Veriscope Regulatory Recap - 6th February to 12th February
We're back with another in-depth edition of Veriscope Regulatory Recap.
This week, we cover South Korea’s clarification on what characteristics will make crypto a security, Dubai’s new crypto guidelines, Thai SEC’s risk disclosure mandate for crypto exchanges, and Argentina’s plans to implement Proof of Reserve requirements on VASPs. So, let’s dive straight into it.
Crypto vs. Security - A Clarification From South Korea
The guidelines, published on February 6th, 2023, would decide the contours within which crypto tokens will be deemed a security under South Korea’s capital market rules.
Market experts see these guidelines as a first step towards the imminent regulations in the country that are expected to institutionalize security tokens.
On the stablecoin front, the guidance made it clear that they would not qualify as securities. And those digital assets that have no issuer and do not accord any sort of investor rights would, too, fall outside the scope of security tokens.
The guidelines insist that they intend to support innovation and safeguard consumer interests. The FSC expects to submit necessary amendments to the Electronic Securities Act and Capital Markets Act during the first half of 2023.Dubai Publishes New Crypto Guidelines
Dubai’s crypto regulator, Virtual Asset Regulatory Authority (VARA), has issued full market regulations, and it will apply to all crypto companies within the Emirates.
These regulations cover the issuance of virtual assets, marketing, advertising, and promotions. They also cover definitive fees and penalty amounts.
The guidelines are extensive and cover a broad range of activities, such as crypto exchange, custody, issuance, and advisory. And under the new guidelines, all VASPs operating in Dubai will have certain obligations as well, such as cybersecurity, compliance, and risk management.
Thailand SEC Demands Detailed Risk Disclosures From VASPs
The crypto exchanges operating in Thailand would have to disclose the risks involved in their operations, according to the SEC regulations, expected to come into effect by mid-year 2023.
The Thai SEC requires the exchange operators to include a special blurb in their ads: “Cryptocurrencies are high risk. You may lose the entire investment amount.” Digital asset traders would also have to acknowledge such risks.
The regulator had also suggested the minimum trading value for cryptocurrencies be set at 5,000 baht (less than $150). However, that proposal did not pass through.
The regulator will hold a public hearing on the draft announcement on these guidelines, expected to continue until February 24th on the SEC’s website.
Argentina Contemplating Proof-of-Solvency Procedures
Argentina is considering launching a set of crypto regulations, with the National Securities Regulator, to oversee the local virtual assets ecosystem.
The country is also planning to introduce proof-of-solvency requirements for institutions handling crypto deposits for third parties.
The regulators will establish a working group with the key local industry players to develop new regulatory parameters.
The Proof-of-solvency reports will highlight whether an exchange or crypto company has the amount of cryptocurrency it claims to have.
To test the exchange’s claims about its reserves, the report makers can look directly at the company’s funds in the blockchain and certify whether the funds are sufficient to cover the company’s liabilities.
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