Crypto World
What is a tokenized deposit? Bank money goes on-chain
SWIFT built a ledger for them. JPMorgan settles billions with them. The FDIC is writing rules about them. Tokenized deposits are the banking system’s answer to stablecoins, and understanding the difference decides how you read the next five years of digital money.
Summary
- A tokenized deposit is a commercial bank deposit represented as a token on a blockchain, issued by the bank itself and maintaining a one-to-one relationship with money on the bank’s balance sheet.
- Unlike a stablecoin, the money never leaves the bank. It stays available to fund lending, remains covered by deposit insurance up to statutory limits, and stays inside the supervisory perimeter of banking regulation.
- The category has moved from pilot to production: SWIFT launched a shared ledger with 17 global banks in July, JPMorgan’s Kinexys settles institutional payments today, and a consortium including Bank of America and BNY targets a 2027 network.
- A technical distinction matters more than it sounds: a non-transferable tokenized deposit that settles between banks behaves like account money, while a freely transferable deposit token behaves more like a bank-issued stablecoin, and regulation treats the two differently.
- The stakes are structural. Stablecoins pull deposits out of banks into reserve assets; tokenized deposits keep them in. Which model wins the institutional corridor shapes bank funding, credit creation, and what a dollar on a blockchain actually is.
The most consequential money on blockchains this year is not a cryptocurrency and not a stablecoin. It is ordinary bank deposits, the money in checking accounts, wearing a token as a coat. In July, SWIFT switched on the 17-bank ledger built for this instrument with 17 of the world’s largest banks built specifically to move this instrument. JPMorgan already settles institutional payments with its own version. A consortium of American banking giants is building a shared network for 2027, and the FDIC’s stablecoin rulemaking carves out space to address how deposit insurance applies to it. The instrument is the tokenized deposit, and the reason it deserves twenty minutes of any crypto reader’s attention is that it is the banking system’s structural answer to the $300 billion stablecoin sector: a digital dollar that does everything a stablecoin does while never leaving the bank. Whether that is the point or the problem depends on where you sit, which is exactly what this guide unpacks.
The definition, precisely
A tokenized deposit is a digital representation of a claim on a commercial bank, recorded on a blockchain or distributed ledger, issued by the bank that holds the deposit, and redeemable one-to-one against it.
Every clause is doing work. It is a claim on a bank, the same legal object as the balance in a checking account, which means it is commercial bank money, the kind that makes up the overwhelming majority of what people and firms actually use as dollars. It is issued by the bank itself, not by a third party holding the bank at arm’s length. It maintains one-to-one correspondence with a deposit that remains on the bank’s balance sheet, so tokenizing a million dollars does not move a million dollars anywhere; it changes the record-keeping technology for money that stays put. And it lives on a ledger, which is what gives it the properties deposits never had: settlement in seconds, availability at 3 a.m. on a Sunday, and the ability to be composed into programmable payment logic.
The cleanest way to hold the concept: a stablecoin is a new kind of money issued by a new kind of company, while a tokenized deposit is the oldest kind of money with a new kind of plumbing. For readers who want the other side of the comparison, crypto.news has also explained the competing model.
How it differs from a stablecoin, mechanically
The two instruments look identical at the point of use, a dollar-denominated token that moves on a ledger and settles fast, and are opposites underneath. Three differences carry all the weight.
Where the money sits. When a customer buys a stablecoin, dollars leave their bank account and land in the issuer’s reserve portfolio, Treasury bills, repo, money funds, custodial accounts, outside the banking system. The bank loses a deposit; the reserve assets sit sterile with respect to lending. With a tokenized deposit, nothing leaves. The deposit stays on the bank’s balance sheet, funding loans exactly as before, while the token circulates as its mobile representation. Multiply across a sector and this is the difference between digital dollars that drain bank funding and digital dollars that preserve it, which is why the Federal Reserve’s research treats stablecoins as a disintermediation risk and tokenized deposits as the banks’ countermove.
Who stands behind it. A tokenized deposit carries the full apparatus of banking: deposit insurance up to statutory limits, the bank’s capital and supervision, and, behind the bank, access to the Federal Reserve’s discount window. A stablecoin carries the issuer’s reserves and, under the GENIUS Act, a legal priority for holders in insolvency plus full-reserve requirements, real protections, but no insurance and no central bank. The FDIC has confirmed the insurance line between the two: stablecoin wallets get no pass-through deposit insurance, while the FDIC’s own stablecoin rulemaking addresses insurance treatment of tokenized deposits precisely because they are deposits.
What it may pay. The GENIUS Act prohibits payment stablecoin issuers from paying interest on the coin itself, a line Congress drew to stop stablecoins from becoming uninsured savings accounts. A tokenized deposit is a deposit; a bank can pay interest on it the way it pays on any account. In a world of meaningful rates, that asymmetry is not a footnote, it is a business model, and it is one reason banks believe the institutional corridor is winnable.
The distinction inside the category
Here the vocabulary gets sloppy across the industry, and one analytical cut, articulated most clearly by researcher Noelle Acheson, brings it into focus: a tokenized deposit is not the same thing as a deposit token, and the difference is transferability.
In the strict model, a tokenized deposit moves only between customers of banks in the network, and when it moves between banks, the banks settle behind the scenes, the token a customer of Bank A holds is always a claim on Bank A, and transferring value to a customer of Bank B means Bank A’s token is burned, interbank settlement occurs, and Bank B mints its own. This is account money with better rails: the customer relationship, the compliance perimeter, and the claim structure all stay intact, which is why regulators are comfortable with it and why SWIFT’s ledger, which coordinates exactly this burn-settle-mint choreography across institutions, is built this way.
In the looser model, a deposit token is a bearer-style instrument: freely transferable to anyone with a wallet, circulating like a stablecoin while claiming deposit status. This version makes bank money composable with open networks, and it makes regulators nervous, because a freely circulating claim on a bank held by strangers to the bank starts to blur into a bank-issued stablecoin, raising exactly the insurance, run-risk, and know-your-customer questions the strict model avoids. Where each jurisdiction draws this line will quietly determine whether tokenized deposits remain an interbank instrument or grow into a public one, and it is the single most important open design question in the category.
Who is building what
The category crossed from white papers to production over roughly eighteen months, and three architectures now compete.
The single-bank model is live. JPMorgan’s Kinexys settles institutional payments with tokenized deposits today, has extended onto public infrastructure including Base and the Canton network, and proves the concept at the only scale that matters, real money, real clients. Its structural limit is reach: one bank’s token moves one bank’s money, and every large bank running its own rail recreates the fragmentation problem that correspondent banking exists to solve.
The shared-network model is the answer to that limit, and it launched in earnest on July 9, when SWIFT’s blockchain-based ledger went live for initial use with 17 banks across six continents, Citi, HSBC, UBS, BNP Paribas among them, built on Hyperledger Besu in nine months. The ledger validates and coordinates tokenized-deposit movements between member banks around the clock, with final settlement through existing rails, and its pitch is distribution: SWIFT connects more than 11,000 institutions, a footprint no single bank or startup can match. A parallel American effort through The Clearing House, backed by JPMorgan, Bank of America, Barclays, and BNY, targets a 2027 launch, meaning even the shared-network lane already has competing networks.
The public-facing frontier is where the deposit-token question lives: experiments in making bank-issued tokens usable in open on-chain environments as settlement assets and collateral. This is the smallest lane today and the one with the largest implications, because it is where bank money and DeFi composability would actually meet.
The honest limitations
The category’s advocates describe it as stablecoins without the risk. The description omits four things.
Tokenized deposits are permissioned by construction. Every holder is a bank customer inside a compliance perimeter; there is no permissionless access, which means the instrument does nothing for the populations and corridors where stablecoins found their strongest product-market fit, users the banking system serves badly or not at all. A fintech in Lagos paying a supplier in Shenzhen holds USDT because it cannot hold a JPMorgan deposit; that fact does not change when the deposit grows a token.
They are also only as good as the network effects they achieve. Money is useful in proportion to who accepts it, and a tokenized deposit accepted inside one consortium is a better wire transfer, not a new form of money. The proliferation of competing networks, SWIFT’s, The Clearing House’s, each mega-bank’s own, raises a real fragmentation scenario in which the category succeeds technically and still fails to produce a unified instrument.
Insurance is bounded. Deposit insurance covers up to the statutory limit per depositor per bank, which protects retail balances fully and institutional balances barely; a corporate treasurer holding nine figures in tokenized deposits is an uninsured creditor of the bank above the cap, exactly as with ordinary deposits. The instrument inherits banking’s protections and also banking’s fine print.
And the model is untested in a run. Tokenized deposits settle at all hours, which cuts both ways: the same rails that move corporate treasury on Sunday morning can move a panic on Sunday morning, faster than any deposit flight in history. Bank supervisors have noticed; it is one reason the strict, non-transferable design keeps winning approvals.
What could still go wrong
A category moving this fast earns a section on its failure modes, and tokenized deposits have four worth taking seriously, none of them exotic.
The first is the interoperability trap. Every architecture described above, single-bank rails, SWIFT’s shared ledger, The Clearing House network, mints tokens that work within its own perimeter. History’s parallel is instructive: early wire transfer and card networks fragmented for decades before consolidating, and the consolidation was driven by merchants and users refusing to hold seventeen incompatible instruments. A corporate treasurer offered JPMorgan tokens, SWIFT-coordinated tokens, and consortium tokens, each with different settlement finality and legal terms, may reasonably decide the pilot era is someone else’s problem and keep wiring. The category’s success requires the networks to interconnect, and the incentives to interconnect are weakest for exactly the largest banks whose participation matters most, because a proprietary rail that works is a moat.
The second is the run-dynamics question, which deserves more respect than the marketing gives it. A tokenized deposit inherits the bank’s credit risk, and always-on settlement means the deposit can leave at any hour a holder gets nervous. The 2023 regional banking crisis showed what smartphone-speed withdrawals do to a bank funded by concentrated, sophisticated depositors; token rails compress the same dynamic further. Supervisors have levers, the non-transferable design, settlement windows, position limits, but every lever traded against the always-on convenience that is the product’s selling point. The instrument’s safety case and its value proposition are, at the margin, the same dial turned in opposite directions.
The third is regulatory divergence on the deposit-token boundary. If one major jurisdiction blesses freely transferable deposit tokens while another confines banks to the strict interbank model, bank money itself forks: a transferable claim on a Singapore or London bank circulating on open networks while American bank tokens stay walled. That is not hypothetical, jurisdictions are already writing different answers, and the arbitrage it invites, banking migrating to wherever bank money is allowed to be most bearer-like, is the kind regulators historically respond to late and harshly.
The fourth is the quiet dependency on stablecoin rules. The competitive case for tokenized deposits leans on asymmetries the law that bans stablecoin interest created, stablecoins cannot pay interest, stablecoins carry no insurance, and asymmetries written by one Congress can be rewritten by another. A future amendment permitting yield-bearing regulated stablecoins, an idea already circulating in the CLARITY Act fights over activity-based rewards, would collapse the banks’ cleanest advantage overnight. The banks are building on ground the law currently tilts toward them, and the tilt is a policy choice, not a property of the technology.
None of these kill the category; each shapes what version of it survives. The strongest honest forecast is conditional: tokenized deposits win the regulated institutional corridor if the networks interconnect, if supervisors hold the transferability line without strangling the product, and if the legislative tilt endures. Three ifs is not a guarantee. It is, however, a much shorter list than the one stablecoins faced a decade ago, which is the fairest way to size the two contenders.
Why the fight matters
Strip the technology away and the tokenized-deposit-versus-stablecoin contest is a fight over the two-tier monetary system, the arrangement where central banks serve banks and banks serve everyone else, and every reader in crypto has a stake in the outcome.
If tokenized deposits win the institutional corridor, on-chain finance gets absorbed into banking: programmable settlement arrives, but issuance, access, and control remain with chartered institutions, and the deposit-funding model that finances lending survives digitization intact. If stablecoins win it, a parallel monetary layer keeps growing outside bank balance sheets, with narrower backing, broader access, and the disintermediation consequences the Fed’s researchers keep modeling. The likeliest outcome is partition, banks holding the regulated core, stablecoins holding the open edge, with the boundary contested for years at exactly the seams this guide has mapped: transferability rules, insurance treatment, and the interest-rate asymmetry the GENIUS Act wrote into law.
For now, the practical takeaways are three. A tokenized deposit is bank money with new rails, insured and supervised, and structurally unavailable to anyone outside a bank relationship. A stablecoin is new money with open rails, reserve-backed and uninsured, and structurally available to anyone with a wallet. And the institutions that spent a decade dismissing blockchains have now committed, with 17 banks, a 53-year-old cooperative, and the world’s largest asset managers in the room, to putting the oldest money in the world on them. Whatever else that signals, it settles one argument: the rails were never the controversial part. The money was. For the adjacent cash-market structure, crypto.news has also explained the other regulated cash instrument on-chain.
Frequently asked questions
What is a tokenized deposit in one sentence?
It is a commercial bank deposit represented as a token on a blockchain, issued by the bank holding the deposit, redeemable one-to-one, and left on the bank’s balance sheet, so it settles like a crypto asset while remaining ordinary, insured bank money underneath.
How is that different from a stablecoin?
Three ways. The money stays inside the bank and keeps funding loans, whereas stablecoin purchases move money out of banks into issuer reserves. It carries deposit insurance up to statutory limits and bank supervision, whereas stablecoin holders rely on reserves and legal priority with no insurance. And banks may pay interest on it like any deposit, while the GENIUS Act bars stablecoin issuers from paying interest on their coins.
Are tokenized deposits FDIC-insured?
As deposits, yes, up to the statutory limit per depositor per bank, and the FDIC’s current stablecoin-era rulemaking addresses their insurance treatment explicitly. The practical caveat is the cap: retail balances are fully covered, while institutional holders above the limit are uninsured bank creditors for the excess, exactly as with conventional accounts. Stablecoin wallets, by contrast, carry no pass-through insurance at all.
What is the difference between a tokenized deposit and a deposit token?
Transferability. A tokenized deposit in the strict sense moves only among customers of participating banks, with interbank settlement behind each transfer, preserving the account relationship. A deposit token is freely transferable to any wallet, circulating like a bank-issued stablecoin. Regulators are far more comfortable with the first model, and where jurisdictions draw this line will shape whether the instrument stays interbank or becomes public.
Who actually uses tokenized deposits today?
Institutions, not retail. JPMorgan’s Kinexys settles real institutional payments and has extended to public infrastructure including Base and Canton. SWIFT’s shared ledger launched initial use in July 2026 with 17 global banks coordinating tokenized-deposit movements around the clock. A Clearing House consortium including Bank of America and BNY targets 2027. Retail-facing versions remain experimental almost everywhere.
Do tokenized deposits threaten stablecoins?
In the institutional corridor, directly: for regulated entities moving money between themselves, an insured, interest-capable, supervised instrument is a strong competitor. In open corridors, not really: tokenized deposits require a bank relationship, so exchange settlement, DeFi collateral, and unbanked-adjacent remittances remain stablecoin territory. The likely outcome is partition rather than a winner-take-all, with the boundary set by regulation as much as preference.
What are the main risks or limits?
Permissioned access excludes everyone outside member banks. Competing networks risk fragmenting the category into non-interoperable islands. Insurance is capped, leaving large institutional balances exposed above the limit. And always-on settlement is untested under stress, since the same 24/7 rails could accelerate a deposit run faster than any in history, which is partly why supervisors favor non-transferable designs.
Why does this matter for someone holding crypto?
Because it defines the competition. The growth path stablecoins were assumed to own, institutional settlement, corporate treasury, tokenized-asset plumbing, is exactly where banks are now deploying an instrument with insurance and interest attached. How that contest resolves shapes stablecoin demand, the reserves feeding Treasury markets, and which digital dollar becomes default in each corridor. This is educational context, not investment advice.
Disclaimer: This article is for information and educational purposes only and does not constitute financial, investment, or legal advice. Product structures, insurance treatment, and regulatory rules described here vary by jurisdiction and are subject to change. Always do your own research. Information is accurate as of July 20, 2026.
Visa launched the Visa Stablecoin Platform, an enterprise system for financial institutions built around the Open USD stablecoin, the payments company's head of crypto, Cuy Sheffield, said on X on Wednesday. "Excited to launch the Visa Stablecoin Platform as the best way to access and use Open… Read the full story at The Defiant
The filing expands Grayscale’s growing lineup of crypto-related exchange-traded products outside of Bitcoin and Ether.
Loyalty programs have been around for decades. From airline miles and hotel points to coffee shop punch cards and retail rewards, businesses have long relied on incentives to keep customers coming back. However, traditional loyalty systems often suffer from limited flexibility, poor transparency, expiration rules, and rewards that are difficult to redeem.
Blockchain technology is changing that.
By bringing transparency, security, and interoperability to reward systems, blockchain-based loyalty programs are creating a more engaging experience for both businesses and consumers. Instead of locking rewards inside a single ecosystem, blockchain allows digital loyalty assets to become more flexible, secure, and valuable.
What Is a Blockchain Loyalty Program?
A blockchain loyalty program is a customer rewards system that records loyalty points, memberships, or digital rewards on a blockchain instead of a centralized database.
Customers still earn rewards by making purchases, completing tasks, or participating in promotions, but the rewards are stored as blockchain-based digital assets that are verifiable and secure.
Unlike traditional databases that are controlled by one company, blockchain creates an immutable record of every reward earned and redeemed.
Why Traditional Loyalty Programs Fall Short
Most loyalty systems have several common problems:
- Points expire unexpectedly.
- Rewards cannot be transferred.
- Customers struggle to track balances.
- Fraud and duplicate rewards occur.
- Programs are isolated from one another.
- Redemption options are often limited.
Many consumers forget they even have reward points because accessing them is inconvenient.
Blockchain addresses many of these challenges.
How Blockchain Improves Loyalty Programs
1. Transparent Rewards
Every reward transaction is recorded on-chain.
Customers can independently verify:
- Points earned
- Reward history
- Redemptions
- Bonus campaigns
This transparency builds trust between brands and customers.
2. Improved Security
Blockchain significantly reduces the risk of:
- Account manipulation
- Duplicate rewards
- Fraudulent redemptions
- Unauthorized balance changes
Since blockchain records cannot easily be altered, businesses gain a more secure infrastructure for managing rewards.
3. True Ownership
Instead of existing only inside a company’s private database, blockchain-based loyalty assets can be owned directly by users through their digital wallets.
Customers have greater control over their rewards rather than relying entirely on centralized systems.
4. Cross-Brand Interoperability
One of blockchain’s biggest advantages is interoperability.
Imagine earning rewards from:
- An airline
- A hotel
- A restaurant
- A ride-sharing app
Instead of maintaining four separate point systems, blockchain could allow these rewards to interact within a shared ecosystem.
Customers gain more flexibility while businesses expand their reach through partnerships.
5. Instant Redemption
Traditional loyalty systems often require:
- Manual approvals
- Delayed processing
- Customer support intervention
Blockchain enables near-instant verification and redemption through smart contracts.
The result is a smoother customer experience.
Tokenized Loyalty Points
Some blockchain loyalty programs tokenize rewards.
Rather than simple database entries, loyalty points become blockchain tokens.
These tokens may allow users to:
- Redeem products
- Access premium memberships
- Unlock exclusive experiences
- Participate in community events
- Receive discounts
- Earn additional rewards through staking mechanisms
Not every loyalty token is tradable, but tokenization opens many possibilities beyond traditional reward systems.
NFTs in Loyalty Programs
Non-fungible tokens (NFTs) introduce another layer of customer engagement.
Brands can issue NFTs that represent:
- VIP memberships
- Lifetime customer status
- Event tickets
- Limited-edition collectibles
- Special access passes
- Exclusive product launches
Unlike traditional membership cards, NFTs can include programmable benefits that automatically unlock perks when owned by a customer.
Smart Contracts Automate Rewards
Smart contracts eliminate much of the manual work involved in loyalty programs.
They can automatically:
- Award points after purchases
- Trigger bonus campaigns
- Validate eligibility
- Process redemptions
- Prevent duplicate claims
Automation reduces operational costs while improving customer satisfaction.
Benefits for Businesses
Blockchain loyalty programs provide several business advantages.
Lower Fraud
Immutable records reduce reward abuse.
Better Customer Retention
Flexible rewards encourage repeat engagement.
Reduced Administrative Costs
Automation minimizes manual management.
Richer Customer Engagement
Digital collectibles and tokenized experiences create stronger emotional connections.
Easier Partnerships
Multiple brands can collaborate through shared blockchain infrastructure.
Benefits for Consumers
Customers enjoy several improvements.
- Greater transparency
- Faster reward redemption
- Increased security
- Digital ownership
- More valuable rewards
- Cross-platform usability
- Personalized experiences
Instead of forgetting points inside dozens of accounts, users can potentially manage rewards from multiple brands in a single wallet.
Real-World Use Cases
Blockchain loyalty is already appearing across multiple industries.
Retail
Reward tokens for purchases and referrals.
Travel
Airline and hotel points with broader redemption options.
Food & Beverage
Digital memberships and collectible reward NFTs.
Gaming
Cross-game loyalty rewards and digital collectibles.
Entertainment
Concert tickets combined with long-term fan rewards.
E-commerce
Tokenized cashback and loyalty incentives.
Challenges Still Exist
Despite its advantages, blockchain loyalty programs still face several hurdles.
User Experience
Wallet setup and blockchain interactions remain unfamiliar to many consumers.
Regulation
Different jurisdictions have varying rules for digital assets and tokenized rewards.
Scalability
Large consumer brands require networks capable of processing millions of transactions efficiently.
Education
Many customers still do not understand blockchain technology, making onboarding a challenge.
As blockchain infrastructure matures, these barriers are expected to diminish.
The Future of Loyalty
The next generation of loyalty programs may become far more personalized and interconnected.
Future systems could enable customers to:
- Carry loyalty rewards across multiple brands.
- Receive personalized incentives powered by AI.
- Earn rewards for both online and offline activity.
- Access exclusive communities through digital memberships.
- Trade or combine rewards across participating ecosystems.
- Interact with brands through gamified experiences.
Rather than simply collecting points, customers will increasingly participate in digital ecosystems where loyalty becomes an interactive and valuable asset.
Conclusion
Blockchain loyalty programs are transforming how businesses build lasting relationships with customers. By combining transparency, automation, security, and digital ownership, they address many of the limitations of traditional reward systems.
As adoption grows, loyalty points may evolve from isolated database entries into versatile digital assets that can be used across multiple brands and experiences. For companies, this creates new opportunities to deepen engagement and foster long-term customer relationships. For consumers, it means rewards that are more accessible, flexible, and meaningful.
In the years ahead, blockchain-powered loyalty programs are poised to become a key component of the digital economy, reshaping customer engagement in ways that traditional systems simply cannot.
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The exploiter who drained Ostium, a real-world-asset perpetuals protocol on Arbitrum, has moved 10,540 ETH into Tornado Cash, blockchain security firm PeckShield said in a post on Thursday. PeckShield reported that Ostium's public OLP vault "has been drained of ~$24M $USDC." The firm said the… Read the full story at The Defiant
Crypto World
Binance, OKX Users Face $1900 fines in Vietnam, Crypto to be National Asset in Korea: Asia Express
VIETNAM
Vietnam goes after the little guys
Vietnam will fine retail crypto users up to $1900 if they trade on unlicensed overseas platforms such as Binance, OKX and Bybit, instead of on licensed local exchanges.
There’s just one problem: Vietnam’s Finance Ministry has yet to issue any exchange licenses for its regulated digital asset market which is due to start on September 1. Five exchanges have been approved in principle however.
Domestic investors who trade crypto that’s been designated exclusively for foreign investors can be fined up to $3800. Crypto companies providing or advertising services without a license, those who fail to properly ID customers, or unlawfully deal with crypto account data, can be fined up to $7600.
MALAYSIA
Network school dragged into Israeli citizen controversy
Balaji Srinivasan’s utopian Network School in Forest City, Malaysia is under fire over allegations it has been hosting Israeli citizens using second passports.
The claims trace back to an activist group Malaysia Protest 4 Palestine, which has accused the school of becoming a “gathering place for Israeli entrepreneurs.”
In other countries such a kerfuffle might result in a few BDS protesters or a boycott, but Malaysia has no diplomatic relations at all with Israel, and bans Israeli citizens from even visiting.
That said, dual nationals with Israeli passports are allowed… for now, although the controversy suggests that particular loophole may be closed soon.
Vitalik, Bryan and Balaji at the Network School. (X)
The incident made international headlines after Srinivasan threatened to pull the Network School and its millions in investments out of the country.
The Immigration Department said its investigation had found the 266 foreigners have valid documents, while the Johor state government is plowing ahead with a probe to ensure compliance with regulations on business licenses, building usage and commercial operations.
Ironically, the Network School is based on the concept of online network states, which are meant to be above such petty IRL squabbles.
JAPAN
Japan reclassifies crypto as financial assets
The Japanese parliament has passed revisions to the Financial Instruments and Exchange Act and now classifies cryptocurrencies as financial assets.
The move takes crypto regulations out of the Payment Services Act and comes with a mixed bag of tax benefits along with harsher fines and regulations that befit crypto’s new status up there alongside TradFi assets.
Source: Reuters, X.
Unlicensed crypto platforms face a fine of 10 million yen or 10 years in jail and there’s a new ban on insider trading in crypto that will be policed by the Securities and Exchange Surveillance Commission.
On the upside, current crypto tax rates of up to 55% will be slashed to approximately 20%, with a three year carry forward provision for any losses… which neatly lines up with a bull run every fourth year.
Unfortunately the new tax rules don’t come into effect until 2028.
SOUTH KOREA
South Korea adds crypto to public wealth management rules
South Korea has proposed updating its national asset management scheme to include crypto and IP under the definition of “national assets.”
The Ministry of Economy and Finance announced it is rewriting the 1950 State Property Act, as the National Asset Basic Act, which would make it the first national sovereign asset management statute to embed cryptocurrency.
The existing law was built around an economy focused on real estate which no longer reflects the range of assets the government holds. The new framework also changes the emphasis from managing assets to instead generating value from them. So perhaps we’ll see the Korean Government yield farming on Aave one day soon.
More news from Korea
— South Korea’s Financial Supervisory Service (FSS) has begun sanction procedures against Upbit operator Dunamu, after the platform was hacked for $30 million in November. FSS has been investigating to determine if the incident violated the Virtual Asset User Protection Act, however that law doesn’t provide sanctions for hacks or IT failures.
— That particular oversight is expected to be addressed in the forthcoming Digital Asset Basic Act. Legislators have finally restarted talks on the new act after four months.
— Korea’s Financial Services Commission is extending victim compensation schemes to cover crypto scams.
— Weekly trading volume on Korea’s five top exchanges has more than halved since early June to just 8 trillion won.
— The Bank of Korea will expand its Project Hangang CBDC pilot to nine banks. Phase two, which kicks off in September, also adds biometric payments and person to person transfers.
— Officials from South Korea’s National Tax Service have proposed changing the law to establish clear procedures for seizing self hosted crypto wallets during investigations.
— Consensys unwittingly hired a North Korean dev and gave him access to Metamask’s code. It says an investigation didn’t uncover any security issues.
CHINA and HONG KONG
Is Coinbase allowing Chinese users to verify?
Wu Blockchain reports that Coinbase has opened up verification for users who are solely based in China. Previously Chinese users needed to provide a Hong Kong address, but they can now reportedly verify on the platform using only a Chinese ID card and a Chinese address. However, China still does not appear in Coinbase’s list of supported countries.
— Hong Kong has approved its first crypto native tokenized fund from Baillie Gifford, that allows professional investors to have direct ownership of assets on the blockchain.
INDONESIA
— Bybit is launching a regulated platform in Indonesia, following its acquisition of the local NOBI exchange. It will retain NOBI’s senior management team to run the Bybit Indonesia operation.
Cointelegraph publishes long-form journalism, analysis and narrative reporting produced by Cointelegraph’s in-house editorial team with subject-matter expertise. All articles are edited and reviewed by Cointelegraph editors in line with our editorial standards. Content published in here does not constitute financial, legal or investment advice. Readers should conduct their own research and consult qualified professionals where appropriate. Cointelegraph maintains full editorial independence.
CASHCAT, the flagship token of the two-week-old Robinhood Chain, has fallen roughly 70% from its record high, unwinding most of the run that briefly carried its market value above $200 million after leveraged trading arrived. The token changed hands at about $0.065 on Friday, down about 70% from… Read the full story at The Defiant
Celsius co-founders Shlomi Daniel Leon and Hanoch “Nuke” Goldstein have been ordered to pay over $6 million to settle Federal Trade Commission charges alleging they misrepresented the safety of the Celsius platform before the company collapsed.
Goldstein, Celsius’ former chief technology officer, was ordered to pay $2.014 million under an order signed Monday by US District Judge Denise Cote. Leon, the firm’s former chief strategy officer, was ordered to pay $4.1 million under a separate order entered on June 29.
The settlements extend the fallout from the 2022 collapse of Celsius beyond its former CEO Alex Mashinsky. The crypto lending platform, which held $25 billion in assets at its peak, owed its users $4.7 billion when it filed for bankruptcy in July 2022.
The order also bars Leon from marketing or selling products or services that can be used to deposit, exchange, invest or withdraw assets, the FTC said in a statement Monday.
“Similarly, Goldstein has agreed to a ban on marketing or selling retail products or services that can be used to buy, sell, deposit, withdraw, distribute or trade cryptocurrency.”
Related: Celsius’ Mashinsky gets permanent trading ban in CFTC settlement
FTC allegations against Celsius co-founders
The FTC alleged that Celsius falsely told customers it held sufficient reserves to meet withdrawal demands, maintained a $750 million insurance policy covering customer deposits and did not issue unsecured loans.
“The FTC, however, alleged that the promises were false and that its top executives continued to claim that customers’ deposits were safe days before the company filed for bankruptcy,” it said.
Mashinsky settles FTC case for $10 million
In April, Mashinsky agreed to an FTC settlement that permanently bars him from promoting asset-related products and required him to pay $10 million as part of a broader, partially suspended $4.72 billion judgment.
The $2.014 million and $4.1 million payments from Goldstein and Leon, respectively, will also be credited against the $4.72 billion judgment. The judgments reflect the consumer harm alleged by the FTC.
Separately, Mashinsky was sentenced to 12 years in prison in May 2025 after pleading guilty to commodities and securities fraud charges, with prosecutors saying he misled Celsius customers about the company’s profitability, investment risks and the safety of customer funds.
Magazine: Binance & OKX users face $1900 fines in Vietnam, Coinbase in China? Asia Express
Tokenized stocks are seeing more onchain trading and are starting to be used as lending collateral, though both remain a small share of DeFi activity, according to data published July 16 by Token Terminal, an onchain analytics provider. The firm's dashboard put spot DEX trading volume for tokenized… Read the full story at The Defiant
OKX said its Unified Tokenized Stocks product is now live for eligible traders, with users in the United States and the European Union excluded. The crypto exchange listed more than 40 tokenized US stocks and ETFs, including XNVDA, XAAPL and XTSLA, tradable against the USDT stablecoin. The design… Read the full story at The Defiant
Crypto World
Vietnam Targets Binance and OKX Users With $1,900 Fines; Coinbase Faces Scrutiny in China
Vietnam is moving to tighten oversight of crypto trading by cracking down on retail users who access overseas platforms not licensed in the country. At the same time, lawmakers and regulators across Asia are continuing to reshape how digital assets fit into financial law—through new classifications, asset-management rules, and enforcement actions.
Below is a regional roundup of the most consequential policy and compliance developments highlighted across Vietnam, Malaysia, Japan, South Korea, China and Hong Kong, and Indonesia.
Key takeaways
- Vietnam plans penalties of up to $1,900 for retail crypto trading on unlicensed offshore exchanges such as Binance, OKX, and Bybit, ahead of a regulated market rollout that is scheduled to begin on September 1.
- Japan’s parliament has passed revisions that reclassify cryptocurrencies as financial assets, shifting oversight away from the Payment Services Act and introducing new compliance requirements.
- South Korea is seeking to include crypto within the country’s “national assets” framework by rewriting the State Property Act as a National Asset Basic Act.
- In South Korea, regulators have begun sanction procedures against Upbit operator Dunamu following a $30 million hack, while broader legislative gaps around digital asset failures remain under review.
- Malaysia’s immigration and local authorities are investigating an Israeli citizenship controversy tied to Network School in Forest City, amid claims that the venue has been used through second passports.
Vietnam sets penalties for retail trading on offshore exchanges
Vietnam’s Finance Ministry has outlined fines targeting retail users who trade crypto on unlicensed overseas platforms rather than using locally licensed exchanges. The proposed penalties can reach up to $1,900 for retail participants, depending on the specifics of the activity and the platform involved.
The enforcement focus extends beyond individual traders. Domestic investors who trade crypto assets designated exclusively for foreign investors can face fines up to $3,800. Meanwhile, crypto companies that provide or advertise services without a license—or fail to properly identify customers—or unlawfully handle crypto account data can be fined up to $7,600.
The policy is scheduled to take effect alongside a regulated digital asset market framework due to start on September 1. However, the sticking point is that Vietnam’s regulator has not yet issued exchange licenses for the regulated market, even though five exchanges have reportedly been approved “in principle.”
For investors and traders, this gap matters: penalties are aimed at use of unlicensed offshore venues, but the local licensing pipeline is still not operational. Market participants should watch closely for when Vietnam’s first regulated exchange licenses are formally issued and which products and investor categories each approved platform will be allowed to support.
Malaysia investigation highlights passport and visa compliance risk
Malaysia’s immigration authorities are investigating claims that Network School in Forest City—founded by Balaji Srinivasan and designed around the idea of “network states”—has been hosting Israeli citizens via second passports.
According to reporting linked in the source coverage, the allegations trace back to an activist group, Malaysia Protest 4 Palestine, which accused the school of operating as a “gathering place for Israeli entrepreneurs.” In response to the controversy, Srinivasan had threatened to remove the Network School and its associated investments from Malaysia, according to earlier international headlines mentioned in the source.
The Immigration Department said its investigation found that 266 foreigners have valid documents. Separately, the Johor state government is continuing its probe to ensure compliance with local rules, including business licenses, building usage, and commercial operations.
From a policy perspective, the episode underscores how quickly immigration, licensing, and nationality rules can collide with crypto-adjacent narratives and cross-border talent flows. While dual nationals holding Israeli passports are reported to be allowed “for now,” the controversy suggests scrutiny could intensify, potentially closing loopholes that make certain residency or entry routes easier than regulators intend.
Japan reclassifies crypto as financial assets
Japan has moved to tighten the legal framework around digital assets by passing revisions to the Financial Instruments and Exchange Act that reclassify cryptocurrencies as financial assets.
As described in the source coverage, this change takes crypto regulations out of the Payment Services Act. The shift is framed as a mixed outcome for market participants: it brings regulatory expectations closer to traditional finance (TradFi), including stricter enforcement and compliance burdens, while also changing the tax profile for holders.
One of the most immediate implications is enforcement. The source notes that unlicensed crypto platforms could face penalties of 10 million yen or up to 10 years in jail. A new ban on insider trading in crypto is also included, to be policed by the Securities and Exchange Surveillance Commission.
On the tax side, current crypto tax rates—reported as up to 55%—are expected to be reduced to approximately 20%, with a three-year carry forward for losses. However, the revised tax rules do not take effect until 2028.
This timing gap creates uncertainty for investors trying to plan around a trading and tax strategy that spans the transition. Market participants should consider how current tax treatment applies until the 2028 effective date, and whether future guidance clarifies how trading activity should be recorded across the regulatory transition.
South Korea proposes crypto inclusion in national asset management
South Korea is looking to formally expand the scope of state asset management to include both crypto and intellectual property. The Ministry of Economy and Finance announced it is rewriting the 1950 State Property Act into a National Asset Basic Act, which would define “national assets” in a way that explicitly embeds cryptocurrency.
The source coverage emphasizes that the older framework was developed during an economy centered largely on real estate, and that the update would shift emphasis from merely managing assets to generating value from them. The practical implications for the industry are straightforward: if crypto is treated as a category of national assets, it could influence how the state approaches custody, risk management expectations, and the boundaries of public participation or oversight.
Regulatory enforcement and legislative follow-through
South Korea’s broader regulatory direction also includes enforcement actions. The source notes that the Financial Supervisory Service (FSS) has started sanction procedures against Upbit operator Dunamu after the platform was hacked for about $30 million in November. The FSS is reportedly determining whether the incident violated the Virtual Asset User Protection Act, while the source highlights that the law may not provide sanctions specifically for hacks or IT failures.
The coverage further states that legislators are expected to address that oversight in a forthcoming Digital Asset Basic Act, with talks reportedly restarted after a four-month pause.
Alongside enforcement and legislation, the source includes other ongoing developments, such as extensions of victim compensation schemes to cover crypto scams and a proposal by tax authorities to establish clearer procedures for seizing self-custodied crypto wallets during investigations.
Coinbase verification shift for mainland China users
Separately, Wu Blockchain reports that Coinbase has opened up user verification for accounts solely based in China. Previously, Chinese users reportedly needed to provide a Hong Kong address; the source claims they can now verify using only a Chinese ID card and a Chinese address.
However, the report also states that China does not currently appear in Coinbase’s list of supported countries on its help documentation. That mismatch suggests either a narrow operational change or a staged rollout of verification capabilities that does not equate to full country support for services.
For users, the practical takeaway is to confirm eligibility directly during onboarding and to treat verification availability as distinct from whether all account features are accessible in a given jurisdiction.
Other regional updates: Hong Kong tokenized funds and Bybit’s Indonesia platform
In Hong Kong, the source notes that the territory approved its first crypto-native tokenized fund from Baillie Gifford, allowing professional investors to have direct blockchain-based ownership of underlying assets.
Meanwhile in Indonesia, the coverage says Bybit is launching a regulated platform following its acquisition of the local NOBI exchange. Bybit is reportedly retaining NOBI’s senior management team to run the Bybit Indonesia operation, signaling continuity on the operating side while shifting regulatory posture under the new ownership structure.
Across the region, the common theme is that regulation is tightening while timelines and operational gaps remain: Vietnam’s licensing is still pending even as penalties loom, Japan’s tax relief arrives years after the legal reclassification, and South Korea’s state-asset framework is taking shape alongside enforcement for platform security. The next signal to watch is how quickly regulators turn policy announcements into functioning compliance infrastructure—especially licenses, tax guidance, and enforcement standards that affect day-to-day trading and custody decisions.
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