Tron founder Justin Sun has urged China to reassess its position on Bitcoin, following former President Donald Trump’s endorsement of the digital currency and plans to make the U.S. the world crypto capital.
Trump pledged to create a “strategic Bitcoin stockpile” for the U.S. during his keynote address at the Bitcoin 2024 conference in Nashville on Saturday.
“As the final part of my plan today, I am announcing that if I am elected, it will be the policy of my administration, the United States of America, to keep 100% of all the Bitcoin the U.S. government currently holds or acquires into the future,” Trump stated. “I hope you do well.”
Responding to Trump’s comments, Sun, a prominent figure in the crypto world, said competition between the two countries is likely to benefit the entire industry.
“China also needs to step up. Since President Trump pushed for Bitcoin, U.S. policies have warmed. China should make further progress in this area. Competition between China and the U.S. in Bitcoin policy will benefit the entire industry,” Sun said on Twitter.
This statement comes against the backdrop of China’s historically stringent stance on cryptocurrencies.
The country, once a global leader in Bitcoin mining and trading, has implemented some of the world’s most restrictive policies on digital currencies in recent years.
In 2013, the country emerged as a powerhouse in the crypto space, with Chinese miners accounting for more than 70% of the Bitcoin network’s mining power by 2017.
However, September 2017 marked a turning point when the government banned Initial Coin Offerings (ICOs) and ordered the closure of domestic cryptocurrency exchanges.
Despite these initial restrictions, mining operations continued to thrive in China due to cheap electricity—particularly in regions like Inner Mongolia, Xinjiang, and Sichuan. This allowed China to maintain its dominance in the global crypto mining landscape for several years.
However, the situation changed dramatically in 2021. In May of that year, Chinese Vice Premier Liu He announced a sweeping crackdown on Bitcoin mining and trading.
This was followed by a series of regulatory actions, culminating in September 2021 when the government declared all cryptocurrency transactions illegal, effectively banning mining nationwide.
The Chinese government cited several reasons for this hardline approach, including concerns over financial stability, environmental impact due to mining operations’ high energy consumption, prevention of capital flight, and the desire to maintain control over the financial system.
The impact of China’s ban was felt globally.
The Bitcoin network’s hash rate dropped by over 50% temporarily, and there was a mass exodus of mining operations to countries like Kazakhstan, Russia, and the United States.
While cracking down on decentralized cryptocurrencies, China has been actively developing its own Central Bank Digital Currency (CBDC), the digital yuan.
This state-controlled digital currency is seen as a way for China to modernize its monetary system while maintaining oversight of financial transactions.
Sun’s call for China to “step up” in the realm of Bitcoin policy represents a significant challenge to this status quo, suggesting that China risks falling behind in the global race for cryptocurrency adoption and innovation if it maintains its current prohibitive stance.
Industry experts suggest that a shift in China’s Bitcoin policy could have far-reaching implications for the global cryptocurrency market.
“The U.S., especially under President Trump and following administrations, has shown growing support for Bitcoin, establishing itself as a leader in the global crypto space. If China were to take a similar path, it could lead to healthy competition between the two economic powerhouses,” Anndy Lian, author and intergovernmental blockchain expert told Decrypt. “This competition could lead to advancements in blockchain technology, better regulatory frameworks, and broader cryptocurrency adoption.”
He added that the global market would benefit from increased liquidity, enhanced security measures, and stronger infrastructure. Additionally, balanced regulations in both countries could help mitigate risks related to volatility and fraud, increasing investor confidence.
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.
In recent years, Singapore has emerged as a global leader in embracing cryptocurrency and blockchain technology. With a forward-thinking approach, the city-state has been at the forefront of fostering innovation while maintaining a keen eye on regulatory safeguards. As the discussion around stablecoins gains momentum, the question arises: Is Singapore truly ready to harness the potential of stablecoins, and what implications could this digital evolution bring?
What is Stablecoin?
A stablecoin is a type of cryptocurrency specifically designed to maintain a steady value relative to another asset, which could be a fiat currency or a commodity. This unique characteristic sets stablecoins apart from more volatile cryptocurrencies like Bitcoin and Ethereum.
Stablecoins can be categorized into two main types:
Fiat-backed stablecoins: These stablecoins are backed by traditional fiat currencies, such as the US dollar or the euro. To ensure their stability, the issuer holds reserves of the corresponding fiat currency in a bank account. Each stablecoin is intended to be redeemable for a specific amount of the backing fiat currency.
Crypto-backed stablecoins: In this type, stablecoins are backed by other cryptocurrencies like Bitcoin or Ethereum. The issuer maintains reserves of these cryptocurrencies in a wallet, with each stablecoin representing a defined amount of the backing crypto.
There are algorithmic stablecoins as well, which lack direct backing by physical assets. Instead, algorithms are employed to regulate their value, often involving the burning or minting of tokens to maintain stability.
Stablecoins serve various purposes, including:
Payments: Stablecoins can be utilized for everyday transactions, such as purchasing goods and services or transferring funds between individuals.
Investing: Some use stablecoins as a means to invest in other cryptocurrencies or as a tool to hedge against the price volatility of more unpredictable cryptocurrencies.
Decentralized Finance (DeFi): Stablecoins play a crucial role within decentralized finance applications, enabling activities like lending and borrowing in the DeFi ecosystem.
Speculation: Certain individuals engage in speculative trading of stablecoins, aiming to capitalize on potential price fluctuations and generate profits.
Stablecoins have gained prominence due to their potential to combine the advantages of blockchain technology with the stability of traditional assets. Their versatile applications across various sectors underscore their significance in shaping the future of digital finance.
Singapore’s Crypto-Friendly Stance
Singapore has long been acknowledged as a welcoming environment for the crypto sector, a stance that’s been in place since the beginning. The Monetary Authority of Singapore (MAS) has actively fostered the growth of fintech ventures, attracting investments and entrepreneurial endeavors aimed at contributing to the country’s advancement. The MAS has undertaken a thoughtful and deliberate path toward regulating cryptocurrencies, striving to strike a balance between promoting innovation and ensuring the safeguarding of consumers and investors from potential hazards.
Singapore has successfully introduced several crypto-friendly frameworks, some of which encompass:
Payment Services Act: Commencing in January 2020, Singapore saw the implementation of the Payment Services Act. This step was a response to the Financial Action Task Force’s updated 2018 guidelines concerning Anti-Money Laundering (AML) and the Combatting of Financing of Terrorism (CFT) risks that cross borders in relation to cryptocurrencies. The Payment Services Act establishes an adaptable structure for overseeing payment systems and providers of payment services in Singapore. It sets forth requirements for registration, in addition to guidelines for AML and CFT targeted at cryptocurrency businesses.
Cryptocurrency Consumer Protection Law: In the middle of January 2022, Singapore’s MAS enacted a set of laws focused on safeguarding investors from the relentless exposure to digital asset content through mediums like billboard ads and crypto ATMs. This initiative led to the prohibition of all cryptocurrency-linked advertisements and the operation of crypto ATMs in public spaces. The MAS, in its communication, emphasized its encouragement of blockchain technology development and innovative applications of cryptocurrencies. However, it cautioned against the high risk associated with cryptocurrency trading, discouraging any presentation that downplays these substantial risks.
Pioneering Role and Recognition: Singapore has emerged as a trailblazer in the cryptocurrency arena, attributed to its favorable regulatory and tax frameworks, as well as its broad incorporation of blockchain technology across various sectors of its economy. By the close of 2021, the reputable global crypto rating firm Coincub conferred Singapore with the top ranking of the world’s most crypto-friendly country. This accolade was attributed to factors such as a robust economy, a supportive legislative environment, and an elevated level of cryptocurrency adoption.
In August 2023, the MAS introduced a comprehensive regulatory framework tailored to stablecoins. This move followed an extensive consultation with the public in October 2022 on this specific topic. The framework is designed to ensure stablecoins regulated within Singapore maintain a substantial degree of value stability. It permits single-currency stablecoins pegged to the Singapore Dollar or other G10 currencies, issued within Singapore. These stablecoins are required to facilitate full cash withdrawals within five days upon customer request. Furthermore, issuers must possess a minimum base capital of one million Singapore dollars or half of their annual operating expenses. They are also mandated to maintain a corresponding level of capital and liquid assets to safeguard against insolvency and effectively manage any related consequences. Stablecoin providers that fulfill these rigorous criteria receive the coveted “MAS-regulated stablecoins” endorsement. This signifies to the global community that these instruments offer a level of security on par with other financial instruments.
This newly established regulatory framework underscores the MAS’s unwavering commitment to promoting transparency and diligent oversight over the burgeoning crypto sector, all while invigorating innovation within the city-state. By instituting robust regulations, firms that adhere to the stipulated criteria and address the multitude of associated risks can thrive and operate. This approach not only fosters innovation but also serves as a shield, protecting consumers and investors against potential threats. Singapore is positioning itself favorably for the anticipated developments of 2030, when an economy centered around tokenization is expected to take shape.
Benefits on the Horizon
The adoption of stablecoins and Central Bank Digital Currencies (CBDCs) holds transformative potential for Singapore’s financial landscape. Efficiency gains are a driving force, promising quicker and more cost-effective payment solutions. Moreover, these digital currencies could attract increased investment, bolstering the country’s economic prospects.
Financial inclusion could experience a boost as well. Stablecoins offer a digital alternative to traditional banking, providing easier access to financial services. This accessibility is crucial in a digital age where the barriers of physical proximity are being dismantled.
Mitigating the Risks
While the promise of stablecoins is enticing, it’s essential to navigate the potential pitfalls diligently. One concern lies in the volatility of stablecoin prices. Despite being pegged to real-world assets, market dynamics could still lead to fluctuations, potentially exposing investors to financial risks.
Cybersecurity remains another significant challenge. As digital assets, stablecoins are stored on vulnerable digital ledgers, susceptible to cyberattacks. Ensuring robust security measures is imperative to safeguard users’ funds.
The regulatory landscape is yet another dimension of consideration. As governments worldwide grapple with the evolving nature of cryptocurrencies, regulations could change, impacting the use and trade of stablecoins.
Balancing Act: Embracing the Promise, Managing the Risks
Singapore’s readiness for stablecoins rests on a foundation of thoughtful regulation and an environment conducive to innovation. As the government collaborates with the private sector to develop CBDCs and pioneers stablecoin frameworks, the nation is poised to capitalize on the benefits of these digital assets.
The road ahead entails a delicate balance, where the potential for financial inclusion, streamlined payments, and enhanced security must be weighed against market volatility, cybersecurity risks, and evolving regulations. Singapore’s journey into the realm of stablecoins is an ongoing narrative that showcases the city-state’s commitment to harnessing the power of innovation while safeguarding its citizens and investors.
In this dynamic landscape, the question of whether Singapore is ready for stablecoins takes on greater significance. The answer may very well shape the trajectory of digital finance not only within Singapore but on a global scale.
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.
The lawsuit against Binance and its CEO yesterday (Monday) has brought havoc to the cryptocurrency industry. The market prices of Bitcoin and also the publicly listed shares of crypto companies plummeted significantly. The civil changes brought by the SEC are very serious, but the exchange might face further action.
SEC’s Lawsuit against Binance
The SEC brought a total of 13 charges against Binance, its two affiliates, and Founder CEO, Changping Zhao, which includes operating illegal trading platforms, offering unregistered crypto asset securities, and commingling customers’ funds.
However, a part of the industry is not surprised by the actions of the US regulator against the largest global crypto exchange, a title that Binance has been holding for a while now.
“I think this was to be expected, and anyone that has been in the financial industry for years should have seen this coming,” Ilies Larbi, the Co-Founder and CEO at Ouinex, told Finance Magnates.
In an official response, Binance complained that the SEC abandoned negotiations with the exchange to reach a “settlement to resolve their investigations.” Earlier, the SEC settled with companies like BlockFi and Poloniex for hefty fines.
However, according to Anndy Lian, an expert and advisor on blockchain, Binance still has some options.
“In general, companies facing lawsuits from regulatory agencies such as the SEC have several options. They can choose to fight the lawsuit in court, which can be a lengthy and costly process. Alternatively, they can try to negotiate a settlement with the SEC, which may involve paying a fine and agreeing to certain conditions. Binance may also choose to cooperate with the SEC and provide information to help resolve the matter,” he told Finance Magnates.
“Zhao’s stand has always been cooperative. Being the leading crypto exchange, their next step means a lot to the whole industry.”
Are Criminal Charges on the Way?
“The charges are extremely serious, and the mere fact that the settlement route has been ignored by the SEC (despite Binance’s efforts) while requesting from the Department of Justice that Binance’s asset be frozen and repatriated is a testament to how serious the situation is,” Larbi added.
Additionally, the request for an asset freeze indicates that the SEC’s concerns against Binance’s operations are grave. FTX’s Sam Bankman-Fried also faces criminal and civil charges in the US. Both FTX and Binance allegedly solicited users’ funds, among other similar charges.
Like FTX, Zhao and Binance’s access to Binance.com and Binance.US gave them the opportunity to commingle customer assets or divert them to Sigma Chain, the market maker and trading firm said to be owned and controlled by Zhao. In addition, they allegedly merged ‘billions of dollars of investor assets’ and sent them to Merit Peak Limited, which is also owned by the Binance Founder. These funds were later subsequently transferred to a third party “apparently in connection with the purchase and sale of crypto assets,” the SEC added.
“The Commission respectfully requests that the Court order temporary and preliminary injunctive relief, including, but not limited to, asset freezes, a verified accounting, repatriation of assets, expedited discovery, preservation of documents and information, prohibition on the destruction of evidence, the appointment of a receiver, alternative service, and/or any other necessary equitable relief,” the lawsuit stated.
Earlier media reports revealed that the Department of Justice was investigating Binance’s failure to implement an anti-money laundering program. Moreover, the exchange faces US investigations for allowing services to Russians, thus breaching sanctions.
“While the SEC has filed a civil action, it is likely that criminal violations have been referred to the Department of Justice as it pertains to matters such as RICO violations, Russian Sanctions violations, fraud, etc,” said Larbi.
In a separate civil lawsuit against Binance, the US derivatives market regulator called the compliance measures of Binance a “sham.” The CFTC’s lawsuit against Binance is along the same lines as its securities market counterpart.
“US regulators are taking a more firm stance towards Binance and are working to enforce compliance with US securities laws,” Lian added. “On the other hand, when I spoke to my counterparts in US who are mainly professional investors, they are supportive of Binance and see them as a force that could challenge SEC and give people more choices to take control of their own money.”
More Incoming Regulatory Actions?
Binance operates on a global scale. While the exchange has obtained several regulatory licenses over the past couple of years, it has operated in many jurisdictions without permission for years.
Now, the SEC’s action might encourage other global regulators to take action against the exchange.
“Many regulators across the globe will look to the US for direction on this, and we are slowly seeing many regulators across the globe following this trend,” said Remonda Kirketerp-Møller, the Founder and CEO at Muinmos. “At the end of the day, it’s about investor protection, and the US does this very well.”
Zhao, a Canadian national of Chinese origin, established Binance in 2017. In its early days, the exchange operated without a license, and Zhao publicly boasted that it had no headquarters.
On top of that, the lawsuit mentioned earlier internal statements from top Binance executives, including Zhao, indicating the goal of the exchange is to avoid regulations.
Zhao allegedly designed and implemented a multi-step plan to surreptitiously evade US laws. A Binance Chief Compliance Officer even admitted that: “we do not want [Binance].com to be regulated ever.”
In the early days of Binance, Zhao publicly boasted his ambitions to facilitate crypto trading with every fiat available globally. However, the US market has always been tricky with its stringent regulatory oversight, which led to the launch of its separate US affiliate.
The Binance CCO explained: “[o]n the surface we cannot be seen to have US users[,] but in reality, we should get them through other creative means.” Moreover, Zhao stated that the “goal” was “to reduce the losses to ourselves, and at the same time to make the US regulatory authorities not trouble us.”
BAM Trading officially operates Binance.US without Zhao in any of its executive roles. It is touted to be operationally independent of the global exchange, Binance.com. However, the reality is different.
The SEC found that Zhao and Binance were intimately involved in directing BAM Trading’s US business operations and providing and maintaining the crypto asset services of the US affiliate.
BAM Trading employees referred to the controls of Zhao and Binance on the company as “shackles” that prevented them from understanding and freely operating the US platform. A former CEO of BAM Trading even told Binance’s CFO that her “entire team feels like [it had] been duped into being a puppet.”
Indirectly, Zhao holds majority ownership of Binance.US, which operates in the US with money-transmitting licenses.
“Whether Binance fights this in court or not is irrelevant at this stage,” Larbi added. “The consequences are going to be, at best, being banned from the USA with fines that mirror Binance’s size.”
“We are only starting to see the tip of the iceberg, and mid-term consequences could go as far as the closure of the Binance operations globally. At the very least extreme consolidation of their operations and reduction in size.”
Gold-i’s Tom Higgins believes the lawsuit will “end Binance US eventually but will not have as much impact on Binance globally.”
The Fall of a Mammoth?
Binance’s strategy worked for years as the exchange became the largest globally in terms of crypto trading volume. The peak of its dominance hit last February when it controlled 57.5 percent of the average monthly volume on the world’s crypto exchanges, according to CCData. However, by the end of April, it dropped to 43 percent.
“Crypto, in general, started as a completely unregulated activity which led first movers such as Binance to onboard clients initially with barely a name and an email. That already set the scene for extreme risk exposure once regulations kicked in. Now the reality is that Binance has not been getting away with these violations. Investigations take time, and this one has been going on for over four years now,” Larbi said.
The Crypto Industry Is Taking the Heat
Though on the surface, the lawsuit is only against Binance, it directly or indirectly hinted at actions against other crypto projects.
One of the major allegations of the SEC against Binance and its US affiliate is for offering and selling unregistered tokens and stablecoin, BNB and BUSD, respectively, to US customers. However, the lawsuit categorized ten other cryptocurrencies as unregistered securities – Solana’s SOL, Cardano’s ADA, Polygon’s MATIC, Filecoin’s FIL, Cosmos’ ATOM, Sandbox’s SAND, Decentraland’s MANA, Algorand’s ALGO, Axie Infinity’s AXS and Coti’s COTI tokens.
With these new additions, the SEC is now categorizing 61 cryptocurrencies in total as unregistered securities. The regulator is already fighting a long-running legal battle with Ripple on the status of XRP.
The SEC’s lawsuit against Binance came after the exchange was hit with a Wells Notice seeking clarification for its alleged lapses. Another crypto exchange that was served with the Wells Notice is Coinbase.
“We observe that several of the details of the lawsuit that the commission filed against Binance echo those it previously filed against crypto exchanges Bittrex and Kraken, and we believe these cases, in aggregate, represent a preview of the action that is likely to be filed against COIN,” Berenberg’s analyst, Mark Palmer wrote in a note.
Furthermore, Coinbase admitted that it is expecting enforcement action following the Wells Notice. The American exchange is fighting a legal battle with the SEC over its regulatory decision-making processes.
The share price of Coinbase dropped 10 percent following the announcement of the lawsuit against Binance.
“Any large exchange that performs all of the trading functions in one place is in danger,” Higgins added. “The traditional finance world separates responsibilities like execution, prime broking, and custody for good reasons. Big crypto exchanges want to own it all, and this will not fly in the long term.”
The Market Reaction
The SEC’s formal allegations against Binance triggered its users to withdraw funds. According to Data from Nansen.ai, Binance and its US affiliate endured about $790 million in net outflows in the past 24 hours, which is the highest since mid-March.
However, Seoul-based crypto analytics firm CryptoQuant pointed out that the outflows remain within historical norms.
“The Crypto market is only now entering its regulated era,” Kirketerp-Møller added. “Crypto firms will have to adjust and “change their mindset,” if you like, from an industry operating at the peripherals of the financial sector to now occupying its main avenue, and as such also very much in the “regulators’ eye.” A similar process happened in recent years in CFDs; for example – we see a lot of online investment firms adopting our mPASS™ solution, which automatically classifies investors and performs cross-border suitability and appropriateness checks. In the past, only a handful of firms applied mPASS™, seeing it as a “luxury”; now it’s the standard and the only way to protect both investors and secure compliance of the institution.”
Itai Sadeh, the CEO of iFOR Fintech the technology arm of the iFOREX Group, said: “The complaint brought by the SEC against Binance, its controlling shareholder Changpeng Zhao and other companies under Zhao’s control, proves the importance of having well structured and strong compliance procedures and functions, which includes robust KYC procedures. US regulations are very strict on the ability of offshore brokers to accept US clients and regulators in the US are swift in enforcing such restrictions. Companies who are not licensed in the US should implement both technological and human measures in order to verify that US clients cannot access overseas trading platforms and that KYC processes are in place to detect and block any US client who manages to circumvent such restrictions.”
“If the SEC allegations that Binance has intentionally allowed US clients to onboard onto Binance’s unregulated platform are proven to be true, Binance and Zhao may face severe consequences.”
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.
