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Factbox: Singapore’s rise, and falter, as Asia cryptocurrency hub

Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 14, 2018. REUTERS/Dado Ruvic

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HONG KONG/SINGAPORE, July 12 (Reuters) – Singapore’s burgeoning cryptocurrency sector has been shaken by the recent collapse of Three Arrows Capital, a cryptocurrency hedge fund, and signs of tighter scrutiny by regulators at the Monetary Authority of Singapore. read more

Following are key facts about the rise of Singapore as an Asian cryptocurrency hub, and the fallout from the Three Arrows collapse.

HOW IMPORTANT IS SINGAPORE TO ASIA’S CRYPTO SECTOR?

Investment in Singapore’s crypto and blockchain companies surged to $1.48 billion in 2021, according to KPMG, ten times the previous year and nearly half the Asia Pacific total for 2021.

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PwC says 6% of the world’s crypto funds are based in Singapore, ranking it a joint third globally – along with Switzerland and Hong Kong – behind the U.S. and UK.

Singapore, one of Asia’s main investment banking and asset management centres alongside Hong Kong, is keen to establish a leading role in financial technology, including blockchain and crypto.

WHY HAS SINGAPORE ATTRACTED CRYPTO BUSINESS?

The scale and range of Singapore’s crypto companies and service providers attracted digital asset companies fleeing regulatory crackdowns elsewhere.

These include Huobi, a crypto exchange initially focused on China that now has a major presence in Singapore.

U.S. firms like crypto exchange Gemini have set up regional Asia headquarters in Singapore.

The citystate was also a forerunner in developing a licencing regime for crypto companies, which attracted many companies hoping the endorsement of a leading regulator would help them to win business.

Other industry leaders such as crypto exchange Coinbase (COIN.O) have applied for licences in Singapore.

DBS (DBSM.SI), Singapore’s largest bank, has launched its own crypto exchange.

WHY DID 3AC COLLAPSE?

Digital currencies have been on the backfoot for months, with Bitcoin losing roughly half its value since the start of May.

The sell-off was triggered by the collapse of stablecoin TerraUSD and its paired token Luna, resulting in large losses for holders such as 3AC. The company lost about $200 million of its investment in Luna, an executive told the Wall Street Journal last month, adding that the company was still trying to quantify its losses.

According to U.S. court filings, several of 3AC’s lenders have issued it notices of default.

WHAT IS SINGAPORE’S REGULATORY STANCE?

The Monetary Authority of Singapore’s statements have indicated a welcoming approach, encouraging crypto-related services.

At the same time, some companies say the authorities’ soothing rhetoric belies an occasionally harsh regulatory stance.

Only a handful of approvals have been granted so far among well over 100 applicants for new crypto payments licences.

Chia Hock Lai, co-chairman, Blockchain Association Singapore, said there were currently well over 200 crypto businesses in Singapore, but several had shut down or moved out after the licencing regime came in.

The most high-profile of these is Binance, the world’s largest crypto exchange, which left Singapore last year as it came under close scrutiny around the world. read more

Like regulators elsewhere, MAS has also indicated that it would take a tough stance on money laundering, consumer protection, and other risks that may be associated with the digital currency sector.

Tharman Shanmugaratnam, Senior Minister and chairman of the MAS, told parliament last week that the regulator was considering additional consumer safeguards for cryptocurrency trading, although he did not mention 3AC.

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Reporting by Alun John and Chen Lin; Editing by Edmund Klamann

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Russian parliament approves tax break for issuers of digital assets

MOSCOW, June 28 (Reuters) – Russian lawmakers on Tuesday approved a draft law that would potentially exempt issuers of digital assets and cryptocurrencies from value-added tax.

Russia has long voiced scepticism of cryptocurrencies and other digital assets, with the central bank citing concerns over financial stability.

But in February the regulator gave blockchain platform Atomyze Russia the first licence to exchange digital assets. A licence for dominant lender Sberbank (SBER.MM) soon followed.

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Unprecedented Western sanctions have hit the heart of Russia’s financial system over events in Ukraine and lawmakers have scrabbled to bring in new legislation to soften the blow.

The draft law, approved by State Duma members in the second and third readings on Tuesday, envisages exemptions on value-added tax for issuers of digital assets and information systems operators involved in their issue.

It also establishes tax rates on income earned from the sale of digital assets.

The current rate on transactions is 20%, the same as for standard assets. Under the new law, the tax would be 13% for Russian companies and 15% for foreign ones.

The draft must still be reviewed by the upper house and signed by President Vladimir Putin to become law.

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Reporting by Reuters, Editing by Louise Heavens

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U.S. senators unveil bill to regulate cryptocurrency

WASHINGTON, June 7 (Reuters) – A bipartisan pair of U.S. senators unveiled a bill on Tuesday that would establish new rules for cryptocurrency, and hand the bulk of their oversight to the Commodity Futures Trading Commission (CFTC).

The bill, introduced by Republican Senator Cynthia Lummis, one of Congress’ most vocal cryptocurrency advocates, and Democratic Senator Kirsten Gillibrand, marks one of the most ambitious efforts yet by lawmakers to place clear guard rails around rapidly growing and controversial cryptocurrency markets.

The measure would stipulate that the CFTC, not the Securities and Exchange Commission, play the primary role in regulating crypto products, most of which the senators said operate more like commodities than securities. The smaller CFTC is generally seen as a friendlier regulator for cryptocurrency, as the SEC has typically found that crypto products must adhere to a host of securities requirements.

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The bill is not expected to become law in the current session of Congress, with the midterm elections just months away, but its framework could serve as a starting point for future debates about how best to oversee those markets.

“We expect this bill will be the starting point for debate next year regardless of which party controls the House or the Senate,” wrote Jaret Seiberg, an analyst with Cowen Washington Research Group. “What does matter is that there is a bipartisan effort to bring crypto into the existing regulatory regime even if the details are likely to change.”

The senators said the bill is aimed at providing certainty and clarity to crypto markets, alongside consumer protections.

Among other items, the bill would establish new rules for “stablecoins,” which are tokens intended to have their value pegged to a traditional asset like the U.S. dollar. Those products have been under significant pressure lately after a crash in the value of a high-profile stablecoin, TerraUSD. read more

The new bill would require stablecoin issuers to maintain high-quality liquid assets equal to the value of all outstanding stablecoins, and public disclosures of those holdings.

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Reporting by Pete Schroeder in Washington
Editing by Matthew Lewis

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Russia mulls allowing cryptocurrency for international payments, Interfax reports

Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 14, 2018. REUTERS/Dado Ruvic/Illustration

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May 27 (Reuters) – Russia is considering allowing cryptocurrency to be used for international payments, Interfax news agency quoted a government official as saying on Friday.

“The idea of using digital currencies in transactions for international settlements is being actively discussed,” Ivan Chebeskov, head of the finance ministry’s financial policy department, was quoted as saying.

Russian officials are wrestling with how to regulate the country’s crypto market and use of digital currencies, with the finance ministry opposed to the central bank’s calls for a blanket ban. read more

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Discussions have been ongoing for months and though the government expects cryptocurrencies to be legalised as a means of payment sooner or later, no consensus has yet been reached. read more

The finance ministry is discussing adding the latest proposal on international payments to an updated version of a draft law, the Vedomosti newspaper reported on Friday, citing government officials.

Allowing crypto as a means of settlement for international trade would help counter the impact of Western sanctions, which has seen Russia’s access to traditional cross-border payment mechanisms “limited,” Chebeskov said.

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India’s top crypto app CoinSwitch calls for regulatory ‘peace, certainty’

Souvenir tokens representing cryptocurrency Bitcoin plunge into water in this illustration taken May 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

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DAVOS, Switzerland, May 22 (Reuters) – India must establish rules on cryptocurrencies to resolve regulatory uncertainty, protect investors and boost its crypto sector, CoinSwitch CEO Ashish Singhal said on Sunday.

Although India’s central bank has backed a ban on cryptocurrencies over risks to financial stability, a federal government move to tax income from them has been interpreted by the industry as a sign of acceptance by New Delhi.

“Users don’t know what will happen with their holdings – is government going to ban, not ban, how is it going to be regulated?,” Singhal, a former Amazon engineer who co-founded CoinSwitch, told Reuters at the World Economic Forum in Davos.

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CoinSwitch, which is valued at $1.9 billion, says it is the largest crypto company in India with more than 18 million users. The firm, based in India’s main tech hub of Bengaluru, is backed by Andreessen Horowitz, Tiger Global and Coinbase Ventures.

“Regulations will bring peace … more certainty,” he added.

Blockchain and cryptocurrency companies have a large presence at this year’s Davos meeting, which coincides with a period of crypto prices plummeting around the world.

India’s central bank has voiced “serious concerns” around private cryptocurrencies, but Prime Minister Narendra Modi in December said such emerging technologies should be used to empower democracy, not undermine it. read more

Exchanges often struggle in India to partner with banks to allow transfer of funds and in April, CoinSwitch and some others disabled rupee deposits through a widely-used state-backed network, alarming investors. read more

‘CLARITY’

While moves on taxation and certain advertising regulation had brought some relief, a lot more needed to be done, Singhal said, adding that India should develop a set of laws.

These should include norms for identity verification and transferring crypto assets, while for exchanges, India should put in place a mechanism for them to track transactions and report them to any authority if need be.

While no official data is available on the size of India’s crypto market, CoinSwitch estimates the number of investors at up to 20 million, with total holdings of about $6 billion.

Regulatory uncertainty has been widely felt. In April, Coinbase, the largest cryptocurrency exchange in the United States, launched in India, but within days paused use of a state-backed inter-bank fund transfer service.

Coinbase CEO Brian Armstrong later said in May the move was triggered due to “informal pressure” from India’s central bank.

CoinSwitch too has paused so-called UPI transfers to hold talks with banking partners and make them comfortable, Singhal said in the interview. He added CoinSwitch was is in talks with regulators to try and restart the transfer service.

“We are pushing for regulations. With the right regulation, we can get the clarity,” he said.

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Reporting by Aditya Kalra in Davos; Editing by Alexander Smith

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Panama passes bill to permit use of crypto assets

A representation of cryptocurrency Bitcoin is seen in this illustration taken August 6, 2021. REUTERS/Dado Ruvic/Illustration

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PANAMA CITY, April 28 (Reuters) – Lawmakers in Panama’s National Assembly on Thursday approved a bill to regulate the use and commercialization of crypto assets in the Central American country renowned as a hub of offshore financial services.

The bill opens the door to private and public use of crypto assets, and will make it possible for people to pay their taxes with cryptocurrencies. Experts warned it could heighten Panama’s reputation as a place lacking financial transparency.

The legislation is broader in scope than measures passed by El Salvador, which last year made bitcoin legal tender, said independent lawmaker and promoter of the bill Gabriel Silva.

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“We’re seeing the emergence of many different types of crypto assets like works of art,” he said. “That’s why we didn’t want to limit ourselves only to cryptocurrencies.”

The bill covers the trading and use of crypto assets, issuance of digital securities, new payment systems and the tokenization of precious metals. Tokenization is when rights to an asset are converted into digital formats.

Under the new legislation, Panamanians may use crypto assets as means of payment for any civil or commercial operation not prohibited by law in the country.

Panama is on the European Union’s list of tax havens, and Romain Dromard, chief executive officer at financial investment advisory firm K&B Family Office, said the crypto bill would not help it appear more transparent.

“Panama was already in a bad position and these payment methods skip the due diligence processes that international organizations are asking Panama to embrace,” he said.

The bill, which now passes to President Laurentino Cortizo to be signed, was approved in the assembly with 38 votes in favor, two abstentions and no votes against.

Belisario Castillo Saenz, chief executive officer of tokenization firm Feänor Corp, argued that crypto assets could help the unbanked, given that internet penetration is high in Panama but only one in four people have bank accounts.

The bill could also make banks that have created barriers to using cryptocurrencies more cooperative, said Jose Fabrega of CryptoSPA, a hub for crypto and blockchain services.

Still, K&B’s Dromard said the role banks will play under the new rules is unclear and forecast that it will take years for traditional institutions to use the assets.

In addition, small and medium businesses would not be able to switch to such highly volatile assets, he argued.

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Reporting by Elida Moreno and Valentine Hilaire; Editing by Cynthia Osterman

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Cryptoverse: Ether prepares for epic ‘merge’ in quest to eclipse bitcoin

April 26 (Reuters) – Ether has promised to do better. It has promised to go to the next level, edging out crypto rivals and even outshining the godfather, bitcoin. But the clock’s ticking.

The No.2 cryptocurrency was supposed to be weeks away from the “merge”, a transformative June upgrade of its blockchain Ethereum to make it faster, cheaper and less power hungry, holding out the prospect of a meaner and cleaner crypto future.

The anticipation had supported ether this year, even as inflation and monetary tightening shackled bitcoin. But that merge – which would see ether mining transition away from the energy-intensive proof-of-work method to proof-of-stake – has been delayed, frustrating investors.

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“The timeline for seeing this launch continues to extend,” said Brendan Playford, founder and CEO of decentralized financial data platform Masa Finance.

“It’s certainly plausible that Ethereum’s highly anticipated upgrade to a proof-of-stake system could be delayed again given that this transition is highly complicated and still uncertain as to whether it can actually deliver on its promise of lowering costs and increasing transaction speeds.”

Ether fell 8% from $3,215 to $2,947 on April 11, the day Ethereum lead developer Tim Beiko said on Twitter that the June rollout had been pushed back as tests continued. It is down 13% this month, at $2,844.

“It won’t be June, but likely in the few months after,” Beiko wrote in his tweet. “No firm date yet, but we’re definitely in the final chapter.”

The timing of the merge – Ethereum’s EH1 chain will meld with a new chain to create ETH2 – remains unclear, although many crypto watchers expect it to happen some time this year. Beiko didn’t reply to a request for comment via Twitter and LinkedIn.

Ether’s market capitalization of $363 billion is less than half bitcoin’s , and together the two make up 60% of the crypto market.

Yet bitcoin remains just an investment without any real ability to be used for contracts in decentralized finance applications. For this reason, many investors believe a flipping of the market is inevitable – dubbed “the flippening” in crypto circles – with the merge acting as a catalyst for Ethereum becoming the dominant platform.

“We are seeing funds rotate into Ethereum in preparation for the merge, even though we don’t know when it’s going to be,” said Noelle Acheson, head of market insights at Genesis Trading. The buying interest, she said, did “hint that more funds seem to be appreciating that (Ethereum) is perhaps undervalued at this stage”.

Both bitcoin and ether are mined, or produced, using a proof-of-work (POW) method, where thousands of miners, or network nodes, compete to solve complex mathematical puzzles.

This is a massively power-thirsty process that’s estimated to cause more pollution than a small country every year, fostering fears about crypto in a low-carbon world.

The alternate proof-of-stake (POS) method uses much less power because, rather than have millions of computers race to process puzzles, it allows nodes that stake the most coins to validate transactions.

Ethereum has long been hobbled by issues of speed and processing costs. It only processes 30 transactions per second as a proof-of-work blockchain, but expects to process as many as 100,000 transactions per second once it moves to POS.

That will allow it to compete with other, smaller altcoins such as Solana and Cardano , which use POS partly or entirely, for decentralized finance applications such as trading, investing, borrowing and even non-fungible tokens.

That’s provided Ethereum gets its upgrade.

“Ethereum maxis, people who believe in ‘the flippening’, believe it will come very soon,” said Acheson at Genesis Trading. “But it is only a theory and it remains to be seen.”

Ethereum vs ethereum killers
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Reporting by Medha Singh and Lisa Pauline Mattackal in Bengaluru
Editing by Vidya Ranganathan and Pravin Char

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.


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U.S. can regulate cryptocurrencies without new law, think tank says

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March 1 (Reuters) – U.S. regulators can largely use existing laws to bring digital assets such as cryptocurrencies under their supervision without new congressional legislation, one of Washington’s most influential liberal think tanks said on Tuesday.

Agencies including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) could use the report from the Center for American Progress (CAP) to inform their decisions on how to govern cryptocurrencies.

Regulators have not yet determined how best to regulate cryptocurrencies, in particular so-called “stablecoins” whose creators say they have pegged their values to the dollar and other fiat currencies. The U.S. Treasury Department kicked the issue to Congress in a report last year.

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Progressives, worried about systemic risk and investor protection, want regulators to take a tougher stance on the issue. read more

The think tank said it would be helpful for Congress to address gaps within the current regulatory framework — such as creating rules for crypto commodities. But it warned that a new and distinct regulatory structure for crypto could inadvertently weaken supervision and create regulatory arbitrage.

“For crypto securities, we already have an existing structure in place, and that structure needs to be enforced. We don’t need to recreate the wheel,” said Todd Phillips, director of financial regulation and corporate governance at CAP, who co-authored the paper with Alexandra Thornton, its senior director of tax policy.

CAP maps out a number of measures agencies can take within their current mandates. For example, the SEC could regulate crypto wallet providers as clearing agencies, or the CFTC could require the disclosure of the assets that back stablecoins.

The report also suggested that the banking regulators could allow banks to issue their own stablecoins without congressional authorization, so long as they would be backed by dollar reserves.

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Reporting by Hannah Lang in Washington; Editing by Michelle Price and David Gregorio

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India to tax cryptocurrencies at 30%, puts digital assets in highest tax band

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MUMBAI, Feb 1 (Reuters) – India will impose a tax of 30% on income from cryptocurrencies and other digital assets, finance minister Nirmala Sitharaman said while presenting the federal budget on Tuesday.

Aside from placing earnings from cryptocurrencies and non-fungible tokens (NFTs) in India’s highest tax band, Sitharaman also said losses from their sale could not be offset against other income, delivering another disincentive to trading and investment in digital assets.

Industry estimates suggest there are 15 million to 20 million crypto investors in India, with total crypto holdings of around 400 billion rupees ($5.37 billion). No official data is available on the size of the Indian crypto market.

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Proponents of digital currencies have been hoping that the establishment of a formal tax framework could at least spare the crypto industry from some of the more draconian measures that the government had been considering. read more

“Thirty percent tax on income from virtual digital assets, while high, is a positive step as it legitimises crypto and hints at an optimistic sentiment towards further acceptance of crypto and NFTs,” said Avinash Shekhar, chief executive of ZebPay, a cryptocurrency exchange.

Tax consultants reckoned individuals could end up paying more than 30% of their crypto profits in tax and other charges.

“If you made a profit of 100 rupees then including the 30% tax bracket, plus surcharge and cess the total tax outgo will be around 42 rupees,” Amit Maheshwari, partner at AKM Global, a tax and consulting firm told Reuters.

Crypto exchanges also hoped the the new tax regime would signal acceptance of digitial currencies by the authorities, and reassure corporates that they can enter the market.

“We also hope this development removes any ambiguity for banks and they can provide financial services to the crypto industry,” said Nischal Shetty, CEO, WazirX, another virtual currency exchange.

India’s central bank has voiced “serious concerns” around private cryptocurrencies on the grounds that these could cause financial instability. As a result, several banks severed ties with crypto firms.

The finance minister also said that the central bank will introduce a digital currency in the next financial year using blockchain and other supporting technology.

“The introduction of a central bank digital currency will give a big boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system,” Sitharaman added.

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Reporting by Nupur Anand;
Editing by Euan Rocha & Simon Cameron-Moore

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Facebook’s cryptocurrency venture to wind down and sell tech assets – WSJ

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Jan 26 (Reuters) – Meta Platforms Inc’s digital currency venture (FB.O) Diem Association is winding down and selling its technology to California-based Silvergate Capital Corp (SI.N) for about $200 million, the Wall Street Journal reported on Wednesday, citing a person familiar with the matter.

Meta, formerly Facebook Inc, first unveiled plans for Diem, known as Libra earlier, in June 2019, as part of an effort to expand beyond social networking into e-commerce and global payments.

The project immediately ran into fierce opposition from policymakers globally, who worried it could erode their control over the money system, enable crime, and harm users’ privacy.

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In the quest for regulatory approvals, Facebook then renamed its digital coin to ‘Diem’ and scaled down its global ambition to focus on the United States by announcing the launch of a U.S. dollar stablecoin, which are cryptocurrencies pegged to a traditional currency. read more

A much recent blow came when Facebook’s financial technology executive David Marcus, who was overseeing its efforts to develop Diem, left the company to start working on something new. read more

Meta and Silvergate did not immediately respond to a Reuters’ request for comment outside business hours.

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Reporting by Rachna Dhanrajani and Shivam Patel in Bengaluru; Editing by Rashmi Aich

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