Japanese and Singaporean regulators join forces on crypto pilot project

June 27, 2023 Coin Telegraph

"Decentralized financial ecosystem continues to develop in complexity, and it is important to address emerging risks," said FSA official Mamoru Yanase.

On June 26, Japan's financial regulator, the Financial Services Authority (FSA), announced a partnership with the Monetary Authority of Singapore (MAS) for the joint regulation and pilot testing of cryptocurrency projects in accordance with the latter's "Project Guardian" initiative. The participation will be limited to observer capacity for the FSA in its current phase. Regulators wrote:

"The project aims to test the feasibility of applications of digital technologies such as asset tokenization through pilot experimentations, while managing risks to financial stability and integrity. Current industry pilots include fixed income, foreign exchange, and asset & wealth management."

Established in May 2022 by the MAS, Project Guardian seeks to test the "feasibility of applications in asset tokenisation and DeFi," in accordance with proper regulations. The project has four areas of focus; open and interoperable networks, trust anchors, asset tokenization, and institutional grade DeFi protocols. In one notable project from the initiative:

"DBS Bank, JP Morgan and SBI Digital Asset Holdings conducted foreign exchange and government bond transactions against liquidity pools comprising of tokenised Singapore Government Securities Bonds, Japanese Government Bonds, Japanese Yen (JPY) and Singapore Dollar (SGD)."

Meanwhile, HSBC, Marketnode, and UOB have since concluded a pilot test of a blockchain-structured product, while UBS is exploring the issuance of Variable Capital Company funds on digital asset networks. Project Guardian isn't the first collaboration between the FSA and MAS. In 2017, the two regulators established a joint fintech cooperation framework to promote innovation in their respective markets.

The collaboration also follows a period of relaxation on crypto laws in Japan. On June 25, Cointelegraph reported that Japan's National Tax Agency ruled to exempt token issuers from a 30% tax on unrealized capital gains. Earlier this year, Japanese prime minister Fumio Kishida said that DAOs and NFTs could help support the government's 'Cool Japan' strategy as it explores Web3 usage.

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3AC liquidators look to recoup $1.3B from founders

June 27, 2023 Coin Telegraph

3AC liquidators look to recoup .3B from founders

Bankruptcy

The report came exactly one year since a court in the British Virgin Islands ordered Three Arrows Capital into liquidation.

Teneo, the liquidators behind bankrupt hedge fund Three Arrows Capital (3AC), are reportedly seeking to recover roughly $1.3 billion in funds from founders Su Zhu and Kyle Davies.

According to a June 27 Bloomberg report, the liquidators claimed Davies and Zhu incurred the $1.3 billion in debt when 3AC was already insolvent, adding to creditors’ losses. 3AC reportedly owed creditors $3.5 billion, making the founders’ potential liability more than a third of the total debt.

A Teneo spokesperson told Cointelegraph that the goal of seeking $1.3 billion from the 3AC founders was “generally reflective” of a June 27 creditor presentation. At the time of publication, court documents did not appear to include this information.

The report came exactly one year since a court in the British Virgin Islands ordered 3AC into liquidation on June 27, 2022. In July 2022, the firm also made a Chapter 15 filing in U.S. Bankruptcy Court in the Southern District of New York.

Though Davies and Zhu have remained active on social media through the liquidation process, their physical whereabouts have been largely unknown. In June, the pair helped launch the Open Exchange, a platform for trading claims against bankrupt crypto entities.

3AC is dead, long live 3AC Ventures https://t.co/61s8uQquOZ
— Kyle Davies (@KyleLDavies) June 21, 2023

Lawyers for the liquidators in the U.S. have also attempted to make Davies and Zhu answer in court during the bankruptcy proceedings. Both 3AC founders have been issued digital subpoenas, and the legal team sought to hold Davies in contempt of court for having “repeatedly defied their obligations”.

Among the 3AC founders’ former assets included a digital art collection being auctioned off through Sotheby’s. Pieces that were a part of the collection like Dmitri Cherniak’s artwork ‘The Goose’ sold for $6.2 million in June.

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Singapore central bank reports on tokenized asset network models after trials

June 26, 2023 Coin Telegraph

Coin Telegraph

Three trial use cases have been completed as part of the project, and the report uses them as a “framework for consideration” of financial market infrastructure.

As asset tokenization continues at a rapid pace, the Monetary Authority of Singapore (MAS) and 11 financial institutions examined infrastructure models to facilitate tokenized asset trading. The key to unlocking the full benefits of the technology is open and interoperable digital asset networks, the MAS said in its Project Guardian report released June 26.

Project Guardian identified options for platform type, asset type and network access with an eye to best practices. It used three test cases and drew observations on them while carefully noting that it does not endorse any of them.

The first use case was over-the-counter (OTC) foreign exchange transactions. A detailed examination highlighted a collaboration between DBS Bank and SBI Digital Asset Holdings. It concluded:

“Trading in a permissioned liquidity pool protocol achieves greater efficiency by reducing friction and minimising risks, while the tokenised assets bring the benefits of atomic settlement.”

The second use case was trade finance and focused on Standard Chartered Bank’s asset-backed securities tokenization. In this model, tokenized trade finance receivable assets are repackaged as natively issued fungible tokens and divided into two tranches with differing risk exposures. Trading in the “senior,” less risky tokens would “broaden the investor base for real economy assets,” the report concluded.

The third use case was OTC-structured notes, which are “a popular wealth management product with substantial traction and demand in Asian wealth centres.” Currently, issuance of such notes is labor-intensive and has manual elements, and the notes require a high level of servicing.

.@MAS_sg published a report proposing a framework for designing open, interoperable networks for #digitalassets. MAS also announced an expansion of Project Guardian to test the potential of asset tokenisation across more financial asset classes.

READ: https://t.co/KXZ8FTqlUp pic.twitter.com/jSnVO9APLM
— MAS (@MAS_sg) June 26, 2023

A network created by HSBC, Marketnode and United Overseas Bank produces OTC-structured notes in a “token factory” by whitelisting parties on a public, permissionless platform, resulting in greater efficiency in creating and distributing the notes. Those institutions are part of an industry-wide effort to establish common standards for asset issuance and exchange.

Project Guardian was launched in May 2022. It will continue to examine “other focused themes of Trust Anchors and Institutional DeFi.”

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Crypto.com receives regulatory approval to offer crypto services in Spain

June 23, 2023 Coin Telegraph

Coin Telegraph

The latest regulatory approval for the crypto exchange comes within weeks of getting a MPI license from regulators in Singapore

Singapore based cryptocurrency exchange service provider Crypto.com has obtained a virtual asset service provider (VASP) registration from the Bank of Spain. The regulatory approval would allow the exchange to offer a range of crypto-focused services to customers in Spain, a country which has shown a positive crypto stance in recent times.

The crypto exchange platfrom had to undergo a comprehensive review of its Anti-Money Laundering Directive (AMLD) compliance and adhere to other financial crimes laws before getting the nod. The latest regulatory approval in Spain comes within weeks of obtaining a major payment institution (MPI) license for digital payment token (DPT) services by the Monetary Authority of Singapore (MAS).

We're excited to share our latest regulatory achievement in Europe!

We have obtained our Virtual Asset Provider Registration in Spain

Learn more:https://t.co/ZGmgE9n937 pic.twitter.com/fmkWt6npvK
— Crypto.com (@cryptocom) June 23, 2023

Kris Marszalek, CEO of Crypto.com called its latest entry into the Spanish crypto market a testimony of their “commitment to compliance” while adding:

“We look forward to continuing to work with the Bank of Spain as we launch our products and services in-market and providing users with the comprehensive, safe and secure crypto experience that they desire.”

The latest regulatory approval helped the crypto exchange become a regulated platform in nearly a dozen countries. Apart from Spain, the firm has obtained regulatory nod in Singapore, France, United Kingdom, Dubai, South Korea, Australia, Italy, Greece, Cayman Islands, and a pre-registration undertaking with Ontario Securities Commission and Canada Securities Administrators.

Crypto.com like most other crypto businesses, thrived during the 2021-22 bull market, expanding its partnerships into the mainstream and obtaining regulatory approval in multiple jurisdictions. The platfrom made headlines when it obtained naming rights to the very famous Staples Center in Los Angeles. The Staples Center is a multi-purpose arena that has been home to numerous public events including boxing and basketball competitions, as

However, with the advent of the bear market, the platform faced certain business troubles and a fall in demand leading to the closure of its institutional platform in the United States earlier this month.

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Ripple CEO Brad Garlinghouse Praises Singapore’s Crypto Approach As the Fintech Firm Acquires Payments License

June 22, 2023 The Daily Hodl

Amazon Collaborating in Pilot Program for New CBDC Proposed by IMF and Central Banks

June 21, 2023 The Daily Hodl

Singapore MAS proposes digital money standards with major industry players

June 21, 2023 Coin Telegraph

Coin Telegraph

The Monetary Authority of Singapore, with input from major tech giants, released a whitepaper on the standards for digital money usage such as CBDCs and stablecoins.

The Monetary Authority of Singapore (MAS) released a proposal for a common protocol that would specify the conditions for the use of various types of digital currencies.

On June 21 MAS published a whitepaper that covers technical specifications outlining the lifecycle of its new Purpose Bound Money (PBM) concept, along with the names of financial institutions and fintech firms that plan to pilot PBM.

PBM plans to enable senders of digital currencies across different systems, such as central bank digital currencies (CBDCs) or stablecoins, to be able to specify conditions of digital currency transactions, including a validity period and types of shops.

Mr. Sopnendu Mohanty, the chief fintech officer of MAS, commented that these recent developments have enhanced the role of digital currencies in the future financial landscape.

“This collaboration among industry players and policymakers has helped achieve important advances in settlement efficiency, merchant acquisition, and user experience with the use of digital money."

The paper was developed in collaboration with the International Monetary Fund, Banca d’Italia, and Bank of Korea, among other financial institutions. Fintech firms implementing a trial of PBM include Amazon, DBS and the fintech firm Grab.

Amazon will specifically trial escrow-like arrangements for online retail payments. It will entail the merchant receiving payment only when the customer receives the items purchased.

Additionally, the whitepaper encourages central banks, financial institutions and fintech companies to conduct more research for digital money use cases.

This comes as Singapore continues to embrace crypto-related businesses and activity. On June 7, Circle, the USDC stablecoin provider, joined other major payment institutions to receive a license in Singapore.

A few days prior, Crypto.com also received its license from MAS for digital payment token services.

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Crypto Exchange Gemini Announces New Expansion Into Asian Region To Capture ‘Next Wave of Growth’

June 20, 2023 The Daily Hodl

Gemini plans Asia-Pacific expansion as part of ‘next wave of growth for crypto’

June 20, 2023 Coin Telegraph

Asia

The crypto exchange has already announced efforts to expand into Canada and Europe amid a lawsuit from the United States Securities and Exchange Commission.

United States-based cryptocurrency exchange Gemini, founded by Cameron and Tyler Winklevoss, has announced plans to expand into the Asia-Pacific region.

In a June 19 blog post, Gemini said it planned to increase the number of staff at the firm’s Singapore office as well as establish an engineering division in India. The crypto exchange hinted at “larger” plans for expanding into the region in the next 12 months.

“We believe that APAC will be a great driver of the next wave of growth for crypto and Gemini,” said the exchange.

1/ We’re expanding in the Asia Pacific region!

Our Singapore office will serve as a hub for our larger APAC operations and we plan to increase our headcount to 100+ in Singapore pic.twitter.com/4fo06cKiLb
— Gemini (@Gemini) June 20, 2023

The expansion plans came amid Gemini facing a lawsuit filed in January by the U.S. Securities and Exchange Commission (SEC) over “Gemini Earn”. The exchange’s product — offered in partnership with Genesis — allows users to lend crypto assets to Genesis, which the SEC alleged violated U.S. securities laws.

Gemini seemed to be exploring different markets amid the crackdown on many crypto firms in the United States. In April, the exchange took the first steps to become a restricted dealer registered with Canada’s Ontario Securities Commission, one of the country’s major financial regulators. In May, the Winklevoss twins announced they had chosen Ireland as a base to grow the firm’s services across Europe.

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3AC liquidators file motion to hold Kyle Davies in contempt

June 15, 2023 Coin Telegraph

Coin Telegraph

Civil sanctions against 3AC co-founder Kyle Davies include an award of attorneys’ fees and a $10,000 daily fine until he is in compliance with a subpoena.

Three Arrows Capital (3AC) co-founder Kyle Davies should be held in contempt of court for ignoring a subpoena connected to bankruptcy proceedings, June 14 court filings from 3AC’s liquidators show. According to the creditor's legal team, Davies is purposely delaying asset recovery from the former crypto hedge fund.

The civil sanctions against Davies for his contempt include an award of attorneys’ fees and a $10,000 daily fine until he is in compliance. The motion does not apply to Su Zhu, the fellow co-founder of the bankrupt hedge fund. Due to his Singaporean citizenship, Zhu is not subject to the jurisdiction of the United States courts, Cointelegraph learned from Teneo, the firm serving as liquidator in the case.

*Screenshot of motion for holding Kyle Davies to be in civil contempt. Source: Teneo*

On Jan. 5, Davies and Zhu were subpoenaed on Twitter for failing to engage in asset recovery after 3AC filed for Chapter 15 in July 2022. Since then, creditors have accused the founders of being “on the run” from the bankruptcy court.

The founders’ whereabouts and legal jurisdictions play a significant role in recovery challenges. For instance, liquidators had to obtain permission from Singapore and U.S. authorities to subpoena Davies and Zhu via digital channels.

“The founders of Three Arrows, Kyle Livingstone Davies and Su Zhu [...] have repeatedly defied their obligations to the Court and failed to cooperate with the Foreign Representatives’ efforts to marshal the assets of the Debtor," reads the document. A hearing on the motion should take place in the coming weeks.

According to the liquidators, instead of complying with subpoenas and information requests, the “founders have ignored their obligations, hidden their whereabouts, and instead spent their time creating, amongst other things, a new venture to trade claims in cryptocurrency bankruptcy cases."

The motion also asks the U.S. to seek personal jurisdiction on Davies, who is believed to be in Bali. “On this record, it cannot be clearer that the Court can — and should — exercise personal jurisdiction over Davies, hold him in willful contempt of court, and impose sanctions."

An auction for parts of 3AC’s nonfungible token collection held last month brought in $2.5 million. The firm reportedly owes creditors a total of $3.5 billion. During its peak, 3AC’s estimated assets under management reached $10 billion.

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Singapore

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