#regulatory framework

➤ Japan's ruling LDP has approved a policy to integrate AI and blockchain into financial infrastructure, aiming for automated economic activities and on-chain payment settlements. ➤ The initiative includes clarifying the legal status of yen-pegged stablecoins and positions Japan to lead in secure, trusted on-chain payments within Asia. ➤ This policy aligns with recent legal amendments classifying crypto assets as financial instruments and signals a move towards formal recognition of digital assets in Japan's financial system.

➤ Sri Lanka's Ministry of Digital Economy and SEC held an awareness forum on regulating virtual assets, focusing on domestic realities and global precedents. ➤ Key discussions included evaluating P2P channels, offshore platforms, and inherent risks in unregulated environments. ➤ The forum also covered risk management, compliance (KYC/AML), blockchain traceability, and use cases like tokenization of real-world assets and cross-border payments.

➤ The SEC has identified blockchain and digital assets as a core strategic priority for its 2026-2030 financial plan, signaling a shift towards supporting tokenized markets. ➤ The agency is increasing regulatory coordination with the CFTC to reduce uncertainty and establish a clearer framework for digital asset activities, including tokenized securities. ➤ This strategic focus recognizes tokenized securities as legitimate capital formation tools, aiming to enhance efficiency and transparency in financial systems rather than exploit regulatory gaps.

➤ The Philippine Central Bank (BSP) has banned crypto exchanges from listing privacy coins as part of stricter regulations for Virtual Asset Service Providers (VASPs). ➤ New rules mandate enhanced due diligence, continuous monitoring, and strict delisting triggers for all digital assets, focusing on transparency and blockchain traceability. ➤ The framework also tightens oversight for stablecoins and asset-backed tokens, requiring verification of reserves and liquidity support.

➤ The SEC is planning an 'innovation exemption' for tokenization, which is seen as a temporary measure rather than a permanent regulatory rule. ➤ Former SEC lawyers suggest this approach, while difficult to reverse, lacks the resilience of a formal rulemaking process. ➤ The agency aims to test tokenization innovations before developing more durable, long-term rules, but industry players emphasize the need for legislative backing for true permanence.

➤ Zimbabwe has launched its first formal regulatory framework for cryptocurrency businesses, requiring annual registration and adherence to AML compliance. ➤ This move shifts from a previous ban on crypto transactions, acknowledging rising adoption driven by monetary instability and a lack of confidence in traditional financial systems. ➤ The new regulations aim to align Zimbabwe with international compliance standards and prevent potential grey-listing by the Financial Action Task Force.

➤ A coalition of over 200 crypto companies, including Coinbase and Circle, is urging the U.S. Senate to advance the Digital Asset Market Clarity Act. ➤ The proposed legislation aims to establish a federal framework for digital asset markets, clarify regulatory oversight, and create registration pathways for firms. ➤ While the bill has bipartisan support and encouragement from Treasury officials, it faces political challenges related to ethics and potential conflicts of interest.

➤ The CFTC has proposed a rule framework for prediction markets, distinguishing sports event contracts from gambling and emphasizing verifiable outcomes for price discovery. ➤ This framework could reduce regulatory uncertainty for platforms like Kalshi and Polymarket, particularly for election-focused contracts, following a 45-day public comment period. ➤ The industry is positioning prediction markets as an alternative financial information layer, attracting interest from traditional finance and media through partnerships and growing valuations.