Appold Market Watch - Week 19 to 23 February 2024

Market Update & Industry News - Week ending 23 February 2024

🔷 Japanese firms, Mitsubishi UJF, Rakuten and Mizuho announced a new offering of security tokens that pay interest in digital assets. In Japan’s first publicly offered bond with interest paid in this way, tokens will be traded on the Progmat platform and paid in Rakuten Cash tokens.

Appold view: This is a significant step forward in Japan in terms of the integration of blockchain technology into traditional financial services. We await full details on the bond structuring and technology processes to fully assess this project.

🔷 The financial regulator of Luxembourg, Commission de Surveillance du Secteur Financier (CSSF), released a guide for alternative fund managers allowing them to invest in digital assets. An extension of authorisation is required before investment, which includes managers to provide impact studies, transparent information to investors and updating risk assessment policies.

Appold view: There are clear conditions attached to this along with manager suitability assessments. Nonetheless, it’s a progressive move from the CSSF and reflects a broader trend from regulatory bodies worldwide in providing clarity and security to the growing digital asset market.

🔷 The global money laundering and terrorist financing watchdog the Financial Action Task Force (FATF) announced that Gibraltar is to be removed from the FATF “grey list”. The “grey list” is a list of countries that are under increased monitoring from the FATF but are working with the FATF to resolve strategic deficiencies to counter money laundering and terrorism financing within agreed timeframes.

Appold view: Based on the country being placed on the “Grey List” in June 2022, this is a positive outcome for Gibraltar where it has worked with FATF officials to verify the implementation and sustainability of AML/CFT reforms.

🔷 The Law Commission of England and Wales published a short consultation exercise on draft legislation to label digital assets as property. On behalf of the UK Government the Law Commission seeks to make recommendations for reform to ensure the law is capable of accommodating both crypto-tokens and other digital assets. The Law Commission seeks responses by the 22nd of March.

Appold view: The view is that limited statutory changes are needed. The Commission suggests categorising digital assets as a new, "third" category of personal property, separate from the conventional classification into "things in possession" and "things in action."

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