Hong Kong SFC Convenes First Virtual Asset Consultative Panel Meeting to Shape Virtual Asset Regulations
On 14 February 2025, the Hong Kong Securities and Futures Commission (HK SFC) convened the inaugural meeting of the Hong Kong Virtual Asset Consultative Panel (VACP), an advisory body dedicated to shaping the regulatory framework for virtual assets in Hong Kong.
- The VACP, chaired by Dr Eric Yip, Executive Director of Intermediaries at the HK SFC, includes senior management representatives from all HK SFC-licensed virtual asset trading platforms (VATPs).
- The panel’s primary objective is to guide regulatory policy development by engaging with industry participants, ensuring that Hong Kong’s virtual asset ecosystem evolves with clear regulations while maintaining investor protection and compliance.
- The VACP’s priorities include, developing clear policies for licensed VATPs,establishing a secure and transparent market framework to promote business growth and market integrity, aligning regulatory approaches with global virtual asset regulatory trends.
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Brian Young Appointed as US CFTC Director of Enforcement
On 14 February 2025, the United States Commodity Futures Trading Commission (US CFTC) announced the appointment of Brian Young as Director of Enforcement. Young had been serving in an acting capacity since 22 January 2025 and was previously the Director of the Whistleblower Office.
- Brian Young is a seasoned federal prosecutor with nearly 20 years of service at the United States Department of Justice (DOJ).
- He previously served as Acting Director of Litigation for the DOJ Antitrust Division, overseeing criminal prosecutions under the Sherman Act and civil antitrust litigation.
- Before that, he was Chief of the Litigation Unit in the Fraud Section of the DOJ Criminal Division, handling high-profile financial crime cases.
- In 2024, Young joined the US CFTC, where he initially led the Whistleblower Office, working closely with the Division of Enforcement on financial misconduct cases.
- Acting Chairman Caroline D. Pham praised Young’s leadership, stating: “Brian exemplifies the best of what we stand for at the CFTC. He is a fearless leader who will build an even more impressive enforcement program that will stay true to the CFTC’s mission to protect the American public from fraudsters and scammers. I am confident that under Brian’s leadership, the CFTC will expand and scale our resources to help more victims than ever before and ensure the integrity of our markets in the name of justice.
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Singapore Authorities Warn Against Unauthorised Contactless Payment Fraud
On 17 February 2025, the Singapore Police Force (SPF), Cyber Security Agency of Singapore (CSA), and Monetary Authority of Singapore (MAS) issued a Joint Advisory on Unauthorised Card Transactions involving contactless payment fraud. The advisory highlights the growing risk of phished card credentials being exploited by scammers through mobile wallets such as Apple Pay.
- Scammers obtain victims’ card details via phishing websites and fraudulent social media ads, tricking users into entering their SMS One-Time Passwords (OTP) on fake platforms.
- Once scammers gain access to the OTP, they link stolen card details to their own Apple wallets and use them for in-person transactions via Near Field Communication (NFC) mobile payments.
- Fraudsters often work with money mules, who use devices linked to the fraudulent wallets to purchase luxury goods and high-value electronics.
- Between 1 October and 31 December 2024, authorities recorded 656 cases of phished card credentials being used in mobile wallets, resulting in over S$1.2 million in losses. Of these, 502 cases involved Apple Pay-linked cards.
- The SPF, CSA, and MAS are working with banks, mobile wallet providers, and card service providers to implement additional security measures to prevent such fraud.
- Authorities advise users to adopt the “ADD, CHECK, and TELL” approach:
- ADD protective measures like installing the ScamShield app, lowering transaction notification thresholds, and disabling international card usage when not travelling.
- CHECK OTPs and transaction alerts regularly for suspicious activity.
- TELL banks or authorities immediately if an unauthorised card provisioning attempt occurs.
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ASIC Updates Regulatory Guidance on Relief Applications and No-Action Letters
On 17 February 2025, the Australian Securities and Investments Commission (ASIC) published updates to Regulatory Guide 51: Applications for Relief (RG 51) and Regulatory Guide 108: No-Action Letters (RG 108). These revisions aim to simplify guidance, eliminate outdated requirements, and enhance accessibility for applicants seeking regulatory relief or no-action letters.
- Regulatory Guide 51 provides framework for applicants seeking relief, detailing available exemptions, the application process, and associated fees.
- Regulatory Guide 108 offers clear guidance for entities seeking no-action letters, indicating ASIC’s intention not to take regulatory action in specific circumstances.
- The updates reflect feedback from Consultation 11: Proposed Updates to RG 51 and RG 108 (CS 11) conducted in 2024, incorporating industry concerns to improve clarity.
- ASIC has withdrawn outdated regulatory guides, RG 21: How ASIC Charges Fees for Relief Applications, RG 208: How ASIC Charges Fees for Credit Relief Applications, and RG 57: Notification of Rights of Review, consolidating their content into RG 51.
- The revised RG 51 now states that applicants may seek a review of ASIC’s decisions at the Administrative Review Tribunal.
- ASIC has removed the requirement for a cost-benefit analysis in relief applications, reducing administrative burdens on businesses.
- Relief applications must be submitted via the ASIC Regulatory Portal, ensuring compliance with the Australian Corporations Act 2001 and the Australian National Consumer Credit Protection Act 2009.
- No-action letters are assessed on a case-by-case basis, considering legislative intent, case-specific details, and regulatory purpose. ASIC clarified that these letters do not constitute legal advice and do not prevent future enforcement actions if new information emerges.
- The updated Regulatory Guide 51 and Regulatory Guide 108 took effect on 13 February 2025.
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UK FCA Fines Mako £1.66 Million for Lapses in Cum-Ex Trading Controls
On 18 February 2025, the United Kingdom Financial Conduct Authority (UK FCA) issued a Final Notice: Mako Financial Markets Partnership LLP, imposing a £1,662,700 fine on Mako Financial Markets Partnership LLP for failing to implement adequate financial crime controls, particularly concerning cum-ex trading. The Final Notice concludes the UK FCA’s investigations into cum-ex trading, marking its eighth and final enforcement action related to this controversial practice.
- Between December 2013 and November 2015, Mako executed purported over-the-counter (OTC) equity trades worth £68.6 billion in Danish equities and £23.6 billion in Belgian equities on behalf of clients associated with the Solo Group, receiving £1.45 million in commission.
- The UK FCA found these transactions were circular in nature, raising serious concerns of financial crime, as they allegedly aimed to facilitate fraudulent withholding tax (WHT) reclaims in Denmark and Belgium.
- Mako failed to conduct due diligence when it accepted payments from a UAE-based third party connected to the Solo Group, exposing itself to money laundering risks.
- The UK FCA classified Mako’s failure to apply its own compliance policies as a serious regulatory breach under financial crime prevention rules.
- As Mako settled the case without dispute, it qualified for a 30% reduction under the UK FCA’s settlement discount scheme.
- Cum-ex trading exploits dividend arbitrage loopholes, allowing multiple investors to claim tax rebates on the same shares, even when they are not entitled to them. The UK FCA has worked with global enforcement agencies on these cases, imposing over £30 million in fines.
- Previous FCA enforcement actions targeted Sapien Capital Ltd, Sunrise Brokers LLP, TJM Partnership Ltd (in liquidation), ED&F Man Capital Markets Ltd, Bastion Capital London Ltd, Arian Financial LLP, and the ongoing case against Nailesh Teraiya.
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ASIC Proposes Additional Relief for Financial Licensees Under Reportable Situations Regime
On 18 February 2025, the Australian Securities and Investments Commission (ASIC) announced its proposal CS 16 Reportable Situations – Additional Relief, to reduce compliance burdens for Australian Financial Services Licensees (AFSLs) and Australian Credit Licensees (ACLs) under the reportable situations regime. The proposed relief introduces exemptions for minor breaches of misleading and deceptive conduct provisions and certain civil penalty contraventions.
- The reportable situations regime, introduced in October 2021, requires financial and credit licensees to identify, rectify, and report misconduct to ASIC.
- The proposed relief applies to financial advisers, mortgage brokers, superannuation trustees, insurers, fund managers, and other regulated entities holding AFSLs or ACLs.
- Certain minor breaches may be exempted from reporting obligations if they meet the following criteria:
- The breach is rectified within 30 days, including any remediation payments.
- The number of affected consumers does not exceed five.
- The total financial loss does not exceed $500, including cases where losses have been remediated.
- The breach does not involve client money reporting rules or clearing and settlement rule violations.
- This follows a series of regulatory updates, including, Updated guidance on compliance requirements of April 2023, Extension of relief measures for certain reporting obligations of September 2024 and Findings on industry compliance under the reportable situations regime of December 2024.
- While the proposal introduces proportionate reporting measures, AFSL and ACL holders must maintain internal compliance systems, including risk management, remediation mechanisms, and ongoing monitoring.
- ASIC has invited industry stakeholders, financial licensees, and consumer protection bodies to submit feedback by 5pm AEDT on 11 March 2025.
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US SEC Reviews Cboe BZX Proposal to Amend 21Shares Core Ethereum ETF for Staking Integration
On 19 February 2025, the United States Securities and Exchange Commission (US SEC) published Release No. 34-102450, announcing its review of a Cboe BZX Exchange, Inc. proposal to amend the 21Shares Core Ethereum ETF. The amendment seeks to allow the staking of Ether (ETH) held by the Trust, to introduce staking rewards as part of the ETF’s structure.
- Cboe BZX Exchange filed the proposed rule change on 12 February 2025, to modify the ETF’s structure to incorporate staking functionality through regulated third-party providers.
- The 21Shares Core Ethereum ETF, originally approved by the US SEC on 23 May 2024, provides Ethereum exposure without direct ownership. It was previously named the ARK 21Shares Ethereum ETF before being rebranded on 10 June 2024.
- The ETF operates under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares, which governs the listing of exchange-traded products (ETPs) backed by commodities like Bitcoin (BTC) and Ethereum (ETH).
- The proposed amendment would allow staking rewards to be earned in additional Ether, while ensuring custody remains with a regulated custodian.
- The Trust’s Sponsor will oversee staking operations but will not engage in delegated staking or operate as a staking-as-a-service provider—a structure that has previously drawn SEC enforcement actions.
- Staked Ether will remain under custody, and the process will be managed by trusted staking providers, avoiding potential securities classification issues.
- The proposal does not guarantee staking rewards, nor does it shield investors from slashing penalties—a risk factor when validators fail to comply with Ethereum’s network rules.
- The US SEC has previously taken enforcement actions against firms offering staking-as-a-service, citing their classification as unregistered securities due to the expectation of profit from the efforts of others (following the Howey Test).
- The US SEC’s approval process will determine whether the ETF’s staking integration aligns with regulatory standards under the United States Securities Exchange Act of 1934.
- The US SEC has 45 days from the Federal Register publication date to approve, reject, or extend the review period for up to 90 days.
- The proposal is open for public comments, investors and market participants can submit their views via email or the SEC’s online comment form.
- If approved, the 21Shares Core Ethereum ETF would be one of the first US-listed Ethereum ETFs to incorporate staking rewards, expanding institutional access to ETH staking while complying with US SEC regulations.
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US SEC to Review Cboe BZX’s Proposal to List Canary XRP Trust Shares
On 19 February 2025, the United States Securities and Exchange Commission (US SEC) published Release No. 34-102449, announcing its review of Cboe BZX Exchange, Inc.’s proposal to list and trade shares of the Canary XRP Trust under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares. The Trust is designed to provide investors with exposure to XRP without requiring direct ownership.
- The Canary XRP Trust, established on 3 June 2024, is sponsored by Canary Capital Group LLC and structured similarly to other cryptocurrency-based trusts.
- The Trust aims to track the performance of XRP, a widely used cryptocurrency associated with the XRP Ledger, without being classified as an investment company under the United States Investment Company Act of 1940 or a commodity pool under the United States Commodity Exchange Act (CEA).
- The US SEC’s review follows prior approvals of Bitcoin (BTC) and Ethereum (ETH) exchange-traded products (ETPs), which were assessed under the significant market surveillance test (Winklevoss Test).
- The SEC v. Ripple Labs case is cited in the proposal, providing legal context on XRP’s classification and regulatory standing.
- Cboe BZX in its proposal argues that XRP should be treated similarly to Bitcoin and Ethereum, citing its liquidity, trading volume, and decentralised nature as mitigating factors against market manipulation.
- The Trust will comply with US SEC Rule 10A-3 to ensure corporate governance measures and adherence to BZX Rule 14.11(e)(4) for Commodity-Based Trust Shares.
- Daily disclosures will include Net Asset Value (NAV) per share, Intraday Indicative Values (IIV), market prices, trading volumes, and XRP holdings in custody.
- No direct XRP purchases or redemptions will be available to investors; instead, the Trust will operate on a cash-based transaction model.
- The Trust’s administrator and custodian will oversee the security and risk management of XRP assets, using cold storage wallets for settlement.
- The US SEC has 45 days from the filing date (6 February 2025) to approve, reject, or extend its review period for up to 90 days.
- The proposal is open for public comments before a final US SEC decision is issued.
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Latvijas Banka Governor Proposes Re-Election of Two Council Members
On 19 February 2025, Mārtiņš Kazāks, Governor of Latvijas Banka, submitted a proposal to Daiga Mieriņa, Speaker of the Saeima, to re-elect Māris Kālis and Zita Zariņa as Council Members for a second term. Their current terms are set to expire on 12 March 2025 and 14 April 2025, respectively.
- Māris Kālis briefly served as acting Governor before Kazāks’ re-election and is responsible for financial stability, investment management, and macroprudential supervision.
- Zita Zariņa oversees cash and non-cash payments, the digital euro project, financial innovation, audit, and IT.
- With Kālis’ term ending in March and Zariņa’s in April, the Saeima will deliberate on their re-election.
- Governor Kazāks stressed on Kālis’ role in strengthening institutional frameworks and investment management and Zariņa’s leadership in ‘modernising’ Latvia’s payment systems and financial technology.
- Both candidates have national and international expertise, having worked with the European Central Bank (ECB), International Monetary Fund (IMF), European Commission, and Latvian financial institutions.
- Kazāks urged the Saeima to approve both candidates, stating: “Māris Kālis plays a key role in the institutional strengthening of Latvijas Banka, ensuring investment management and overseeing development and optimisation efforts. Zita Zariņa has been instrumental in modernising payments, with Latvia leading the euro area in this sector. Their first terms demonstrated their professional excellence, recognised both in Latvia and at the European level. I trust the Saeima will support their re-election, especially given its recent confidence in Māris Kālis as acting Governor.”
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MAS-ESS Essay Competition 2025 Launched on “Building Singapore’s Digital Asset Ecosystem”
On 20 February 2025, the Monetary Authority of Singapore (MAS) and the Economic Society of Singapore (ESS) launched the MAS-ESS Essay Competition 2025, inviting pre-university students to share insights on the topic: “Building Singapore’s Digital Asset Ecosystem: Opportunities and Challenges.”
- The competition encourages participants to explore aspects of Singapore’s digital asset landscape, like infrastructure requirements, talent development, and regulatory frameworks.
- Open to pre-university students in Singapore, including those from Polytechnics, Centralised Institutes, International Schools, Junior Colleges, and full-time pre-university national servicemen. Singaporean pre-university students studying abroad are also eligible.
- The top three winning essays will receive cash prizes:
- First Prize: SG$3,000
- Second Prize: SG$2,000
- Third Prize: SG$1,000
- Submission deadline: 20 April 2025.
- Entry forms and detailed competition guidelines are available on the Economic Society of Singapore’s website.
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