In a blog post on Oct. 31, Sygnum, which gained a Swiss banking license in August this year, can now proceed with its first product for the Singapore market.
Sygnum was the first Swiss company to win the title of cryptocurrency bank and will target accredited investors and institutions with a multi-manager fund, which will also debut in its home jurisdiction.
Long on the cards, the Singapore documentation comes in the form of a capital markets services (CMS) license from the Monetary Authority of Singapore (MAS), the Asian city state’s de facto central bank.
Sygnum’s head of asset management, Stefan Mueller, commented in the press release:
“The CMS license is an important milestone to establishing our asset management arm, leveraging the vibrant financial environment in Singapore. This is complementary to our banking services in Switzerland and will also benefit our Swiss institutional and private qualified investor clients.”
Execs reveal major Swiss crypto interest
As Cointelegraph reported, Singapore continues to position itself as a friendly environment for cryptocurrency and blockchain businesses.
MAS is part of the government structure looking to integrate the emerging technologies with state activities and beyond, as its Project Ubin finance scheme is set to commence operations next year.
Sygnum meanwhile is also eyeing expansion into markets such as Hong Kong, as well as in Europe. In September, Peter Wuffli, the ex-UBS head who is now the company’s CEO, underscored his desire to tap the full potential of the cryptocurrency market.
“Thousands of clients have contacted us for a one-stop-shop for asset custody, loans and trading cryptocurrencies seamlessly with fiat currencies,” he revealed.
Carbon exchange AirCarbon launched a global tokenized carbon credits trading platform for airlines and the aviation industry in Singapore.
Carbon exchange AirCarbon launched a global tokenized carbon credits trading platform in Singapore.
Business news outlet Business Times reported on Oct. 30 that the platform will allow firms such as airlines to buy and sell tokens representing carbon offset credits or Eligible Emission Units (EEUs), approved by the International Civil Aviation Organization (ICAO).
The first token representing an EEU has been created today by Senior Minister of State at the Ministry of Trade and Industry Koh Poh Koon upon the platform’s launch at the Asia Clean Energy Summit 2019. The front end of the platform has been designed by United Kingdom-based financial firm First Derivatives.
Exchange to fully launch in 2020
AirCarbon has not yet received the recognized market operator license that it applied for with the Monetary Authority of Singapore. The firm aims to fully launch the exchange next year. The website of the firm describes its service in the following way:
“A Singapore regulated digital exchange focused on servicing transportation industry stakeholders’ carbon liability under ICAO’s CORSIA regime.”
The credits are represented by fungible security tokens on a blockchain and each is equivalent to one tonne of CORSIA-compliant carbon credits. The firm also aims to fund the registration, consulting, issuance and audit fees of some EEUs for free with its AirCarbon Registration Facility initiative.
A joint initiative
In exchange for the grants, the developers of the financed carbon offset projects must commit to list and transact their credits on the upcoming tokenized credits trading platform.
The exchange is reportedly the result of a collaboration with the Sustainable Energy Association of Singapore (SEAS) that sees support by local statutory board Enterprise Singapore. SEAS chairman, as well as AirCarbon’s chairman and co-founder, Edwin Khew commented:
“We aim to make the AirCarbon token the easiest and most streamlined instrument for the trading of CORSIA EEUs globally.”
Khew also claimed that the platform will be the first global blockchain-based, multi-stakeholder carbon credits trading exchange that will represent carbon trades with a value of over $100 billion.
The assistant chief executive officer of the statutory board under the Ministry of Trade and Industry Enterprise Singapore Satvinder Singh noted that he expects the demand for EEUs to grow, given the increasing focus on sustainability. He also said:
“Enterprise Singapore stands ready to support solutions providers like AirCarbon to grow in Singapore and address the needs of corporates to offset their carbon emissions, starting from the aviation industry.”
As Cointelegraph reported at the beginning of September, Germany’s Free Democratic Party wants to pay cryptocurrency to anyone who removes carbon dioxide and other greenhouse gases from the atmosphere.
Huobi has launched a fiat onramp for the Turkish Lira that will allow users in the country to trade cryptocurrencies on Huobi Global.
Singapore-based crypto exchange Huobi will launch a fiat gateway for the Turkish lira in late 2019.
Huobi’s fiat onramp for lira will be the first fiat gateway launched by a global exchange, Huobi Global claimed during the opening event at the Eurasia Blockchain Summit on Oct. 18.
During the inaugural event hosted by Huobi Global, the company also revealed more information about its expansion into Turkey. Specifically, Huobi unveiled the successful establishment of a local team, localized language option, mobile application, exclusive trading fees as well as a detailed strategy for Huobi Turkey.
By launching the gateway, Huobi will enable Turkish users to deposit fiat currency via wire transfer to exchange for major stablecoin Tether (UDST), which can then be used to trade crypto-to-crypto on Huobi Global.
According to the press release, Huobi users from Turkey will be trading with a 50% discount on transaction fees, which they can further decrease by holding Huobi’s native token Huobi Token (HT). The exchange will also feature a discount fee of 0.0078% on spot and margin trades for Turkish professional traders within the All Star VIP Program, the firm said.
Lira onramp is one part of Huobi’s expansion into Turkey
The Huobi Turkey keynote follows the exchange’s initial announcement of expanding into the Turkish market in June 2019. At the time, Huobi Global CEO Livio Weng stated that the exchange will be “moving aggressively” over the next 12 months, noting that the country has a “very important and promising prospective market.”
Huobi’s expansion is driven by the increased popularity of cryptocurrencies in the country, where 20% of the population holds some form of crypto, which is the “highest per capita rate of cryptocurrency ownership of all nations surveyed,” the firm said.
Mohit Davar, regional president of Huobi Group, emphasized at the event that Huobi’s Turkish arm will be operating in compliance with local regulations, as reported by a Cointelegraph correspondent who visited the event. Davar said:
“For Huobi, what’s important is to go into a market in a compliant way. […] We talk to the stakeholders to make sure we are working closely with them in a controlled fashion. That’s why we take our time preparing.”
In mid-September, the Turkish government announced plans to form a national blockchain infrastructure to utilize distributed ledger technology in its public administration
CIMB Singapore, a part of one of the fifth largest ASEAN bank CIMB Group, completed its first blockchain-based trade financing transaction.
A Singaporean banking branch of CIMB Group, one of the largest Asian investment banks, has completed its first blockchain-based trade financing transaction.
The transaction was processed using blockchain and Internet of Things (IoT) platform developed by local trade financing firm iTrust Trading, Yahoo Singapore reports Oct. 17.
By applying iTrust’s blockchain-based IoT, CIMB intends to minimize the risks associated with commodity trade financing and facilitate credit extension for its customers by gaining access to real-time monitoring of the cargo data in transit and in the warehouse.
The technology reportedly provides all stakeholders with secured accessibility and data integrity of digital documents that are recorded on a distributed ledger.
One of the biggest banks in ASEAN region
Mak Lye Mun, CEO of CIMB Singapore, noted that the implementation of the iTrust’s technology enables the bank to support its clients more efficiently and cost-effectively by mitigating fraud risks and alerting any unauthorized movement of the financed cargo. He also noted that the firm plans further collaboration with iTrust for technology applications in other markets.
Headquartered in Malaysia, CIMB Group is the fifth-largest banking group in the Association of Southeast Asian Nations (ASEAN) and one of the biggest Islamic banks. With 36,000 employees located in 16 counties, the group has a market capitalization of $48 billion at press time.
In November 2018, another CIMB Group subsidiary, CIMB Group Holdings, joined Ripple’s cross-border payments network to apply Ripple’s XCurrent product for its remittance service called SpeedSend.
This is a paid press release, which contains forward looking statements, and should be treated as advertising or promotional material. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the press release.
Hosted by CoinEx Chain Foundation, “CoinEx Chain Global Nodes Election Launch Conference” was successfully held in Shenzhen on Oct 16. The conference marked the official launch of CoinEx Chain’s nodes election. More than 500 blockchain practitioners, including investors, KOLs, technical and financial experts, as well as top institutions and medias attended the conference to witness the important milestone of CoinEx Chain.
Global Nodes Election Kicks Off & Hoo.com, RockX, IFWallet and CETDAC Announced to Join as Nodes Partners
During that conference, Eddie Jiang, CMO of CoinEx, introduced the detailed rules of how to be one of CoinEx Chain’s 42 nodes and their related rewards. The profits of nodes are mainly from block production reward and transaction fees. CoinEx Foundation will offer 350 million CET (CoinEx Token) in total as block production reward.
On the same day, Hoo.com, RockX, IFWallet and CETDAC announced to join CoinEx Chain’s nodes election. The founders of those entities attended the Shenzhen conference and expressed their bullish prospect about CoinEx Chain. “We strongly recognize the vision of CoinEx Chain and are willing to be one of the nodes and participate in the ecosystem building”, Ruixi Wang, founder of Hoo.com said on the conference.
Exploring the Next Generation of Public Chain
On the conference, the core team members of CoinEx Chain delivered keynote speeches to attendees about the mission, design concepts and prospects of CoinEx Chain.
Haipo Yang, founder & CEO of CoinEx, had this to say on the conference. “Public chain is the most important infrastructure, or even the essence, in the blockchain industry. The ultimate goal of CoinEx Chain is to lead the next generation of public chain for decentralized finance.”
Jiazhi Jiang, Lead Developer of CoinEx Chain, introduced CoinEx Chain’s technical innovation to solve the current bottlenecks of public chain. “Currently, the development of public chains are faced with many problems: performance, expansibility, privacy protection, cross-chain, etc,. CoinEx Chain’s solution is the parallelism of dedicated public chains: DEX Chain, Smart Chain and Privacy Chain, each of which performs its own functions, by cross-chaining for both high performance and flexibility.”
CoinEx Chain World Tour
Following the Shenzhen conference, CoinEx Foundation will continue world tours in Shanghai, Wuzhen, Beijing, Singapore and Hong Kong to showcase CoinEx Chain’s innovation to blockchain professionals and recruit node partners from all the world. The core team members will introduce the product design concept and future development plan of CoinEx Chain. Attendees can directly talk to the core team members to discuss the prospects of CoinEx Chain and exchange views about the nodes election.
About CoinEx Chain
CoinEx Chain is the world’s first public chain exclusively designed for Decentralized Exchange (DEX). CoinEx Chain aims to create a decentralized trading system with community-driven operations, transparent trading rules, and self-controlled user assets. Besides the DEX Chain, CoinEx Chain will also include a Smart Chain supporting smart contracts and a Privacy Chain protecting users’ privacy. Ultimately, CoinEx Chain will become a perfect ecosystem powered by the parallel public chain architecture.
This is a paid press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.
Everex has received a full Money Transmitter License from a New Jersey regulator, allowing it to expand cryptocurrency trading service in the U.S. market.
Stablecoin-based settlement platform Everex has obtained a full Money Transmitter License from a New Jersey regulator, allowing the company to test services in the United States.
In a press release shared with Cointelegraph on Aug. 19, Everex revealed that the New Jersey Department of Banking and Insurance issued the company a full Money Transmitter License as of Aug. 13.
Big plans on U.S. expansion
The license reportedly authorizes Everex to conduct activities such as peer-to-peer (p2p) cryptocurrency to fiat exchange, including with U.S.-based exchanges. Everex will also be able to perform blockchain-enabled payments and p2p cryptocurrency-fiat-stablecoin transfers both domestically and internationally.
According to Everex’s blog post on March 25, the company intended to integrate with banks and third-party e-commerce providers, as well as to procure permission to operate in several U.S. states in 2019.
In early April, the central banks of Myanmar and Thailand endorsed Everex’s Ether (ETH)-based remittance system. Veerathai Santiprabhob, the governor of Thailand’s Central Bank reportedly said that “this project is an important step forward for the more than 3 million workers in Thailand who might have so far used not secured channels.”
U.S. states’ varying approach to crypto
As Cointelegraph reported in a dedicated analysis earlier today, the regulatory landscape is actively changing throughout the U.S., as different states push in different directions in regard to crypto, while the federal government has yet to adopt a universal framework despite the calls from local actors. As a result, there is a widening regulatory gap between separate national units.
Lindsay Danas Cohen, chief operating officer at Velocity Markets, a U.S.-based financial technology company providing solutions to investors in the digital asset markets, told Cointelegraph:
“In the future, absent federal intervention, it is likely that these different interpretations will be cemented, reinforcing a state-level patchwork (much as we see with Blue Sky laws). Whether federal-level intervention actually materializes will depend on how D.C. views its role in mediating the space, and whether they deem it in the public interest for there to be a uniform set of laws applicable to cryptographic asset activity.”
Central banks worldwide are examining the possibility of issuing a central bank digital currency (CBDC), with some already testing theirs for different uses. Countries that have advanced their digital currency projects include China, Singapore, Canada, the Bahamas, Thailand, Uruguay, and Sweden. India has also included the digital rupee in the country’s draft cryptocurrency bill.
The most recent country to claim that its CBDC is near completion is China. According to media reports, The People’s Bank of China (PBOC) is “almost ready” to issue the country’s own sovereign digital currency. This was revealed at a forum held in the northern Chinese province of Heilongjiang on Aug. 10 by Mu Changchun, deputy director of the PBOC’s payments department.
He explained that the CBDC will use a two-tier system where both the central bank and financial institutions will be legitimate issuers, Reuters conveyed, noting that “the digital currency would not solely rely on blockchain technology as current blockchain technology would not be able to handle transaction volumes in China.” The publication added that the PBOC started researching the possibility of launching its own CBDC in 2014 with the aim “to cut the costs of circulating traditional paper money and boost policymakers’ control of money supply.”
Trial Between Singapore and Canada
The Monetary Authority of Singapore (MAS) and the Bank of Canada have jointly conducted an experiment on cross-border and cross-currency payments using CBDCs. The two central banks linked up their respective experimental domestic payment networks — Project Jasper and Project Ubin — built on two different distributed ledger technology (DLT) platforms, the MAS described in May. The trial was carried out in partnership with Accenture and J.P. Morgan. The former supported the development of the Canadian network on Corda, while the latter supported the Singapore network on Quorum.
“Cross-border payments today are often slow and costly,” the MAS remarked, emphasizing that they rely on a correspondent banking network “subject to counterparty risk, inefficient liquidity management, and cumbersome reconciliation.” The two central banks, therefore, collaborated to use CBDCs “to make the cross-border payment process cheaper, faster, and safer.” The MAS elaborated:
This is the first such trial between two central banks, and has great potential to increase efficiencies and reduce risks for cross-border payments.
Bahamas Testing CBDC for Payments
Another country that is testing a CBDC is the Bahamas. The International Monetary Fund (IMF) released details of its discussion with the Bahamas’ central bank in July, including work done on the country’s CBDC. “By enabling peer-to-peer transactions, for example through e-wallets, a CBDC can increase access to digital payments systems,” the IMF explained:
The CBOB [the Central Bank of the Bahamas] is planning to pilot a digital version of the Bahamas dollar as a means of payment to boost financial inclusion, especially in smaller islands of the archipelago.
Noting that “the issuance of e-currency can also pose risks to financial stability, cybersecurity, and in the AML/CFT sphere,” the IMF staff “recommended investment in human capital and technological capabilities to ensure that the pilot — and the full-scale adoption of a general-purpose CBDC — is compatible with, and complementary to, the existing financial infrastructure.”
Thailand’s Multi-Phase CBDC Testing
The Bank of Thailand (BOT) has completed the second testing phase of its CBDC called Project Inthanon. Started in August last year, the first phase focused on developing a proof-of-concept decentralized Real-Time Gross Settlement system (RTGS) that uses a CBDC on a distributed ledger. The second phase, now complete, started in February to further explore how DLT can be used in two specific areas.
The first area was “the tokenization of BOT-issued debt instruments on a distributed ledger to achieve their life-cycle activities and delivery-versus-payment settlement.” The second was “the incorporation of regulatory compliance and data reconciliation functionalities into the payment process on a distributed ledger, so as to improve process efficiency and mitigate operational and compliance risks.” The results of the second testing phase were released in July.
The bank will soon proceed with the third phase, which aims to trial a “DLT-based RTGS prototype” that “will be expanded to connect with the other systems to support cross-border funds transfer transactions,” the BOT revealed. “The scope will also cover the regulatory and compliance issues from both THB and foreign currencies.”
Uruguay, Sweden and ECCU
In Uruguay, the central bank completed a pilot program on a retail CBDC in April last year as part of a wider governmental financial inclusion program. The pilot began in November 2017 to issue, circulate and test an e-peso, the Bank for International Settlements (BIS) described. “Transfers took place instantly and peer-to-peer, via mobile phones using either text messages or the e-peso app.” However, no blockchain was used. Twenty million e-pesos were issued, all of which were canceled when the pilot ended. The program is now in an evaluation phase before a decision on further trials and potential issuance can be made.
In Sweden, the Riksbank started working on an e-krona project in the spring of 2017 in response to many years of declining cash use. “An e-krona would give the general public access to a digital complement to cash, where the state would guarantee the value of the money,” the central bank’s website describes. While “There is no decision on whether or not to issue an e-krona,” the Riksbank confirmed that it “is continuing to investigate the possibilities for issuing an e-krona to increase competence and in this way be better prepared to meet a new digital payment market.”
The Eastern Caribbean Central Bank (ECCB) has signed a contract with Barbados-based fintech company Bitt Inc. to conduct a blockchain-issued CBDC pilot within the Eastern Caribbean Currency Union (ECCU). This pilot will involve a securely minted and issued digital version of the EC dollar (DXCD), which will be distributed and used by licensed financial institutions and non-bank financial institutions in the ECCU. The DXCD will be used for financial transactions using smart devices between consumers and merchants. “For example, an individual in St Kitts and Nevis will be able to send DXCD securely from his/her smartphone to a friend in Grenada in seconds — and at no cost to either party,” the ECCB explained.
India Open to a Digital Rupee
The Indian government is currently deliberating on a draft cryptocurrency bill entitled Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019. The bill proposes allowing the government to create a digital rupee as legal tender and currency, and defines digital rupee as “a form of currency issued digitally by the Reserve Bank and approved by the central government to be legal tender.”
The bill states that “The central government, in consultation with the Central Board of the Reserve Bank, may approve digital rupee to be legal tender with effect from such date and to such extent as may be specified.”
Why Central Banks Are Exploring CBDCs
The IMF explained in a June report that a number of central banks are examining issuing a CBDC, noting that those in advanced economies with falling use of cash are exploring the option as an alternative payment method. “The main reasons to consider CBDC are lowering costs, increasing efficiency of monetary policy implementation, countering competition from cryptocurrencies, ensuring contestability of the payment market, and offering a risk-free payment instrument to the public,” the report details:
Most central banks are considering non-anonymous CBDC. Almost all seem to be favoring a hybrid approach that allows the relevant authorities to trace transactions. Several are focusing research on a two-pronged approach with anonymous tokens for small holdings/transactions, and traceable currency for large ones.
Meanwhile, countries with underdeveloped financial systems and many unbanked citizens see CBDCs “as means to improve financial inclusion and support digitalization,” the IMF noted, adding that “several policy and technical hurdles need to be addressed, and a clear case for issuing CBDC has not yet emerged.”
BIS General Manager Agustín Carstens said at the end of June that “Global central banks may have to issue their own digital currencies sooner than expected,” The Financial Times reported. With Facebook’s Libra announcement, a number of central banks have reportedly ramped up efforts on their CBDCs. Concurring with the IMF, Carstens emphasized that “There needs to be evidence for demand for central bank digital currencies and it is not clear that the demand is there yet.” He was quoted as saying:
Many central banks are working on it; we are working on it, supporting them … And it might be that it is sooner than we think that there is a market and we need to be able to provide central bank digital currencies.
What do you think of central banks issuing their own digital currencies? Which country do you think will launch one first? Let us know in the comments section below.
Images courtesy of Shutterstock.
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Bitholic has changed its name to Bithumb Singapore, indicating a shakeup or new partnership with South Korean exchange Bithumb.
Singapore-based cryptocurrency exchange Bitholic has changed its name to Bithumb Singapore this month. Bithumb, for its part, is known as a cryptocurrency exchange based in South Korea.
Local media News1 Korea shared the announcement in a report on Aug. 8. According to the report, the name change is part of an overseas expansion for Bithumb; however, the paper notes that Bithumb’s equity structure remains unknown.
According to the announcement, the exchange’s name change occurred sometime this month. Moreover, a Bithumb official reportedly confirmed with the outlet that “Bitholic plans to launch a coin trading business under the name of Bithumb Singapore.” At press time, however, Bitholic’s website appears to retain its name for now.
The report also notes that BitHolic is represented by Park Jung-hoon, who is apparently a former director of the Bithumb Strategic Planning Office.
Back in Oct. 2018, the BK Global Consortium acquired a majority share in Bithumb for $354 million, as per a report by The Business Times. The leader of BK Global, Kim Byung-gun, is reportedly a plastic surgeon who operates clinics out of both South Korea and Singapore in addition to investing in blockchain businesses.
Legal troubles for Bithumb
As reported by Cointelegraph in June, Bithumb faces legal action for insufficient safeguards of its users’ personal information. The prosecutors in the case alleged that a data breach was to blame for a platform hack that cost users almost $7 million. These lawyers alleged that Bithumb stored its customers’ data on employee computers with no encryption or security update software.
Tokyo, Japan – August 8th, 2019 – BitKan and Bitcoin.com have officially signed a Strategic Collaboration agreement together. Both parties will leverage on each other’s global resources to achieve a mutually beneficial win-win relationship.
Founded in 2012, BitKan provides a one-stop integrated platform for cryptocurrency services. This includes a platform for crypto market data, a crypto wallet and a thriving community. In May 2019, BitKan has also launched a crypto aggregated trading platform, an OTC trading platform, and will continue to bring more complementary resources to Bitcoin.com.
Bitcoin.com is a top-tier platform in the blockchain industry globally, and the collaboration will promote the development of BitKan globalization. Bitcoin.com is supercharged to change the world with Bitcoin Cash (BCH). With its suite of developer tools downloaded 36,000+ times from over 100 countries, the Bitcoin.com team is the heart and soul of the Bitcoin Cash industry. The team is committed to making BCH available to all people, whatever their age, gender, nationality or financial status.
The U.S. Securities and Exchange Commission (SEC) could learn from other countries when finalizing its own crypto regulation, Commissioner Hester Peirce explains. While highlighting peculiar and notable features of the U.S. system, the commissioner emphasizes cross-border considerations, detailing applicable crypto frameworks of several countries.
SEC Commissioner Hester Peirce explained last week her agency’s approach to regulating crypto assets and how the U.S. could draw from other countries’ regulatory frameworks in setting its own policies. Her speech was given in Singapore at the “SUSS Convergence Forum: Inclusive Blockchain, Finance, and Emerging Technologies,” hosted by Singapore University of Social Sciences (SUSS).
Among the topics she discussed was cross-border crypto regulation. Peirce, known in the crypto community as Crypto Mom, suggested that “The U.S. SEC can look to our counterparts overseas for ideas in untangling some of our most difficult legal and policy questions in this area.”
“Because so much of the activity is taking place outside the United States, we have to think about our regulation with a sensitivity for cross-border considerations, cooperation, and what I call co-learning.” Peirce elaborated:
Crypto regulation affords international regulators the opportunity to learn from one another … The resulting regulatory competition will allow us to see what works well and what does not work at all.
Crypto Mom anticipates several obstacles. Since “countries all over the world are still in the early stages of determining how and whether to regulate crypto,” she foresees uncertainties regarding the various rules in those countries. The commissioner further claims that it is difficult to pin down the domicile of an enterprise in the niche due to the global nature of cryptocurrency, adding that determining the “the precise nature — currency, commodity, security, derivative — of many of the assets at issue” may also be challenging.
Bermuda’s Custody Framework
The first country Peirce mentioned the U.S. could learn from was Bermuda, noting that it is one of the only jurisdictions to address crypto custody in depth. Not only does the island have a regulatory regime for crypto businesses, but it has also released draft guidance for crypto custodial services. “It addresses such difficulties as how to store private keys for hot and cold storage while preserving necessary liquidity, what safeguards should be in place to prevent unauthorized access, and how to frame internal audit of transactions to ensure their integrity,” the commissioner described.
“I look forward, for example, to learning more about Bermuda’s custody framework to see if we can draw from it as we think about how our custody rules apply in the crypto context,” she opined, stating:
These ‘laboratories of regulation’ operated by our international counterparts have me thinking about possible paths for the U.S. to become more welcoming of crypto innovation.
Singapore’s Security Token Approach
Singapore has been at the forefront of much crypto-related activity, which may be attributable to the clarity it has offered to issuers in this market, Commissioner Peirce remarked, noting:
Motivated in part by the approach taken by Singapore, which does not treat every token offering as a securities offering, I would support the creation of a non-exclusive safe harbor for the offer and sale of certain tokens.
Peirce has previously suggested that the U.S. SEC should take a safe harbor approach to crypto assets. “A token offering made in reliance on the safe harbor would have to comply with certain requirements — for example, providing clear disclosure of the assets’ functionality, including the mechanisms for changing holders’ rights and explaining how funds are to be used — before the issuer could use the safe harbor,” she clarified. “The relief could be time-limited to guard against reliance on the safe harbor by projects without a workable plan to build operational networks.” Crypto Mom detailed:
The requirements would be tailored to the needs of purchasers [of] digital assets in a way that our current regulations are not. Trading to get tokens in and out of the hands of developers and users would be permitted.
Hong Kong’s Licensing and Sandbox Regime
Commissioner Peirce also talked about Hong Kong’s crypto regulatory framework. Its Securities and Futures Commission (SFC) has released guidance stating that security tokens are “likely to be ‘securities,’” which Peirce said is similar to the approach the SEC has taken in the U.S.
Hong Kong, however, also requires funds with crypto assets exceeding 10% of aggregate assets to be licensed by the SFC, and has issued a circular which places crypto trading platforms within a regulatory sandbox, Peirce noted.
According to the Financial Stability Board’s directory of crypto asset regulators, the SFC and Hong Kong Monetary Authority supervise crypto activities in the country. The former regulates crypto assets that fall within the definition of securities, while the latter covers crypto assets in investment products and wealth management services.
Thailand, Japan, Malta, Switzerland, and France
In addition to the aforementioned countries, Peirce mentioned five others in her speech — Japan, Thailand, Malta, Switzerland, and France.
Japan is significantly ahead of other countries when it comes to crypto regulation, having legalized cryptocurrency as a means of payment in April 2017. Crypto exchanges are required to register with the country’s Financial Services Agency. So far, 19 have been approved but over 110 operators have expressed interest in entering the space. The country recently “passed legislation to bring securities offerings of digital assets within its existing legal framework for securities offerings,” Peirce added.
Another Southeast Asian country Peirce mentioned was Thailand, which has adopted a unique framework for regulating crypto assets, classifying them as either cryptocurrency or digital tokens. Crypto exchanges, brokers, dealers, and initial coin offering (ICO) portals must be licensed and comply with regulatory requirements. So far, five crypto exchanges and three ICO portals have been licensed.
A number of European countries have also acted early to regulate crypto assets. The commissioner mentioned Malta, Switzerland, and France. Malta passed legislation last year that separates digital assets into unregulated virtual tokens and regulated virtual financial assets. Switzerland provided preliminary guidance for ICOs in 2017 and issued more detailed guidance last year. France recently announced a new licensing regime for ICOs and crypto service providers.
Regardless of the kind of regulation the SEC decides on, Peirce believes that “Continued communication among the world’s financial regulators will be important,” reiterating:
We also can continue to learn from one another to fill the gaps in our own regulation and borrow, when appropriate, from frameworks developed and tested in other places.
Notable Features of US Regulatory Approach
The commissioner proceeded to point out some notable features of the approach the U.S. is taking to regulate crypto assets. Emphasizing that the SEC regulates only securities, with other regulators responsible for other areas such as commodities and currencies, the commissioner commented:
One of the peculiarities of the U.S. system is the sheer number of regulators. Not only do we have the state-federal allocation of responsibility that I just mentioned, but we have multiple federal financial regulators.
She added, “Another notable feature of U.S. law is that the definition of what constitutes a security is a bit nebulous,” admitting that “Unlike many other countries, we do not have an exclusive list of what counts as a ‘security.’”
To determine whether something is a security in the U.S., the Howey test is used. “Under Howey, something — including something that is a digital asset — is a security if it involves an investment in a common enterprise with an expectation of profits derived solely through the efforts of others,” the commissioner conveyed.
SEC’s Efforts Now and Going Forward
To understand and regulate crypto assets, the SEC has established a strategic hub called Finhub for fintech and innovation to coordinate the commission’s approach to digital assets. Its staff hosted a fintech forum in May and has “met with hundreds of market participants to hear what they are working on and where they need regulatory clarity,” Peirce said.
Last month, the agency qualified two token offerings under Regulation A+ and issued two no-action letters. The Financial Industry Regulatory Authority (FINRA) also recently approved applications for two non-custodial digital asset broker-dealers.
Moreover, the commission has issued a couple of guidance notes. One was in April which outlines a framework for determining whether a digital asset may be a security. The other, jointly issued with FINRA last month, addresses issues such as how digital asset securities can be custodied and how broker-dealers holding them can comply with other regulatory requirements.
Peirce emphasized that she “would like to see more focused momentum” at the SEC towards finalizing crypto regulation so that the U.S. will not fall behind other countries in attracting crypto businesses, concluding:
While I believe a single global regulatory framework would be unwise, regulators can create a healthy environment for this new market to grow by sharing information that will smooth cross-border transactions.
Do you think the US should adopt some of the crypto frameworks from other countries? Let us know in the comments section below.
Images courtesy of Shutterstock and the SEC.
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