Mitsubishi UFJ Trust Bank and Ginco Collaborate to Offer Japan’s First Crypto Asset Trust Services

Mitsubishi UFJ Trust Bank and Ginco announced on August 31 that they have initiated a partnership to offer Japan’s first-ever trust services for crypto assets. This move comes as institutional investors globally are increasingly seeking custody services for digital assets.

Regulatory Landscape

Mitsubishi UFJ Trust Bank had previously secured two patents related to trust services for crypto assets, aligning with the enforcement of Japan’s Payment Services Act in April 2017. The bank has been a pioneer in the digital asset space, launching its digital asset issuance and management platform, “Progmat,” in March 2021.

The Progmat Platform

Progmat serves as an efficient and secure platform for issuing and managing digital securities. It digitizes various forms of ownership rights, including real estate, movable assets like cash and goods, intellectual property rights, and dividends.

Legal Amendments and Tax Reforms

Recent legal amendments in October 2022 have made it possible for trust banks in Japan to offer custody services for crypto assets. Additionally, tax reforms approved in December 2022 have confirmed that crypto assets meeting certain criteria will be exempt from end-of-term market valuation, potentially increasing the demand for crypto asset trust services.

Ginco’s Role

Ginco, a company providing infrastructure for the safe and secure use of digital assets, will contribute technical expertise required for token management on public blockchains. The company is known for its “Ginco Enterprise Wallet,” which boasts the highest adoption rate among business-use crypto wallets in Japan.

Implications for the Market

The collaboration between Mitsubishi UFJ Trust Bank and Ginco is expected to fill a significant gap in the Japanese market, where institutional investors have been keen on diversifying their portfolios with crypto assets but lacked a regulated framework for doing so.

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US Banking System Faces Crypto-Asset Risks, FDIC Warns in 2023 Review

The Federal Deposit Insurance Corporation (FDIC) has highlighted potential risks associated with crypto-assets to the U.S. financial framework. This insight emerged from the FDIC’s 2023 Risk Review, which, for the first time, included a segment on bitcoin. The report characterized the challenges posed by digital assets as both novel and intricate.

The FDIC’s Risk Review, which was published on August 14, 2023, placed a strong emphasis on the growing interest of banks in operations involving cryptocurrencies. The following is an excerpt from the report: “The FDIC has been generally aware of the rising interest in crypto-asset-related activities through its normal supervision process.” The significant market fluctuations in 2022 underscored the importance of understanding the risks tied to cryptocurrencies more deeply.

The Federal Deposit Insurance Corporation (FDIC) has voiced several primary apprehensions regarding the crypto sector. These include potential fraudulent activities, the threat of widespread impact, and concentration risks due to the interconnected nature of crypto businesses. The ever-evolving and fast-paced nature of cryptocurrencies further complicates the risk evaluation process.

The “run-risk” that is connected with stablecoins is one more key issue that the FDIC is concerned about. The supervisory agency issues a warning that banks that hold stablecoins may be vulnerable to the loss of customer deposits, which may constitute a risk to the integrity of the financial system.

Following the FDIC’s alert, the banking world experienced turmoil in March when three prominent banks – Silicon Valley Bank, Silvergate Bank, and Signature Bank – encountered significant hurdles. Importantly, these institutions were recognized for their services to the U.S. crypto sector. The shutdown of Silicon Valley Bank triggered a frenzied sell-off when Circle, the issuer of USD Coin (USDC), announced its incapability to access $3.3 billion in reserves from the bank.

To counteract the upheaval, the FDIC collaborated with other U.S. regulatory bodies to assist the impacted banks and oversee the transfer of their assets to alternate financial entities.

Drawing from the FDIC’s 2023 Risk Review and recent observations, it’s evident that as the crypto realm expands and evolves, it introduces complexities that both regulators and the banking sector must proactively navigate.

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SEC Freezes Assets of DEBT Box in $50 Million Crypto Fraud Case

The U.S. Securities and Exchange Commission (SEC) has obtained a temporary asset freeze, restraining order, and other emergency relief against Digital Licensing Inc., a Utah-based entity operating as “DEBT Box,” along with its four principals and 13 other defendants. The action is in connection with an alleged fraudulent scheme involving the sale of crypto asset securities, as announced in a press release dated July 28, 2023.

According to the SEC’s complaint, unsealed in the U.S. District Court for the District of Utah, the defendants have been engaged in an ongoing scheme since March 2021 to sell unregistered securities referred to as “node licenses.” Through various online videos, social media posts, and investor events, DEBT Box and its principals claimed that these licenses would generate crypto asset tokens via crypto mining activity, and that revenue-generating businesses in different sectors would drive the value of the tokens, resulting in significant gains for investors.

The SEC alleges that the “node licenses” were a sham, created by DEBT Box instantaneously using code on a blockchain, and that the company and its principals lied about virtually every material aspect of their unregistered offering. The complaint states, “We allege that DEBT Box and its principals lied to investors about virtually every material aspect of their unregistered offering of securities, including by falsely stating that they were engaged in crypto asset mining,” as per Tracy S. Combs, Director of the SEC’s Salt Lake Regional Office.

The fraudulent scheme reportedly raised approximately $50 million, along with unspecified amounts of Bitcoin and Ether. In total, 18 defendants have been charged with engaging in unregistered securities offerings, with additional charges for violations of the antifraud provisions of the federal securities laws against some of the defendants.

The Honorable Judge Robert J. Shelby, U.S. District Judge for the District of Utah, entered an order on July 28, 2023, imposing a temporary restraining order, asset freeze, and other relief. Josias N. Dewey of the law firm Holland & Knight LLP has been appointed as a temporary receiver over DEBT Box to marshal assets for the benefit of investors.

Investors who believe they were affected by the DEBT Box offering may seek further information at the receiver’s website or by calling a designated phone number.

The SEC’s action against DEBT Box highlights the regulatory body’s continued focus on ensuring compliance within the crypto asset space and protecting investors from fraudulent schemes. The investigation is ongoing, and the SEC has provided educational resources to help investors recognize the risks associated with crypto asset securities and unregistered offerings.

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Financial Stability Board Finalizes Global Crypto Asset Regulatory Framework

The Financial Stability Board (FSB) has finalized a global regulatory framework for crypto-asset activities, aiming to promote comprehensive and internationally consistent regulatory and supervisory approaches. The announcement was made on July 17, 2023, and the framework is based on the principle of ‘same activity, same risk, same regulation.’

The FSB’s framework incorporates insights from the past year’s events in crypto-asset markets and feedback received during the FSB’s public consultation. It provides a robust basis for ensuring that crypto-asset activities and so-called stablecoins are subject to consistent and comprehensive regulation, commensurate to the risks they pose.

The framework consists of two distinct sets of recommendations. The first set includes high-level recommendations for the regulation, supervision, and oversight of crypto-asset activities and markets. The second set comprises revised high-level recommendations for the regulation, supervision, and oversight of “global stablecoin” arrangements.

The final recommendations draw on the implementation experiences of jurisdictions and build on the principles that informed the consultative framework. These principles include ‘same activity, same risk, same regulation’; high-level and flexible; and technology neutral.

The FSB has strengthened both sets of high-level recommendations in three areas: ensuring adequate safeguarding of client assets, addressing risks associated with conflicts of interest, and strengthening cross-border cooperation.

The FSB and standard-setting bodies will continue to coordinate in promoting globally consistent regulation by considering the need for further guidance or standards and monitoring implementation status at the jurisdictional level.

The recommendations focus on addressing risks to financial stability and do not comprehensively cover all specific risk categories related to crypto-asset activities. Central Bank Digital Currencies (CBDCs), envisaged as digitalized central bank liabilities, are not subject to these recommendations.

The FSB has been collaborating closely with sectoral standard-setting bodies (SSBs) and international organizations to ensure a coordinated, mutually supportive, and complementary approach to monitoring and regulating crypto-asset activities and markets.

This global framework includes a shared workplan that the FSB and SSBs have developed for 2023 and beyond.

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Coinbase’s Legal Chief Fires on SEC’s Crypto Regulation Approach

On July 8, Paul Grewal, the chief legal officer of Coinbase, tweeted a number of times about his displeasure with the Securities and Exchange Commission’s (SEC) approach to cryptocurrency regulation. Grewal said that the SEC disregarded important legal precedents and principles, such as the Howey case judgement from the Supreme Court, which set the standards for what qualifies as an investment contract.

Grewal argued that the SEC has not considered the requirement of enforceable rights against an issuer, a key part of the Howey test. He also accused the SEC of disregarding the public interest and investor protection, despite having allowed Coinbase to list publicly over two years ago.

The tweets further claimed that the SEC is ignoring statements from its own Chair that there are no regulatory authorities applicable to cryptocurrency exchanges. Grewal also pointed out that the SEC seems to be overlooking recent Supreme Court warnings against regulatory overreach in areas reserved for Congress.

This public expression of frustration comes after a series of legal developments.

On March 22, Coinbase announced that the SEC had issued a “Wells notice” to the company regarding an undefined portion of its listed digital assets, its staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet. Despite this, Coinbase remained confident in the legality of its assets and services and welcomed a legal process to provide clarity.

On June 6, the SEC charged Coinbase with operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency. The SEC also charged Coinbase for failing to register the offer and sale of its crypto asset staking-as-a-service program.

In a June 17 letter filed in court, Coinbase’s lawyers criticized the SEC for continuing to avoid the company’s rulemaking petition, which calls for the establishment of a regulatory framework for digital assets.

Despite these disagreements, Grewal agrees with the SEC that many of these issues should be decided promptly as matters of law. He continues to advocate for fair and reasonable engagement from the SEC on digital assets.

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BaFin Declines to Classify NFTs as Securities, Recommends Case-by-Case Approach

The fact that there is now a discussion going on over the appropriate approach to classify these digital assets is reflected in BaFin’s decision to not recognize NFTs as securities. This argument has been going on for quite some time. Even if there are many who think of non-fungible tokens (NFTs) as investments or crypto assets, there are also others who believe that NFTs are nothing more than one-of-a-kind digital collectibles that have no value apart from the rarity or desirability of their presence. Despite the fact that some individuals regard non-traded stocks and bonds to be investments, this is the case. It is possible that, at some time in the future, the case-by-case method that BaFin utilizes will make it possible to get greater clarification about the classification of NFTs.

Yet, it is difficult to apply current legal frameworks to non-fiat currencies such as NFTs since these assets are not standardized and cannot be exchanged. This makes it difficult to apply existing legal frameworks. Those in charge of regulation are presented with a challenge as a result of this. The phrase “crypto assets” refers to non-fungible tokens that cannot be traded for other currencies and is an exception to this norm. BaFin is under the impression that non-financial transactions will not be in conformity with the licensing requirements outlined in the Payment Services Supervision Act, nor will they be subject to BaFin’s supervision regarding the prevention of money laundering. This is due to the fact that non-bank financial transactions are not regulated in the same manner that payment services are.

Notwithstanding the difficulties that are associated with recognizing them, non-fungible tokens are becoming an increasingly popular category of digital collectibles. This is despite the fact that identifying them may be difficult. The majority of non-fungible token (NFT) collectors acquire NFTs for reasons related to status, distinctiveness, and aesthetics rather than with the purpose of utilizing them as an investment, according to research that was undertaken by the metaverse site Metajuice. As the market for non-traditional assets (NFTs) continues to increase, the legal frameworks that control it will need to change in order to provide investors and collectors a higher degree of transparency and protection. This will be necessary in order to accommodate the market’s growing size.


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Top Analyst Predicts Parabolic Rally for One Emerging Altcoin, Says Dogecoin Will Outperform Bitcoin

A widely followed crypto analyst and influencer says one emerging altcoin is about to explode to a new all-time high.

The prominent trader known as The Crypto Dog tells his 565,500 Twitter followers that decentralized finance (DeFi) payment network Terra (LUNA) has been on a strong uptrend since July and is currently accelerating en route to fresh highs.



“I think that was the last stop before LUNA all-time highs.”

Source: The Crypto Dog/Twitter

LUNA, Terra’s reserve currency, is trading at $16.98 at the time of writing and is up over 100% in the past 30 days, according to CoinGecko. LUNA is the 23rd-largest crypto asset by market cap and hit its all-time high of $22.36 in March.

The Crypto Dog also thinks that meme crypto asset Dogecoin is poised to outperform Bitcoin.

“For what it’s worth, I think DOGE outperforms from here. I like the DOGE.

Source: The Crypto Dog/Twitter

The Crypto Dog adds that he’s seeing a positive technical signal that could potentially ignite the next leg of Dogecoin’s rally.

“I liked the volume coming in earlier. Think we’ll manage to find liquidity higher.”

Dogecoin is trading at $0.27 at time of writing, up nearly 40% in the past week, according to CoinGecko. Bitcoin is trading at $46,271 and is up more than 20% in the past seven days.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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