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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

Our Standards: The Thomson Reuters Trust Principles.


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N.Korea may be behind new $100 mln cryptocurrency hack, experts say

Representation of cryptocurrency bitcoin is seen in this illustration taken November 29, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

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SEOUL, June 30 (Reuters) – North Korean hackers are most likely behind an attack last week that stole as much as $100 million in cryptocurrency from a U.S. company, three digital investigative firms have concluded.

The cryptoassets were stolen on June 23 from Horizon Bridge, a service operated by the Harmony blockchain that allows assets to be transferred to other blockchains.

Since then, activity by the hackers suggests they may be linked to North Korea, which experts say is among the most prolific cyber attackers. U.N. sanctions monitors says Pyongyang uses the stolen funds to support its nuclear and missile programmes.

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The style of attack and high velocity of structured payments to a mixer – used to obscure the origin of funds – is similar to previous attacks that were attributed to North Korea-linked actors, Chainalysis, a blockchain firm working with Harmony to investigate the attack, said on Twitter on Tuesday.

That conclusion was echoed by other investigators.

“Preliminarily this looks like a North Korean hack based on transaction behaviour,” said Nick Carlsen, a former FBI analyst who now investigates North Korea’s cryptocurrency heists for TRM Labs, a U.S.-based firm.

There are strong indications that North Korea’s Lazarus Group may be responsible for this theft, based on the nature of the hack and the subsequent laundering of the stolen funds, another firm, Elliptic, said in a report on Thursday.

“The thief is attempting to break the transaction trail back to the original theft,” the report said. “This makes it easier to cash out the funds at an exchange.”

If confirmed, the attack would be the eighth exploit this year – totalling $1 billion in stolen funds – that could be attributed to North Korea with confidence, accounting for 60% of total funds stolen in 2022, Chainalysis said.

North Korea’s ability to cash in on its stolen assets may have been complicated by the recent drop in cryptocurrency values, experts and South Korean officials told Reuters, possibly threatening a key source of funding for the sanctions-strapped country. read more

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Reporting by Josh Smith

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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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Explainer: Can crypto holders recoup losses in court?

June 24 (Reuters) – A downturn in cryptocurrency prices and crash of one stablecoin has led some investors to try to recover their losses in U.S. court. Here is how cryptocurrency litigation has fared so far and the challenges investors may face.

WHO IS BEING SUED?

Companies that created cryptocurrencies, exchanges that facilitated their sale, and individuals who promoted them have all been sued.

Kyle Roche, who represents cryptocurrency holders in several lawsuits, said U.S. claims over cryptocurrency often involve alleged violations of federal securities or commodities laws, which prohibit fraud and manipulation and require products and operators to be registered with U.S. authorities.

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The latest lawsuit took aim at Terraform Labs, the company behind Terra USD, over the stablecoin’s recent collapse.

A crytocurrency investor sued the Seoul-based company and its Chief Executive Do Kwon on June 17, alleging they failed to register the company’s digital assets as securities and worked with several venture capital funds that backed Terra USD to defraud investors.

A Terraform Labs spokesperson called the claims meritless.

Tether, which is behind the world’s largest stablecoin, has been accused of rigging cryptocurrency markets in a lawsuit in New York. And Ripple, whose founders created the token XRP, has been hit with a lawsuit in California, claiming it sold unregistered securities.

Both lawsuits have survived motions to dismiss.

A spokesperson said Ripple disputes the allegations and will defend against them. Tether did not respond to a request for comment.

Cryptocurrency exchanges have been another target for investors seeking to recoup losses.

Binance U.S. was sued on June 13 by investors claiming it falsely marketed TerraUSD as a safe asset ahead of its collapse. And in March, investors accused Coinbase of selling 79 digital assets as unregistered securities. read more

Binance and Coinbase have denied the allegations.

Investors are also suing celebrities who have publicly touted cryptocurrency. A lawsuit filed in Los Angeles claims Reality TV star Kim Kardashian and boxing legend Floyd Mayweather Jr. engaged in a cryptocurrency pump and dump. Representatives for Kardashian and Mayweather did not respond to requests for comment. read more

LEGAL HURDLES

A wave of lawsuits brought in 2020 against exchanges alleging they fueled an illegal boom in digital coins largely failed after judges found some of the claims were filed too late or had too little connection to the United States.

Timing should not be an issue for newer lawsuits, but cryptocurrency holders seeking to sue overseas companies in U.S. court could still face hurdles.

Token holders won a default judgment in New York against Singapore-based exchange KuCoin, but dropped the case after a Singaporean court would not make the company provide information to enforce the judgment.

KuCoin did not respond to a request for comment.

Another potential hurdle for investors filing claims under securities or commodities laws will be showing their tokens meet the legal definition of those assets. Some courts have ruled that certain cryptocurrencies fit the bill, but the issue remains unsettled.

Cryptocurrency holders may face additional obstacles when going after exchanges. In the Coinbase lawsuit, the exchange has argued that it was not a party to the transactions, and that private litigants cannot enforce registration requirements.

HAVE ANY CRYPTO HOLDERS WON MONEY IN COURT?

While many cryptocurrency lawsuits are pending, the SEC has reclaimed some funds for investors in a handful of digital assets through settlements.

But even after a settlement, investors may face long waits and still end up with less than they shelled out.

Last year, blockchain company Block.one agreed to pay $27.5 million to settle token holders’ lawsuit alleging it had violated securities law.

More than 100 token holders filed claims worth more than $75.7 million, according to court filings. The settlement has not yet received final approval.

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Reporting by Jody Godoy;
Editing by Noeleen Walder and Richard Chang

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Middle East-focused crypto firm BitOasis cuts jobs amid sector turmoil

Representation of cryptocurrency bitcoin is seen in this illustration taken November 29, 2021. REUTERS/Dado Ruvic

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DUBAI, June 19 (Reuters) – BitOasis, a Middle East-focused cryptocurrency exchange based in the United Arab Emirates, said on Sunday it laid off nine of its staff, the latest company in the sector to cut jobs in the face of a downturn and market turmoil.

The cryptocurrency market has been rocked by extreme volatility with crypto lender Celsius Network freezing withdrawals early last week as investors dumped risky assets on fears about aggressive Federal Reserve rate hikes to cool red hot inflation.

On Tuesday, cryptocurrency exchange Coinbase Global Inc (COIN.O) said it was slashing 1,000 jobs, or 10% of its workforce. read more

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BitOasis was founded in Dubai in 2015 and serves English and Arabic speaking customers in the Gulf.

“Earlier this week, nine employees were made redundant across offices in Dubai, Abu Dhabi and Amman,” its CEO and co-founder Ola Doudin said in an email.

A spokesperson for the company said this represented nearly 5% of the company’s workforce.

In 2021, BitOasis received permission to operate a Multilateral Trading Facility from the Abu Dhabi Global Market and is registered as a Virtual Asset Service Provider with the Financial Intelligence Unit of the UAE central bank.

BitOasis received provisional approval from Dubai’s Virtual Assets Regulatory Authority (VARA) in March 2022.

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Reporting by Saeed Azhar; Editing by Emelia Sithole-Matarise

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Crypto firm Celsius pauses all transfers, withdrawals as markets tumble

A representations of cryptocurrencies in this illustration taken, January 24, 2022. REUTERS/Dado Ruvic/Illustration

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June 13 (Reuters) – Cryptocurrency lending firm Celsius Network will pause withdrawals and transfers between accounts due to “extreme market conditions”, the company said on Monday, in the latest sign of pressure in the crypto industry.

Bitcoin extended earlier declines after Celsius’s announcement, falling more than 6% to as low as $24,888, an 18-month low. Ether , the world’s second-largest cryptocurrency, dropped more than 8% to $1,303, its lowest since March 2021.

“We are taking this necessary action … in order to stabilize liquidity and operations while we take steps to preserve and protect assets,” the company said in a blog post.

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“Furthermore, customers will continue to accrue rewards during the pause in line with our commitment to our customers.”

Celsius Network, which raised $750 million in funding late last year, is a significant player in crypto lending. It offers interest-bearing products to customers who deposit their cryptocurrencies with the company, and lends out crypto currencies to earn a return.

As of May 17, the company had processed $8.2 billion worth of loans and had $11.8 billion in assets, according to its website.

It said in August last year that it had more than $20 billion in assets.

While crypto lending has become increasingly big business, the sector has come under regulatory scrutiny, particularly in the U.S. read more

Crypto markets have been under pressure in recent months, falling alongside other so-called risk assets as interest rates have risen around the world.

Price falls have also both been caused by and contributed to the collapse of some crypto projects. Most notable was the fall of stablecoin TerraUSD, which last month broke its dollar peg and collapsed in value, rocking the crypto industry. read more

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Reporting by Abinaya Vijayaraghavan in Bengaluru and Alun John in Hong Kong; Editing by Bradley Perrett

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CFTC eyes potential oversight of cryptocurrencies, carbon trading – commissioner

HOUSTON, June 8 (Reuters) – Cryptocurrency developers and U.S. lawmakers are moving toward putting the Commodity Futures Trading Commission in charge of regulating digital currencies, said CFTC Commissioner Summer Mersinger.

The designation would expand the CFTC’s mandate to oversee agricultural, energy and financial options markets and pave the way for the agency to regulate other digital assets such as non-fungible tokens, or NFTs.

Separately, the CFTC is considering how carbon trading markets operate, with a view toward their use in hedging and risk management.

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Mersinger, one of five commissioners on the independent board that oversees commodity and financial futures markets, was speaking on Tuesday on the sidelines of the Reuters Commodities Trading USA conference in Houston.

Major crypto companies have backed the CFTC and on Tuesday U.S. senators Cynthia Lummis, Republican of Wyoming, and Kirsten Gillibrand, Democrat of New York, filed a bill that would make CFTC the industry’s main overseer.

“You’re seeing the industry coalesce around the CFTC becoming the primary regulator,” said Mersinger.

Lawmakers have not decided which agency would oversee cryptocurrencies but the proposed Lummis-Gillibrand bill offers a starting point for Congressional debate. read more

The CFTC has begun its own review of a potential role over cryptocurrencies, with staff looking for opportunities in areas such as spot-market crypto trading “where we could have some expanded role making,” Mersinger said. She cautioned that the agency historically has not regulated spot markets and its reviews are preliminary.

“We’re still a strong regulator but our registrants have a lot of flexibility,” she said. “They have been very interested in that approach versus the top-down way of some other financial regulators,” she said.

Carbon trading is another area where the CFTC has an interest. Its regulation now is largely policed by industry groups and voluntary on the part of participants.

“We have interest in that space but we don’t regulate that space,” Mersinger said. One consideration is what changes may be needed for the voluntary markets to work properly, she added.

In 2020, when U.S. oil futures prices turned negative for the first time on fears of a lack of physical storage amid collapsing demand, CFTC issued an advisory warning of the risks that not enough people took seriously, she said.

One lesson it learned was that there was a need for broader inter-agency collaboration and discussion of contract settlement terms with the exchanges and traders, she said.

“At the end of the day, storage wasn’t as big an issue” as feared, but it was not well communicated, she said.

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Reporting by Gary McWilliams and Arathy Somasekhar; Editing by Richard Chang

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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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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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