šŸŒ Asia Defines Crypto Clarity,šŸŒ‹Bitcoin Bonds Green Lit in El Salvador,šŸ¦Turkey's Banks Dive into Crypto

December 16, 2023

Your 5 minute emerging markets web3 weekly update

In This Issue

Asia
šŸ”øAsia's Crypto Hubs: Why Clarity Matters More Than 'Crypto-Friendly' Labels
šŸ”øProject Diamond: Coinbase's Institutional Tokenization Platform Launching in Abu Dhabi

Latin America and the Caribbean
šŸ”øEl Salvadorā€™s ā€˜Volcano Bondsā€™ Receive Regulatory Green Light, Signals New Era of Capital Markets
šŸ”øBitcoin in Latin America: A Path to Monetary Sovereignty

Eastern Europe
šŸ”øWith Regulation on the Horizon, Turkish Banks Embracing Crypto
šŸ”øUkraineā€™s Ministry of Digital Development Promotes Regulation to Support Web3 Entrepreneurs Amid Legal and Banking Challenges

Africa
šŸ”øBitmama Crypto Exchange Halts Deposits Amid Technical Woes
šŸ”øSeychelles Financial Authority Cracks Down on Unregistered Crypto Providers

Catch up on the latest episodes and clips from the second season of the EmergingVoices Podcast on YouTube!

Asia

Image Credit: Dall-E 3

In 2023, Asia emerged as a pivotal region for the crypto industry, with Singapore, Hong Kong, and Japan at the forefront. While often referred to as "crypto-friendly," these jurisdictions actually have strict rules in place. Singapore, for example, discourages public crypto trading and favors tokenization of assets, while Hong Kong requires costly licensing and stringent asset storage rules. Japan, on the other hand, enforces clear regulations but imposes high taxes, presenting both opportunities and challenges for crypto entrepreneurs. The clarity in these Asian markets stands in contrast to the United States, where regulatory ambiguity hampers crypto development, highlighting the importance of clear and flexible regulations as the crypto industry evolves globally.

Coinbase is launching Project Diamond, a platform that enables institutional investors to issue and trade digitally native debt instruments on Base, Coinbase's Ethereum scaling network. The platform combines Coinbase Prime's custody service, the exchange's Web3 crypto wallet, Circle's USDC stablecoin, and Base's layer-2 network to create a capital marketplace. Project Diamond has received in-principle approval from the Financial Services Regulated Activity (FSRA) of Abu Dhabi Global Market (ADGM) and will enter the agency's RegLab sandbox, with its first debt instrument issued in USDC stablecoin on Base as a demonstration to regulators. The platform is available to registered institutional users outside the U.S., aiming to bring traditional financial assets to blockchain rails in competition with global banks and crypto-native firms. The tokenization of real-world assets (RWAs) is expected to grow to a $10 trillion market by the end of the decade, with Project Diamond focusing on creating digital assets directly on the blockchain for more efficient and transparent financial operations.

Latin America and the Caribbean

Image Credit: Dall-E 3

El Salvador's Bitcoin bonds, known as "volcano bonds," have received regulatory approval from the country's Digital Assets Commission. The National Bitcoin Office expects the bonds to be issued in the first quarter of 2024, marking the beginning of new capital markets on Bitcoin in El Salvador. President Nayib Bukele has been pursuing the issuance of Bitcoin bonds since the country's Bitcoin Law made cryptocurrency legal tender, with plans to use the funds for infrastructure and Bitcoin mining, as well as to build a "Bitcoin City." The move has faced opposition from the International Monetary Fund (IMF), which has called for the reversal of El Salvador's Bitcoin Law.

In an interview with Cointelegraph, David Bailey, Marketing Director of Azteco, discussed the importance of Bitcoin for monetary sovereignty and its adoption in Latin America. He emphasized that Bitcoin needs to be known and used as a solution for everyday electronic payments to lay the foundation for monetary sovereignty. While El Salvador has adopted Bitcoin as its national currency, Bailey highlighted the varying adoption rates and challenges in different Latin American countries, such as Argentina's economic challenges and the potential of Brazil and Mexico for Bitcoin adoption. David stressed the need for practical Bitcoin education and simplifying its use in order to onboard mainstream consumers.

Eastern Europe

Image Credit: Dall-E 3

Turkey is preparing to introduce new legislation for the cryptocurrency sector, and while the exact restrictions are unclear, it hasn't deterred adoption, even among institutions. Akbank's investment arm recently acquired local crypto firm Stablex, signaling its interest in becoming a key player in the digital asset space. Garanti BBVA, another major bank, launched a crypto wallet app with cold wallet functionality, enabling users to transact in cryptocurrencies like Bitcoin, USD Coin, and Ether. Turkey ranks among the top 20 countries in Chainalysis' Global Crypto Adoption Index 2023, but the government aims to regulate the sector as part of its strategy to address anti-money laundering and terrorist financing concerns and exit the FATF's "gray list."

Web3 growth in Ukraine has been constrained due to the lack of legislative regulation and banking restrictions, according to a report by the Ministry of Digital Development. Ukrainian Web3 entrepreneurs face challenges such as registering their startups outside the country, limited access to banking services, and currency restrictions due to martial law. To address these issues, the Ministry of Digital Development is promoting alternative bills related to virtual assets and cryptocurrency transaction taxation, aiming to neutralize the obstacles hindering the Web3 industry's development in Ukraine and promote its growth as a driver of the country's technological and economic progress.

Africa

Image Credit: Dall-E 3

Nigerian crypto exchange Bitmama has temporarily suspended its deposit feature due to delays caused by third-party provider maintenance activities. Customers had been complaining about the inability to deposit funds into their Bitmama wallets, with some reporting that although they were debited from their source accounts, the funds did not reflect in their Bitmama wallets. The company is working to resolve the technical glitch and has allocated additional technical resources to expedite the resolution process, but no exact timeline for resolution has been provided.

The Financial Services Authority (FSA) of Seychelles has issued a warning against 53 virtual asset providers (VASPs) falsely claiming affiliation or registration in the country. These entities have been found advertising and offering VASP activities, targeting Seychelles' consumers with local language websites promoting cryptocurrency-related services, and claiming to operate from the country without being registered or authorized as VASPs under Seychelles laws. The FSA advises consumers to exercise caution when dealing with unregistered VASPs, as they do not comply with anti-money laundering and terrorism financing laws and lack measures to protect customer funds. Seychelles is working on a legislative framework to regulate VASPs and VAs, expected to be finalized by early 2024.

Thanks for reading and have a great week ahead!

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Written by Jon Lira. Connect with him on LinkedIn.

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