Between the tightness of cryptocurrency regulation

The technological application potential behind the new digital assets is huge, spanning multiple fields, and is expected to be the main driving force for the growth of the financial industry in the new stage. Singapore is in a favorable position at the beginning of this wave of development and can seize the momentum of growth and establish long-term advantages. Judging from this major premise, the opening of the HKMA to cryptocurrency trading is part of the strategy of creating a complete digital asset innovation ecosystem, and it will continue to adopt a balanced attitude of cautious openness and strict supervision.

 

Not long ago, Disney launched its Marvel superhero series digital collectibles for the first time in the form of Non-Fungible Token (NFT), with Spider-Man taking the lead. As a result, all 60,500 limited-edition “digital statues” priced between 40 and 400 US dollars (54 to 540 SGD) were sold out by Marvel fans within 24 hours. Disney took advantage of the victory and immediately launched the NFT of Captain America.

I asked an expert player friend who loves to collect animation merchandise if he joins in the fun. I didn’t expect him to sneer at Marvel NFT. The reason is simple: you can’t touch or touch it, even if it’s 3D, it’s just virtual 3D. What’s the point?

Checking the Internet, there are indeed many players who feel the same way. Some even describe these NFTs as “junk”, “ridiculous”, “scams that sing high bulk goods”, and appeal to fellow players not to be “lied”.

Drive multiple fields to create many new products and applications

However, Disney’s latest financial resources have been favored by brokerages. The latest digital asset analysis report issued by BofA Securities listed Disney as one of the large companies with digital asset potential. Other US media companies that are optimistic about benefiting from the new digital asset trend include Fox and Warner Music.

The bank estimates that the global digital asset sector can create up to US$2 trillion in value. In addition to cryptocurrencies and NFTs, it also includes digital applications based on decentralized technologies such as blockchain, stable coins whose value is linked to legal tender, and central bank digital currency (CBDC) that may replace sovereign currencies in the future. .

The report pointed out that in the first half of this year alone, the U.S. invested US$17 billion in digital asset venture capital, far exceeding US$5.5 billion in the whole of last year. Many new products and applications have been created in the supply chain, e-sports games and social media.

“Forbes” magazine even described digital assets as “the future of the capital market.” Because the development and application of digital technology is expected to remove the current transaction barriers in the capital market, improve the efficiency of capital allocation, and create more investment opportunities .

For example, CashOnLedger, a German financial technology company, is developing a new lease financing model, which will eventually allow retail investors to participate in the investment of various industrial machinery, as small as an agricultural tractor. ) Model to earn returns.

The cryptocurrency market is increasing risks to consumers and the overall economy

However, just like my anime fan friend’s disdain for Marvel NFT, it is still difficult to imagine a new digital solution that will work, which naturally makes people question it. In response, Bank of America Securities put forward a set of rebuttals:

“Disruptive innovation is not a disruptive innovation unless it raises doubts. For example, Thomas Watson, the first president of International Business Machines (IBM), predicted in 1943 that the demand for personal computers in the global market should be There are five.” I don’t think I need to elaborate on the popularity of personal computers in the next few decades.

However, Bank of America Securities also pointed out that the biggest immediate risk in the development of new digital assets is regulatory uncertainty.

The biggest controversy in digital assets currently comes from the booming cryptocurrency market. According to the latest statistics of the International Monetary Fund (IMF), the total market value of all cryptocurrencies in the world has exceeded 2 trillion US dollars as of the end of September, which has increased 10 times since the beginning of 2020.

The IMF pointed out that with the gradual development of cryptocurrency into the mainstream, many exchanges, currency wallets, miners, etc. have spawned, forming a huge ecosystem. The lack of proper supervision and disclosure in this industry is bringing major risks to consumers. Systemic risks to the overall economy are also expanding.

Based on the significant risks of money laundering and other financial crimes faced by cryptocurrency transactions, many countries around the world have been discussing tightening controls in the past few years. At the end of last month, China announced a total ban on cryptocurrency transactions, and vowed to ban all mining activities and block people’s channels for transactions through overseas accounts. South Korea also tightened controls on cryptocurrency exchanges last month, and must comply with stricter regulations to obtain a license.

“Financial Times”: Encrypted assets are Singapore’s leading “key weapon”

In the context of tightening regulations in various places, the Monetary Authority of Singapore officially issued licenses to DBS Vickers and Australian Encryption under the Payment Service Act last week. Independent Reserve, a currency exchange, allows them to provide cryptocurrency trading services-a relatively friendly posture that has attracted international attention.

The British “Financial Times” reported that my country’s policymakers calmly planned to open the door to the blooming field of encrypted assets, and may eventually become a “key weapon” for Singapore’s development into Asia and the world’s leading financial center.

Singapore has always maintained a positive and encouraging attitude towards financial technology innovation. As mentioned earlier, the potential for technological applications behind the new digital assets is huge, spanning multiple fields, and is expected to be the main driving force for the growth of the financial industry in the new phase. Singapore is in a favorable position at the beginning of this wave of development and can seize the momentum of growth and establish long-term advantages.

However, don’t forget that Binance, a cryptocurrency trading platform that faces severe regulatory scrutiny in many countries, was also listed on the investor’s alert list by the Hong Kong Monetary Authority early last month. It is not allowed to provide any business regulated by payment service laws locally. Including domestic and cross-border transfer services, digital token transactions and exchanges, etc. This is because the company owned by Binance.com, the website of Binance, has not obtained a license from the Monetary Authority.

On the other hand, Binance has applied for a license from the Monetary Authority through the Singapore website binance.sg set up by its Singapore branch. Like more than 100 other businesses that apply for licenses, it must undergo strict audits to ensure that risk management and control meet standards, and deploy strict mechanisms to prevent money laundering and other financial crimes before it is expected to obtain licenses issued by the authorities.

In fact, on the day when the Monetary Authority issued two cryptocurrency trading licenses, it also announced the blueprint for the implementation of the “Money Laundering and Terrorism Financing Information Sharing Platform” (COSMIC) in 2023 to further strengthen financial institutions’ regulatory mechanisms for preventing financial crimes. .

Judging from this major premise, the opening of the HKMA to cryptocurrency trading is part of the strategy of creating a complete digital asset innovation ecosystem, and it will continue to adopt a balanced attitude of cautious openness and strict supervision. This is consistent with the principle that Singapore has always adhered to both innovation and prudence in the overall financial sector.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/between-the-tightness-of-cryptocurrency-regulation/
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