This Week’s Global Crypto Regulation Recap: Japan, Brazil, and Binance Moves

Japan's FSA Plans to Classify Crypto as Financial Products by 2026 Amid Rising Scam Reports

Japan's Financial Services Agency (FSA) is considering a significant regulatory shift by proposing the classification of crypto assets as financial products by 2026, as reported by Nikkei. This move, driven by a rise in scam reports within the cryptocurrency sector, aims to implement stricter regulations on crypto-related companies. Currently, cryptocurrencies are categorized as a means of settlement under the Payment Services Act. The proposed amendments to the Financial Instruments and Exchange Act would require exchanges and companies soliciting crypto investments to register with financial regulators. While the new regulations would likely create a distinct classification for crypto assets, insider trading rules would resemble those for traditional financial products. Notably, Japan had approximately 7.34 million active crypto trading accounts as of January 2025. The FSA has also initiated actions to block unregistered overseas crypto exchanges from being accessible through Apple and Google app stores in Japan.

Iranian Officials Allegedly Embezzle $21 Million in Crypto During Corruption Probe of Cryptoland CEO

Iranian officials from the Islamic Revolutionary Guard Corps (IRGC) are accused of embezzling over $21 million in cryptocurrency while investigating Cryptoland and its CEO, Sina Estavi. Two key figures, Mehdi Hajipour and Mehdi Badi, are identified as ringleaders, allegedly moving seized tokens into their wallets and profiting under the guise of a corruption probe. Blockchain evidence indicates Hajipour processed over $21 million worth of BRG tokens. In a prior incident, Hajipour was arrested after taking a $10,000 bribe from Estavi, who mistakenly believed he was repurchasing stolen tokens. Estavi had gained notoriety for purchasing Jack Dorsey's first tweet NFT but subsequently was convicted of financial crimes, leading to investor complaints from over 51,000 Iranians. Despite repaying $14 million to some users, more than 25,000 investors remain uncompensated. The case reflects a broader pattern of crypto-related crime involving Iranian nationals.

Brazil Bans Pension Funds from Investing in Cryptocurrencies to Mitigate Risks

On March 31, 2025, Brazil's National Monetary Council (CMN) issued Resolution 5.202, prohibiting closed pension funds from investing in Bitcoin and other cryptocurrencies due to their high volatility. This move aims to protect the guaranteed reserves of Entidades Fechadas de Previdência Complementar (EFPCs) from market instability. While some industry experts praised the cautious regulation, others voiced concerns about the stifling of innovation and diversification. The decision aligns with global regulatory trends responding to past financial disruptions, prompting tighter controls on emerging assets. As of the same date, Bitcoin's price stood at $83,853.17, with a market cap of approximately $1.66 trillion, having declined 12.15% over the past three months. This regulatory stance may influence other nations to reassess their crypto regulations for pension funds, shaping the future of digital asset adoption.

Binance Halts Tether USDT Spot Trading in Europe to Meet MiCA Compliance

Binance has ceased spot trading of Tether’s USDt and other non-MiCA-compliant tokens in the European Economic Area (EEA) to adhere to the Markets in Crypto-Assets Regulation (MiCA). This move follows a plan announced in March, with delistings required by the end of Q1 2025. Users can still custody these tokens and trade them in perpetual contracts. Competitor Kraken also restricted USDT to sell-only mode. The ESMA clarified that custody services for non-compliant tokens do not violate MiCA, adding to regulatory confusion. Binance’s delistings include Dai, TrueUSD, and Pax Dollar, among others.

South Korea Considers Opening Crypto Market to Foreign Investors Pending AML Compliance

South Korea's Financial Services Commission (FSC) suggests potential easing of restrictions on foreign investors in its cryptocurrency market, contingent upon local exchanges enhancing their anti-money laundering (AML) measures. Currently, foreign investors face strict Know-Your-Customer (KYC) requirements, limiting their access to local trading platforms. Peter Chung, head of research at Presto, emphasizes that permitting foreign participation could invigorate the South Korean cryptocurrency sector and expand the USD stablecoin market, while eliminating the "Kimchi Premium"—the price disparity between local and international exchanges. The FSC's current focus includes strategies to attract global investors while maintaining rigorous AML obligations. Previously, South Korea implemented the Travel Rule to bolster AML practices, mandating exchanges to collect personal information for significant transactions. As global regulatory trends evolve, South Korea appears poised to adapt its capital controls to remain competitive in the global cryptocurrency landscape.

Binance Founder CZ Signs MoU with Kyrgyzstan to Boost Web 3 Adoption

Binance founder Changpeng Zhao (CZ) has signed a Memorandum of Understanding (MoU) with Kyrgyzstan’s National Investment Agency to enhance Web 3 adoption in the country. This collaboration aims to integrate Web 3 technologies across various sectors, leveraging CZ’s expertise to develop a robust cryptocurrency ecosystem. Kyrgyzstan, led by President Sadyr Zhaparov, is eager to digitize its economy, focusing on distributed ledger technology (DLT) and practical blockchain applications. Training programs on blockchain, cybersecurity, and virtual asset management are expected to empower residents, potentially boosting the nation’s GDP by 2030. CZ expressed enthusiasm for his advisory role, emphasizing the significance of this work while steering clear of geopolitical issues. His previous advisory contributions and charitable donations, including over $1 million for earthquake relief efforts in Myanmar and Thailand, underscore his commitment to the welfare of affected regions and the proactive development of cryptocurrency regulations worldwide.

OKX Fined €1.1 Million by Malta for Anti-Money Laundering Violations

OKX was fined €1.1 million ($1.2 million) by Malta's Financial Intelligence Analysis Unit (FIAU) for anti-money laundering violations, including inadequate risk assessments and poor transaction monitoring. The fine followed a compliance examination revealing serious systematic failures. OKX asserted that it has enhanced its compliance efforts through technology upgrades and voluntary corrective actions over the past two years. This fine comes amid increased scrutiny, including a previous €304,000 fine from Malta and a $505 million settlement in the U.S. for failing to register as a money-transmitting business, highlighting ongoing regulatory challenges for the exchange.

This article has been refined and enhanced by ChatGPT.