, the Monetary Authority of Singapore (MAS) announced that crypto service providers in Singapore are required to place customer assets into a statutory trust by the end of the year for secure storage. This action underscores a global shift towards more stringent regulation in the cryptocurrency sector.


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$707 Million Investment in Metaverse So Far in 2023 Despite Metaverse Land Collapse

Despite a significant downturn in the virtual world market and a drastic drop in metaverse land prices, the metaverse industry has attracted substantial investment in 2023. According to a recent report by DappRadar, venture capital funds have invested $707 million into metaverse projects this year.

The report highlights a sharp decline in trading volumes in Q2 2023, falling 81% to $56M due to shifting interests towards AI, memes, and DeFi services. This has led to decreased trading volumes for top virtual dapps like Otherdeed for Otherside and Topia.

Furthermore, metaverse land prices have plummeted. Topia’s floor price fell by approximately 99.58%, and Otherdeed for Otherside saw an 86% decrease in land value. Other platforms like The Sandbox and Decentraland also experienced significant drops in land prices.

Despite these challenges, the metaverse market has seen some positive developments. The debut of Apple’s VR Pro sparked significant market shifts, and the rise of decentralized identity solutions, with dapps like Ethereum Name Service (ENS), ADA Handle, and Unstoppable Domains gaining traction.

Another notable development is the introduction of Token Bound Accounts (ERC-6551), set to revolutionize the way we interact with NFTs. ERC-6551 allows every NFT to own Ethereum (ETH) and other ERC-20, 721, 1155 tokens, opening avenues for a range of use cases previously inaccessible or difficult to implement on-chain.

The report also emphasizes Asia’s potential to dominate the metaverse market, with a projected boost to its GDP by up to $1.4 trillion by 2035. Countries or Regions like Hong Kong, Mainland China, and Japan are leveraging the metaverse as a strategic asset for their digital future.

In the face of these challenges, companies like Animoca are still making significant investments in metaverse startups, indicating a promising future for the industry. This continuous funding and development hint towards an exciting future in the metaverse space, despite the current market downturn.


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Bitcoin Miners Move 54,000 BTC to Binance as Liquidity Drops

Recently, significant Bitcoin transactions have been observed in the market. According to Ki Young Ju, the CEO of CryptoQuant, Bitcoin miners have reportedly transferred a whopping 54,000 BTC to Binance over the last three weeks.

This dramatic shift was announced via a series of tweets by Ki Young Ju, which rises speculation about potential implications on Bitcoin’s market dynamics.

Despite the major transfer of Bitcoin to Binance, the leading cryptocurrency exchange, there hasn’t been a significant change in the Bitcoin-USD open interest. The CEO’s tweets suggest that this hints towards a reduced likelihood of using these funds to create new long positions. Instead, it points more towards the possibility of spot selling.

A broader look at the market reveals a diminishing crypto liquidity on both ends of the spectrum. CryptoQuant’s data showcases a decline in the sell-side liquidity for cryptocurrencies, albeit accompanied by an even sharper fall in the buy-side liquidity.

Crypto exchange reserves have also seen a downward trend, further corroborating the liquidity squeeze. In the span of a year, Bitcoin’s exchange reserve has decreased by 20%, while Ethereum (ETH) and stablecoins experienced a more drastic decline of 40% and 52% respectively.

This liquidity crunch in the crypto market, coupled with the significant transfer of Bitcoin to Binance, may be setting the stage for potential price volatility. Market stakeholders and investors are closely watching these unfolding developments to gauge their impact on Bitcoin and other cryptocurrencies’ pricing and trading behavior.


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185 Blockchain Hacking Incidents with $920M Loss Reported by SlowMist in First Half of 2023

SlowMist, a renowned blockchain security firm, has recently published its mid-2023 report on Blockchain Security and Anti-Money Laundering (AML). The report offers a comprehensive overview of the current global landscape of blockchain security and AML developments.

The first half of 2023 witnessed significant growth and increased security challenges in the blockchain sector. According to SlowMist’s Blockchain Hacked Incident Archive, there were 185 security breaches leading to a massive loss of $920 million. However, this figure represents a 54% decrease compared to the first half of 2022, which saw losses of around $2 billion.

The report categorizes the incidents into five sectors: DeFi/NFT/Bridge, Trading Platforms, Public Chain, Wallet, and Others. The DeFi, NFT, and Cross-chain Bridge sectors bore the brunt, with 131 incidents leading to losses of approximately $487 million. Despite fewer incidents in other categories, they still resulted in significant financial losses.

In a positive development, the first half of 2023 saw the successful recovery of stolen funds in 10 instances. Of the $232 million stolen, an impressive $219 million was reclaimed, including full refunds in three cases. This trend highlights the importance of robust security strategies and effective negotiations.

The report also underscores the intensifying global focus on Anti-Money Laundering. Regulatory bodies worldwide are reshaping the AML landscape, with notable actions taken by Tether, Circle, ChipMixer, the U.S. Treasury Department, Hong Kong, Indonesia, the United Kingdom, and France.

Mixing platforms such as Tornado Cash and eXch experienced significant user activity, being widely used for questionable transactions. Phishing scams, perpetrated by groups like Pink Drainer, Vemon Drainer, Monkey Drainer, Pussy Drainer, and Inferno Drainer, continue to pose a significant threat within the blockchain community.

The activities of hacking groups like the Lazarus Group highlight the escalating sophistication of threats within the blockchain ecosystem. These groups employ complex multi-chain paths and intricate transaction patterns to launder stolen assets and evade detection, necessitating advanced countermeasures and investigative methods.

SlowMist’s report aims to arm individuals and the broader blockchain industry with the knowledge needed to counter these evolving threats.


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HKUST Vice-President Urges Hong Kong to Issue Stablecoin HKDG

According to TKWW, key figures including HKUST Vice-President suggest that the Hong Kong government should issue its own stablecoin, referred to as HKDG, as a strategic move to bolster the city’s digital economy.

Hong Kong SAR government’s ongoing promotion and acceptance of digital assets positions it ahead of countries or regions such as the U.S and Singapore. In this context, stablecoins, bridging the gap between traditional finance and the digital economy, are becoming increasingly important. Issuing a stablecoin linked to the Hong Kong dollar could significantly enhance transaction efficiency, reduce costs, and strengthen the region’s fintech capabilities.

However, the government’s current stance of encouraging private institutions to issue Hong Kong dollar stablecoins is seen as too conservative by industry insiders. This strategy might lead to stablecoins with marginal market impact, a concern underscored by the example of Singapore’s XSGD.

The experts argue that a Hong Kong dollar stablecoin, supported by the city’s foreign exchange reserves and government regulations, could provide a double guarantee of safety. Such a stablecoin, HKDG, could pose a challenge to dominant stablecoins like USDT and USDC, which currently hold market capitalizations of $830 billion and $280 billion, respectively. Given Hong Kong’s foreign exchange reserves of $430 billion, a government-backed HKDG offers greater credibility and lower risk.

The proposed HKDG could also represent a significant step towards de-dollarization. While it might not singlehandedly disrupt the dominance of the US dollar, it could challenge its supremacy within the digital asset ecosystem. The successful implementation of HKDG could inspire other sovereign currencies to follow suit, promoting diversification in the global financial market.

In essence, the call for a government-backed stablecoin like HKDG underscores both the potential and urgency for Hong Kong to establish a more commanding presence in the rapidly growing digital economy.

This proposition is co-authored by Wang Yang, Vice President and Chief Science Advisor of the Hong Kong University of Science and Technology and the Hong Kong Web3.0 Association, alongside renowned angel investor Wensheng Cai, Web3.0 Tech company founder Zhibin Lei, and doctoral student Yizhou Wen from the Hong Kong University of Science and Technology. Together, they’re advocating for a significant shift in strategy.


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Telegram’s TON Q2: Significant Account and Transaction Growth, Deflationary Measures, and Developments in DeFi, NFT, and Cross-Chain Solutions

In Q2 2023, The Open Network (TON) saw a 2.88 million total accounts and 173 million transactions, making it the 14th largest cryptocurrency by market capitalization. TON’s technology, ecosystem, and economy improved significantly, comparable to the previous quarter.

TON’s 2023.06 update introduces burn functionality, incinering 50% of network fees, potentially decreasing Toncoin supply. Additionally, a “Black Hole” mechanism permanently eliminates all Toncoin sent, potentially forming future deflationary measures.

In order to increase user involvement, a new smart contract called “The Locker” has been created. It enables users to lock up their Toncoin for a long time in exchange for rewards. Additionally, the network now allows users to send encrypted messages using TON wallets, guaranteeing secure communication even in the absence of conventional messaging servers.

Due to the Liquidity Mining Rewards Campaign, the network’s Total Value Locked (TVL) surged by 2200%, and more than $20 million has passed via the token bridge that was set up in the previous quarter. Staking and a decentralised cryptocurrency exchange have been added into the well-known TON wallet Tonkeeper, and other exchanges on TON have either been updated or just created.

Users now have the ease of earning staking rewards while also using their assets in DeFi thanks to the development of a liquid staking solution. The alteration of TON addresses to prevent asset loss from incorrect transactions and advancements in Non-Fungible Tokens (NFT), with well-known artists presenting their work and collecting royalties in Toncoin, are additional improvements.

TON has updated its virtual machine (TVM) and launched a new WebApp API in collaboration with Telegram. The system’s core has been optimized for optimization, security, and DDoS attack protection. Progress has been made in the development of the Rainbow cross-chain solution, which operates without intermediaries and private keys. Five TON contests have been conducted, with a prize pool over $200,000, and a large-scale Hack-a-TON program announced with a prize pool of 150,000 Toncoin. TON plans to introduce new cross-chain solutions, optimize tokenomics, stimulate growth in the DeFi segment, and conduct public stress testing of the blockchain in the next quarter.

Toncoin support has been added to a number of sites, including Changelly, Onramp, Mooli, CoinStats, and Chainalysis. Trust Wallet has integrated TON. Important partnerships have also been started with the cryptocurrency exchanges MEXC and


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