Cryptocurrency has been on a red alert as of late with recent policy changes in Singapore while Thailand allows the central bank to be more involved with digital currencies.
The crypto adoption rates in SEA averaged 3.56% in 2021. Singapore is the most “crypto-friendly” nation in SEA, with approximately 10% of its population owning crypto. Surprisingly, this figure is more than the US, at 8.3%, according to White Star Capital.
Since 2021, an increasing number of crypto enthusiasts with “OCDs” (obsessive cryptocurrency disorder) flock to SEA in search of potential “to the moon startups” – communities that are thriving, vibrant, and profitable.
Singapore: Cryptocurrency is on a red alert
The two biggest cryptocurrencies Bitcoin and Ethereum both experienced a steep drop of about 50% year-to-date. The TerraLuna economy collapsed, and hedge fund Three Arrows Capital is liquidated. Crypto companies including Zipmex, Vauld, Celsius, Voyager Digital, and Babel Finance have been frozen withdrawals one after the other.
Fear, uncertainty, and doubt (FUD) abound, from the entrepreneurs to investors, especially Hodlnaut, another digital-asset firm that ran into trouble.
Hodlnaut is an app that allows users to collect funds in order to borrow when they are in need of money. The funds can be used by institutional borrowers instead of going through the traditional peer-to-peer lending route.
The Monetary Authority of Singapore (MAS) has rescinded its in-principle approval for crypto lender Hodlnaut to obtain a license to provide digital payment token services, a MAS representative said.
“Hodlnaut is a shadow bank, not an asset manager, exchange, or trading platform,” Frances Coppola, a financial writer, and CoinDesk columnist commented. “They are not entitled to return of their funds,” citing The Washington Post.
Hodlnaut announced that they have since informed the MAS of their intention to withdraw their license application. “Hodlnaut is therefore no longer providing regulated digital payment token services, our token swap feature included. For the avoidance of doubt, Hodlnaut will also cease all borrowing and lending services,” in a statement.
In response to the current market turmoil, MAS representative has commented that cryptocurrencies do not pose stability risks. “Spillover to the domestic financial system has been very limited as our key financial institutions do not have significant exposures to either distressed cryptocurrency firms or cryptocurrencies.”
Thailand: Allowing the central bank to be more involved
Thailand is going to overhaul its digital rules in order to have more regulatory power over cryptocurrency platforms, tighten oversight and prevent further market crashes.
The planned amendments to the regulations will allow the central bank to be more involved, according to Finance Minister Arkhom Thommierd.
The Securities and Exchange Commission is the government agency in charge of overseeing cryptocurrency. They were requested to take the lead on reforming crypto, Thommierd added.
Thailand has enacted a series of regulations to protect its cryptocurrency investors. This comes after their recent failings for not acting quickly to protect investors of the Zipmex Thailand Ltd. licensed exchange which briefly suspended withdrawals before closing down entirely.
“Right now, the central bank has no room to enter into the regulatory framework except for notifying that cryptos are not a legal means of payment for goods and services,” Thommierd continued. “So, the framework is not clear enough to regulate the industry.”
Since November 2021, the global crypto market has lost US$2 trillion in total. The implosion happened due to increasing interest rates which deterred investors from buying coming in.
Leveraged funds and lending platforms blew up one after another, exposing the fact that there were regulatory gaps in the process. Governments worldwide are now trying to find ways to plug them.
The number of active accounts trading in Thailand has decreased sharply over the past few months. There was a high point during December 2021, almost 700,000, but now it’s down to just 230,000.
Cryptocurrency emerges, however, from utter chaos in SEA & Latest News Update
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