FDUSD Depegging Sparks Regulatory Concerns? VARA Helps You Move Forward with Confidence!

Recently, the stablecoin FDUSD experienced a severe depegging, dropping as low as $0.87, causing a public uproar. The controversy was ignited by TRON founder Justin Sun, who alleged that FDUSD issuer First Digital Trust (FDT) is deeply insolvent and even struggling to meet client redemptions.

Even more shocking, Sun accused FDT of illegally misappropriating reserves from another stablecoin, TUSD, involving hundreds of millions of dollars. This not only shook market confidence but also raised concerns about damaging Hong Kong’s reputation as a global financial hub. He sharply criticized weaknesses in Hong Kong’s trust licensing reviews and internal risk controls, urging regulators and law enforcement to intervene swiftly.

The truth behind this turmoil is yet to be revealed, but it raises an important question worth reflecting on: In the fast-paced world of cryptocurrency, what is the true significance of regulation for Virtual Asset Service Providers (VASPs)?

This incident forces us to confront a reality: despite being a global financial center, Hong Kong’s regulation of cryptocurrency businesses is still developing. The Securities and Futures Commission (SFC) currently focuses on platforms dealing with securities-like virtual assets. However, trust companies like First Digital Trust (FDT), which specialize in stablecoin issuance and asset custody, don’t fully fall under the SFC’s regulatory purview.

While the Hong Kong Monetary Authority (HKMA) is accelerating the development of a regulatory framework for stablecoin issuers, these new rules have yet to be implemented. For now, FDT’s compliance mainly depends on its obligations as a Trust and Company Service Provider (TCSP), rather than a robust framework tailored for digital assets.

This raises concerns—could this regulatory gap become the breeding ground for the next crisis?

Looking to the global financial leader, the United States has only just begun to establish a regulatory system for stablecoins. On April 4, the U.S. Securities and Exchange Commission (SEC) released new guidance, stating that “qualified stablecoins” may be exempt from securities registration. This marks a clear regulatory milestone for the industry.

What qualifies as a “qualified stablecoin”? The SEC provides clear criteria, primarily based on marketing intent. These stablecoins must be positioned as tools for payment, funds transfer, or value storage—not as investment products.

In terms of reserve assets, the SEC imposes strict requirements. Qualified stablecoins must be backed by physical U.S. dollars or highly liquid, low-risk assets such as short-term U.S. Treasuries, and must meet the following conditions:

Reserve assets must be completely segregated from the issuer’s operational funds;
Must not be used for lending, pledging, re-pledging, or any investment activities;
Cannot be used for company operating costs or business expenses;
Must be protected from third-party creditor claims;
Interest earned on reserves may be retained but must not be distributed to token holders.

To further enhance transparency, the SEC encourages issuers to regularly publish “Proof of Reserves” as a public verification mechanism of financial soundness.

However, this guidance is not a comprehensive solution. While the SEC has relaxed rules for qualified stablecoins, it remains silent on algorithmic stablecoins like Terra and Frax, or stablecoins designed to offer yields. These “alternative players” remain legally ambiguous, and if classified as securities, compliance risks will follow closely. As regulatory boundaries become clearer, the next chapter in the stablecoin market clearly holds more unknowns.

While global regulators are still finding their footing, Dubai has taken the lead. In early 2022, the Virtual Assets Regulatory Authority (VARA) was established—becoming the world’s first independent regulator dedicated to virtual assets. VARA’s bold and clear goal: position Dubai as a global hub for digital assets, enhance its competitiveness in digital finance, and foster a healthy ecosystem through efficient regulation.

VARA not only provides VASPs with a clear compliance path, but also strikes a balance between innovation and security. This forward-looking initiative sets a global benchmark for the crypto industry.

Legal Safeguards: It offers a transparent framework, strictly upholding anti-money laundering (AML) and cybersecurity standards to build trust.
Investor Magnet: A VARA license is a mark of compliance, attracting both local and international capital to energize your business.
Geographic Advantage: Dubai serves as a golden hub between Asia and Europe, placing your business at the center of global finance with ample opportunities.
Innovation Ground: The UAE embraces foreign investment and innovation with forward-thinking policies, helping you expand your crypto footprint.

Want to seize the digital asset opportunity in Dubai? CryptoLicence is your top choice!

Expert Insight: We understand VARA’s core framework and detailed requirements and provide tailored, end-to-end guidance.
One-Stop Support: From business plans and AML policies to financial and risk frameworks—we make the licensing process smooth and simple.
Ongoing Assistance: After licensing, we offer compliance updates, audit support, and banking introductions to keep you ahead of the curve.

The TUSD scandal is a wake-up call—risks are everywhere in the absence of regulation. Dubai’s VARA paves the way for compliant and successful growth. Contact CryptoLicence today to start your new chapter in digital finance!

MiCA Regulation Goes Live: How Can European VASPs Break Through?

The official implementation of MiCA regulation has practically placed a “tightening spell” on digital currency transactions, bringing Europe’s cryptocurrency market unprecedented challenges. With ever stricter policies in Europe, VASPs face a stark survival dilemma: Should they forge ahead against the odds, or quietly exit the scene? Don’t worry—this article will dissect the situation layer by layer, revealing the key strategies for a successful breakthrough!

The Markets in Crypto-Assets (MiCA) framework is undoubtedly a hot topic among Virtual Asset Service Providers (VASPs).

What is MiCA? Put simply, it’s a regulatory framework carefully crafted by the EU, acting like an all-in-one “guidebook” specifically designed for crypto assets and related services. Its aim is to make Europe’s cryptocurrency market more unified and transparent. This framework took full effect on 30 December 2024, and from now on, all players in Europe’s crypto space must operate under these new “game rules.”

The rollout of MiCA is viewed as a major milestone for global crypto regulation, offering both opportunities and challenges for European VASPs. On one hand, MiCA provides legitimate enterprises with a clear legal framework—a transparent compliance roadmap that shows you how to avoid legal pitfalls. On the other hand, its stringent requirements and considerable costs form a high barrier to entry, potentially driving smaller players or those unfamiliar with compliance out of the market.

What’s more troubling is that even if VASPs invest significant time, effort, and capital, there’s no guarantee they’ll successfully obtain a MiCA “entry ticket.” Under MiCA’s supervision, compliance requirements for Anti-Money Laundering (AML) and Know Your Customer (KYC) are extremely stringent—not to mention the registration fees and other costs that can run into the hundreds of thousands of euros. Rough estimates suggest that meeting MiCA’s requirements could initially cost around EUR 500,000, and that’s just the beginning. Many who aim to secure a European crypto licence drop out midway in this regulatory marathon. Those who fail to get licensed can only watch as the doors to the European market close in front of them.

Looking at the European market, the regulatory “tightening spell” is already in place, and the need to find a way forward is urgent.

When faced with MiCA’s rigorous compliance demands, high application costs, and complex registration process, VASPs still have an excellent “safe harbor”: Switzerland! Renowned for its stability and innovation in finance, Switzerland not only boasts a mature legal system and robust financial infrastructure but also leads the way in blockchain and crypto assets. Currently, Switzerland is home to 900 registered cryptocurrency companies, including leaders in various niches.

Switzerland’s regulatory environment is overseen directly by the Swiss Financial Market Supervisory Authority (FINMA), ensuring everything remains orderly. For financial intermediaries that do not require a full FINMA licence, Switzerland mandates membership in Self-Regulatory Organizations (SROs). These SROs operate under FINMA’s authorization and supervision, offering both flexibility and authority—an ideal “fast pass” for VASPs.

Obtaining membership in a Swiss SRO is not only a wise choice for managing MiCA pressures but also a way for VASPs to enjoy several “Swiss benefits”:

Clear Legal Framework: Switzerland’s regulatory framework is transparent and stable, with a business-friendly compliance path—avoiding the uncertainty of “feeling your way forward” under MiCA.
Robust Financial Infrastructure: From banking to payment systems, Switzerland’s financial ecosystem provides a strong backbone for VASPs’ operational needs.
Outstanding Corporate Image: Earning “Swiss certification” is like gilding your brand with a seal of trust. Clients and partners will be more confident entrusting their assets to you.
Flexible Tax System: Compared to the EU’s heavier tax burdens, Switzerland’s tax policies are more favorable, offering various tax breaks and incentives that both reduce corporate costs and support profit growth.
High-Quality Blockchain Community: Switzerland’s “Crypto Valley” is a global hub for top blockchain technology resources and high-profile projects, creating a fertile environment for innovation.
Government Support: Switzerland’s lenient policies foster a crypto-friendly ecosystem, ensuring VASPs can thrive without worrying about excessive barriers.

In addition to these core benefits, SRO members can leverage “reverse solicitation” to serve EU customers. In simple terms, as long as the EU customer actively reaches out—of their own volition—VASPs with SRO membership can legally offer crypto services to them without needing the EU licence required by MiCA.

Below are the core requirements for applying for Swiss SRO membership, neatly summarized to help you get started quickly:

Corporate Membership (Eligibility and Suitability)
- All members must provide valid passports and proof of residence.
- Submit detailed source-of-funds information to ensure transparency and compliance.
Documentation
- Business Plan outlining your vision and operations.
- AML/KYC Policies ensuring compliance with anti-money-laundering and customer due diligence standards.
- Articles of Association and shareholding structure.
- Clear details regarding any branches or affiliated companies.
Local Presence
- Appoint a local Compliance Officer and Director/Signatory in Switzerland who will be responsible for regulatory matters.
- Establish a physical office address within Switzerland to demonstrate local operations.
Minimum Capital
- For a Limited Liability Company (GmbH / Sàrl): CHF 20,000
- For a Stock Corporation (AG / SA): CHF 100,000

With MiCA’s adoption, the threshold for entering the EU crypto market has suddenly risen, and compliance costs are putting smaller VASPs off. The Swiss SRO licence offers a low-cost, high-efficiency alternative! There’s no need to face FINMA’s rigorous scrutiny directly; by joining an SRO, you can quickly establish compliance and seize market opportunities. Thanks to Switzerland’s neutrality and global reputation, you’ll not only gain a firm foothold in the European market but also set your sights worldwide.

Crytolicence is your ideal partner for obtaining SRO membership:

External Compliance Team: We handle Swiss regulations on your behalf to ensure all policies and processes align with FINMA and SRO requirements, increasing your approval chances.
Strategic Guidance: From choosing the right company type (GmbH or AG) to selecting the right SRO (VQF or SO-FIT), we tailor a compliance plan that fits your needs.
One-Stop Support: Company registration, legal consultation, document review, AML/KYC policy formulation, audit coordination—everything covered.
Corporate Accounts: We can connect you with crypto-friendly banks, EMIs, and card payment solutions, ensuring smooth payment channels.
Ongoing Compliance Support: We assist with audits, reporting, and regulatory updates so you can operate with peace of mind.

Get in touch with Cryptolicence now to secure your SRO membership—hassle-free!