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U.S. Treasury seeks input on cryptocurrency risks, benefits

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July 12 (Reuters) – The U.S. Treasury on Tuesday said it was seeking comment on the on the risks and opportunities posed by digital assets as it seeks to prepare a report for President Joe Biden on the implications of developments such as cryptocurrencies.

The official query builds on an executive order Biden signed in March, which directed government agencies to study cryptocurrencies and other digital asset products, including central bank digital currencies.

“For consumers, digital assets may present potential benefits, such as faster payments, as well as potential risks, including risks related to frauds and scams,” Treasury Under Secretary for Domestic Finance Nellie Liang said in a statement.

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The crypto market, including bitcoin and other products, has rapidly grown in popularity in recent years, despite concerns from regulators and some policymakers that the market lacks sufficient oversight, transparency and consumer protections.

The crypto market has been wracked by turmoil in recent weeks, with a number of high-profile firms and tokens collapsing or refusing to allow customers to withdraw funds in a bid to stabilize themselves.

The Treasury’s query is far-ranging, asking for input on a host of questions, including how businesses are using cryptocurrency, where consumers may not be sufficiently protected, and how the nation’s poorest could benefit or face risk from broader cryptocurrency adoption.

The Treasury is accepting comments until Aug. 8.

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Reporting by Costas Pitas in Los Angeles; Editing by Tim Ahmann and Marguerita Choy

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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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Bitcoin drops 6.9% to below $30,000

June 1 (Reuters) – Bitcoin, the world’s biggest and best-known cryptocurrency, dropped 6.9% to $29,555.35 at 22:03 GMT on Wednesday, losing $2,262.81 from its previous closing price.

It was down 38.9% from the year’s high of $48,234 on March 28.

Ether , the coin linked to the ethereum blockchain network, dropped 7.52% to $1,794.68, losing $145.87 from its previous close.

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Reporting by Shubhendu Deshmukh and Rachna Manojkumar Dhanrajani in Bengaluru

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Bitcoin surges nearly 8% to $31,780

May 30 (Reuters) – Bitcoin rose 7.93 % to $31,780.51 at 2200 GMT on Monday, up $2,334.8 from its previous close.

The world’s biggest and best-known cryptocurrency is up 25.1% from the year’s low of $25,401.05 on May 12.

Ether , the coin linked to the ethereum blockchain network, rose 9.8 % to $1,989.38 on Monday, adding $177.54 to its previous close.

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Reporting by Ann Maria Shibu in Bengaluru; Editing by David Gregorio

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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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G7 countries urge swift regulation of crypto assets – draft

Souvenir tokens representing cryptocurrency networks Bitcoin, Ethereum, Dogecoin and Ripple plunge into water in this illustration taken May 17, 2022. REUTERS/Dado Ruvic/Illustration

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KOENIGSWINTER, Germany, May 19 (Reuters) – The world’s top financial leaders called on Thursday for the swift and comprehensive regulation of cryptocurrencies following turmoil that has seen the demise of the Terra stablecoin last week, a draft communique showed on Thursday.

“In light of the recent turmoil in the crypto-asset market, the G7 urges the FSB (Financial Stability Board)…to advance the swift development and implementation of consistent and comprehensive regulation,” finance ministers and central bankers from the Group of Seven industrialised nations said in the document.

They were meeting in Koenigswinter, near Bonn (Germany), on Thursday and Friday.

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Reporting By Francesco Canepa and Jan Strupczewski; Editing by Angus MacSwan

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Biden orders government to study digital dollar, other cryptocurrency risks

WASHINGTON, March 9 (Reuters) – U.S. President Joe Biden signed an executive order on Wednesday requiring the government to assess the risks and benefits of creating a central bank digital dollar, as well as other cryptocurrency issues, the White House said.

Bitcoin surged on the news as the administration’s holistic and deliberative approach calmed market fears about an immediate regulatory crackdown on cryptocurrencies. In midday trading, bitcoin rose 9.1% to $42,280, on track for its largest percentage gain since Feb. 28. read more

Biden’s order will require the Treasury Department, the Commerce Department and other key agencies to prepare reports on “the future of money” and the role cryptocurrencies will play.

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Wide-ranging oversight of the cryptocurrency market, which surged past $3 trillion in November, is essential to ensure U.S. national security, financial stability and U.S. competitiveness, and stave off the growing threat of cyber crime, administration officials said.

Analysts view the long-awaited executive order as a stark acknowledgement of the growing importance of cryptocurrencies and their potential consequences for the U.S. and global financial systems. read more

“The growth in cryptocurrencies has been explosive,” Daleep Singh, deputy national security adviser for economics, said in an interview with CNN.

Cryptocurrencies and digital assets can affect how people access banking, whether consumers are safe and protected from volatility, and the primacy of the U.S. dollar in the global economy, he said.

The executive order is part of an effort to promote responsible innovation but mitigates the risk to consumers, investors and businesses, Brian Deese, director of the National Economic Council, and Jake Sullivan, White House national security adviser, said in a statement.

“We are clear-eyed that ‘financial innovation’ of the past has too often not benefited working families, while exacerbating inequality and increasing systemic financial risk,” they said.

One key objective is to redress inefficiencies in the current U.S. payments system and boost financial inclusion, especially of poor Americans, about 5% of whom do not currently have bank accounts due to high fees, one official said.

Another key measure directs the government to assess the technological infrastructure needed for a potential U.S. Central Bank Digital Currency (CBDC) – an electronic version of dollar bills in your pocket.

But it could take years to develop and introduce a “digital dollar,” administration officials cautioned on Wednesday, noting that the Federal Reserve in January had referred the issue to Congress. read more

Administration officials said the United States was taking great care to decide whether – and how – tomove forward with developing a digital dollar, given the dollar’s role as the world’s primary reserve currency.

“We’ve got to be very, very deliberate about that analysis because the implications of our moving in this direction are profound for the country that issues the world’s primary reserve currency,” one of the officials said.

The order also encourages the Federal Reserve to continue research and development efforts.

Nine countries have launched central bank digital currencies, and 16 others – including China – have begun development of such digital assets, according to the Atlantic Council, leading some in Washington to worry that the dollar could lose some of its dominance to China.

The U.S. dollar remains underpinned by key fundamentals, including a commitment to transparency, the rule of law and the full independence of the Federal Reserve, the official said.

“The dollar’s role has been and will continue to be crucial to the stability of the international monetary system as a whole. Foreign central bank digital currencies and their introduction by themselves do not threaten this dominance,” the official said.

Asked whether China could develop a competitive advantage if it moved sooner, one administration official said U.S. officials would monitor developments with an eye to maintaining the centrality of the dollar in the global economy.

The order asks for over a dozen reports, including by the Securities and Exchange Commission and the Consumer Financial Protection Bureau, to assess issues raised by cryptocurrencies, including systemic risk and consumer protection.

One key objective is to redress inefficiencies in the current U.S. payments system and boost financial inclusion, especially of poor Americans, about 5% of whom do not currently have bank accounts due to high fees, an official said.

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Reporting by Andrea Shalal and Katanga Johnson; Additional reporting by Doina Chiacu; Editing by Michelle Price, Simon Cameron-Moore and Mark Porter

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

A representations of cryptocurrency bitcoin and Ethereum placed on U.S. dollars in this illustration taken, January 24, 2022. REUTERS/Dado Ruvic/Illustration

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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 β€” 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.

β€œFor 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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Russian c.bank proposes banning cryptocurrencies, crypto mining

MOSCOW, Jan 20 (Reuters) – Russia’s central bank on Thursday proposed banning the use and mining of cryptocurrencies on Russian territory, citing threats to financial stability, citizens’ wellbeing and its monetary policy sovereignty.

The move is the latest in a global cryptocurrency crackdown as governments from Asia to the United States worry that privately operated highly volatile digital currencies could undermine their control of financial and monetary systems.

Russia has argued for years against cryptocurrencies, saying they could be used in money laundering or to finance terrorism. It eventually gave them legal status in 2020 but banned their use as a means of payment.

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In December, the price of bitcoin fell after Reuters reported, citing sources, that Russia’s regulator was in favour of a complete ban on cryptocurrencies. read more

In a report published on Thursday, the central bank said speculative demand primarily determined cryptocurrencies’ rapid growth and that they carried characteristics of a financial pyramid, warning that bubbles in the market could form, threatening financial stability and citizens.

The bank proposed preventing financial institutions from carrying out any operations with cryptocurrencies and said mechanisms should be developed to block transactions aimed at buying or selling cryptocurrencies for fiat, or traditional currencies. The proposed ban includes crypto exchanges.

Russians are active cryptocurrency users, the central bank said, with an annual transaction volume of about $5 billion.

CRYPTO MINING

Russia is the world’s third-largest player in bitcoin mining, behind the United States and Kazakhstan, though the latter may see a miner exodus over fears of tightening regulation following unrest earlier this month. read more

The central bank said crypto mining created problems for energy consumption. Bitcoin and other cryptocurrencies are “mined” by powerful computers that compete against others hooked up to a global network to solve complex mathematical puzzles. The process guzzles electricity and is often powered by fossil fuels.

“The best solution is to introduce a ban on cryptocurrency mining in Russia,” the bank said.

In August, Russia accounted for 11.2% of the global “hashrate” – crypto jargon for the amount of computing power being used by computers connected to the bitcoin network.

In its report, the central bank pointed to steps taken in other countries, such as China, to curb cryptocurrency activity. It said it would work with regulators in countries where crypto exchanges are registered to collect information about the operations of Russian clients.

In September, China intensified its crackdown on cryptocurrencies with a blanket ban on all crypto transactions and mining, hitting bitcoin and other major coins and pressuring crypto and blockchain-related stocks.

Russia’s regulator said crypto assets becoming widespread would limit the sovereignty of monetary policy, with higher interest rates needed to contain inflation.

It said the long-term potential of cryptocurrencies being used for settlements was limited.

Meanwhile, the Bank of Russia is planning to issue its own digital rouble, joining the global trend to develop digital currencies to modernise financial systems, speed up payments and counter a potential threat from other cryptocurrencies.

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Reporting by Elena Fabrichnaya and Alexander Marrow; Editing by Emelia Sithole-Matarise

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