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Coinbase’s MPI License: A Game-Changer For Crypto In Singapore, But A Challenge For Competitors

Coinbase’s MPI License: A Game-Changer For Crypto In Singapore, But A Challenge For Competitors

Coinbase, the largest cryptocurrency exchange in the US, has recently obtained a Major Payment Institution (MPI) licence from the Monetary Authority of Singapore (MAS), the country’s central bank and financial regulator. This licence will allow Coinbase to offer regulated digital payment token (DPT) products and services in Singapore, such as buying and selling cryptocurrencies, storing them in wallets, and transferring them to other users.

They not the first crypto exchange to receive an MPI licence from MAS. In June 2023, two other platforms, Crypto.com and Circle, were also granted full licences after obtaining in-principle approvals in 2021. However, Coinbase is arguably the most prominent and influential one among them, given its global reach, market capitalization, and reputation.

Coinbase’s entry into the Singaporean market is seen by many as a positive sign for the crypto industry in the region, as it reflects the country’s openness and support for innovation and digital finance. Singapore has been widely regarded as a crypto-friendly jurisdiction, with a clear and progressive regulatory framework for DPT service providers under the Payment Services Act (PSA) that came into effect in 2020.

According to the PSA, any entity that provides DPT services in Singapore must obtain a licence from MAS, either as a standard payment institution (SPI) or as an MPI. The difference between the two types of licences lies in the scale and scope of their operations. SPIs can provide any combination of regulated payment services, but are subject to transactional volume or e-money limits. MPIs have no such limits, but are subject to more stringent requirements, such as safeguarding customer funds, complying with anti-money laundering and counter-terrorism financing rules, and submitting regular audits and reports to MAS.

By obtaining an MPI licence, Coinbase has demonstrated its ability and willingness to meet the high standards set by MAS for DPT service providers. This could give it a competitive edge over other crypto exchanges that operate in Singapore, especially those that have not yet obtained a licence or are still waiting for approval.

As mentioned on MAS’s website, there are currently 170 entities that have applied for a licence under the PSA, but only three have been granted full licences so far (Coinbase, Crypto.com, and Circle). Among the applicants are some of the most popular and well-known crypto exchanges in Singapore, such as Binance, Kraken, Coinhako, Gemini, and Independent Reserve. These exchanges have been allowed to continue their operations while their applications are being processed by MAS, under a grace period that was initially supposed to end on July 28, 2021. However, due to the large number of applications and the complexity of the assessment process, MAS has extended the grace period for most applicants until January 28, 2023.

This means that these exchanges have less than four months left to obtain their licences from MAS, or they will have to cease their DPT services in Singapore. This could pose a significant challenge and risk for them, as they may lose their market share and customer base to Coinbase and other licensed platforms.

Competitive Challenges For Other Crypto Exchanges

While Coinbase’s MPI license is undoubtedly a boon for the company, it also presents a competitive challenge for other crypto exchanges operating in Singapore. Here are some key challenges they are likely to face:

  • Regulatory Compliance Pressure: The foremost challenge for competitors is the need to meet the stringent regulatory standards set by MAS. Coinbase’s compliance with these standards sets a high bar, and other exchanges will need to invest significant resources to achieve similar levels of regulatory approval.
  • Increased Competition: Coinbase’s entry into the Singaporean market intensifies competition. As a well-established global exchange, Coinbase has a strong brand presence and the resources to invest in marketing, user acquisition, and product development. Competitors will need to step up their game to compete effectively.
  • User Trust and Confidence: Coinbase’s MPI license not only signifies regulatory compliance but also implies a higher degree of trust and confidence from users. Competitors will need to work harder to gain the trust of customers and differentiate themselves in a market where regulatory compliance and security are paramount.

Recommendations For Success In The Singaporean Crypto Market

To thrive in this evolving landscape and address the challenges posed by Coinbase’s MPI license, crypto exchanges in Singapore should consider several strategic approaches:

  • Collaborate with Local Partners: Building relationships with local financial institutions, fintech companies, and government agencies can help crypto exchanges navigate the complex regulatory landscape in Singapore. Collaborations can also open doors to new markets and customer segments.
  • Innovate New Products and Services: To stand out in a competitive market, exchanges should focus on innovation. Developing new products and services that cater to the unique needs and preferences of Singaporean users can help differentiate them from Coinbase and other competitors.
  • Educate Customers and Regulators: Crypto exchanges should actively engage in educational initiatives aimed at both customers and regulators. Providing resources and information on responsible crypto use, security practices, and the benefits of blockchain technology can help build trust and bridge knowledge gaps.
  • Adapt to Changing Market Conditions: The crypto industry is known for its rapid evolution. Exchanges must remain agile and adaptable to changing market conditions, regulatory updates, and technological advancements. Staying ahead of the curve can be a key differentiator.
  • Foster Regulatory Relationships: Building positive relationships with regulators is essential. Exchanges should actively engage with regulatory authorities, participate in industry consultations, and contribute to the development of fair and effective crypto regulations.
  • Emphasize Security and Compliance: Like Coinbase, prioritizing security measures and regulatory compliance is non-negotiable. Exchanges should invest in robust security infrastructure and continuously monitor for potential vulnerabilities or risks.
  • Customer-Centric Approach: To succeed in a competitive market, exchanges should prioritize the needs and concerns of their customers. Providing excellent customer service, transparent fee structures, and responsive support channels can help build loyalty and trust.
  • Diversify Product Offerings: Beyond trading, exchanges should consider diversifying their product offerings. This could include services like staking, lending, or even non-fungible tokens (NFTs). Diversification can attract a broader user base and increase revenue streams.

In Conclusion

Coinbase’s MPI license from MAS is a watershed moment for the cryptocurrency industry in Singapore. It signifies not only the legitimization of digital assets but also the importance of regulatory compliance and security within the sector. While this development poses competitive challenges for other crypto exchanges operating in the country, it also sets a high standard that can benefit the entire industry.

Success in the Singaporean crypto market will require a combination of regulatory adherence, innovation, customer education, and adaptability. By focusing on these aspects and strategically positioning themselves, other exchanges can thrive alongside Coinbase in this dynamic and rapidly evolving sector. Ultimately, the success of these exchanges will contribute to the broader adoption and acceptance of cryptocurrencies in Singapore and around the world.

 

 

 

Source: https://www.benzinga.com/23/10/35201460/coinbases-mpi-license-a-game-changer-for-crypto-in-singapore-but-a-challenge-for-competitors

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”.

www.anndy.com
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Gary Gensler Crypto Perspective: Why Bitcoin is Not a Security, but Refuses to Say It’s a Commodity?

Gary Gensler Crypto Perspective: Why Bitcoin is Not a Security, but Refuses to Say It’s a Commodity?

The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has been making headlines in the crypto space with his statements on the regulatory status of various digital assets.He has repeatedly affirmed that Bitcoin is a commodity, but has been reluctant to say the same for other cryptocurrencies, especially those that have been issued through initial coin offerings (ICOs) or have some form of governance mechanism. He has also expressed concerns about stablecoins and their potential impact on the financial system. What are his intentions behind these statements? Is he trying to protect investors, stifle innovation, or something else?

I will try to analyze Gensler’s views and motives from an opinionated perspective, based on his public speeches, interviews, and testimonies. I will also discuss the implications of his stance for the crypto industry and the investors.

Gensler’s Background and Philosophy

Before becoming the SEC chair, Gensler had a long and distinguished career in both the public and private sectors. He was a partner at Goldman Sachs for 18 years, where he held various leadership positions in trading, finance, and technology. He also served as the undersecretary of the Treasury for domestic finance and the assistant secretary of the Treasury for financial markets under President Bill Clinton. President Barack Obama later appointed him as the chairman of the Commodity Futures Trading Commission (CFTC), where he oversaw the implementation of the Dodd-Frank Act and the regulation of the derivatives markets after the 2008 financial crisis.

Gensler is also an academic and an educator. He is a professor of the practice of global economics and management at the MIT Sloan School of Management, where he teaches courses on blockchain technology, digital currencies, financial innovation, and public policy. He is also a senior advisor to the MIT Media Lab’s Digital Currency Initiative.

Some observers have described him as a “crypto-friendly” regulator, given his expertise and interest in the field. He has acknowledged the potential benefits of blockchain technology and digital assets for innovation, efficiency, inclusion, and competition. He has also praised Bitcoin as a “catalyst for change” and a “scarce store of value” that is not controlled by any government or central authority.

However, he is also a “crypto-savvy” regulator who understands the risks and challenges posed by the nascent industry. He has emphasized the need for investor protection, market integrity, financial stability, and national security in the crypto space. He has also warned about the prevalence of fraud, manipulation, hacking, money laundering, tax evasion, and terrorist financing in the crypto ecosystem.

In my personal opinion, Gensler’s philosophy seems to be based on two main principles: first, that every financial product or service should be subject to some form of regulation or oversight; and second, that the existing laws and rules should be applied consistently and fairly to all market participants.

Gensler’s Stance on Bitcoin

Gensler’s stance on Bitcoin is relatively straightforward and consistent. He has repeatedly stated that Bitcoin is not a security under the federal securities laws, but rather a commodity under the Commodity Exchange Act (CEA). This means that Bitcoin falls under the jurisdiction of the CFTC, not the SEC.

This classification is based on the Supreme Court’s Howey test , which determines whether an asset is a security or not based on whether it involves an investment of money in a common enterprise with an expectation of profit derived from the efforts of others. Bitcoin does not meet this criteria because it does not have any issuer or promoter who controls its supply or value. It is also decentralized and distributed among its users who validate transactions and secure the network through proof-of-work mining.

His view aligns with his predecessors at the SEC and the CFTC, who have also recognized Bitcoin as a commodity. It also reflects the reality of how Bitcoin operates and functions in the market. This does not mean that Bitcoin is free from any regulation or oversight. As a commodity, Bitcoin is subject to anti-fraud and anti-manipulation provisions under the CEA and the securities laws. It is also subject to reporting and recordkeeping requirements under the Bank Secrecy Act and the Patriot Act. Moreover, Bitcoin derivatives, such as futures and options, are regulated by the CFTC as commodity contracts. And Bitcoin exchanges, platforms, wallets, and custodians are regulated by various state and federal agencies as money transmitters, broker-dealers, or investment advisers.

Gensler’s intention behind his stance on Bitcoin seems to be to acknowledge its unique nature and innovation, while ensuring that it is subject to appropriate rules and standards that protect investors and the public interest.

Gensler’s Stance on Other Cryptocurrencies

Next, his stance on other cryptocurrencies. It is less clear and more nuanced. He has indicated that many of them should be considered securities under the federal securities laws, but he has not specified which ones or how to determine their status. He has also suggested that some may be commodities or hybrid instruments that fall under the SEC and the CFTC’s purview.

Gensler’s position is based on his interpretation of the Howey test , which he believes applies to most of the crypto tokens that have been issued through ICOs or have some form of governance mechanism. He argues that these tokens involve an investment of money in a common enterprise with an expectation of profit derived from the efforts of others, such as the network’s developers, promoters, or validators.

His view is consistent with that of the SEC staff, who have issued several guidance documents and enforcement actions against various crypto projects that they deemed to be securities offerings without proper registration or exemption. It is also supported by some federal courts that have applied the Howey test to crypto tokens in civil and criminal cases .

However, his angle is not universally accepted or applied. Some crypto projects have challenged the SEC’s authority or interpretation in court or through administrative proceedings. Some have also sought clarity or relief from the SEC through no-action letters or safe harbor proposals. Some have also argued that their tokens are not securities but rather commodities, currencies, utility tokens, or network tokens that serve a different purpose or function than investment contracts .

His intention behind his stance on other cryptocurrencies seems to be to assert the SEC’s jurisdiction and mandate over a large segment of the crypto industry that he believes poses significant risks to investors and the market. He also seems to be seeking more cooperation and coordination from the crypto industry to comply with the existing laws and rules or seek appropriate exemptions or waivers.

Gensler’s Stance on Stablecoins

Gensler’s stance on stablecoins is also unclear and complex. He has expressed concerns about stablecoins and their potential impact on the financial system, but he has not proposed any specific regulatory framework or approach for them. He has also indicated that some stablecoins may be securities, while others may be commodities or hybrid instruments that fall under both the SEC and the CFTC’s jurisdiction.

Stablecoins are digital assets that are designed to maintain a stable value relative to another asset, such as a fiat currency, a commodity, or a basket of assets. They are often used as a medium of exchange, a store of value, or a unit of account in the crypto space. They are also used as a bridge between different blockchains or platforms. There are different types of stablecoins, such as fiat-backed, crypto-backed, algorithmic, or hybrid.

Gensler’s position is based on his assessment of the risks and challenges posed by stablecoins to the financial system. He has highlighted the issues of transparency, accountability, governance, liquidity, solvency, market integrity, consumer protection, and systemic stability that arise from stablecoins. He has also warned about the potential for stablecoins to facilitate illicit activities, such as money laundering, tax evasion, and terrorist financing.

His perspective is shared by other regulators and policymakers who have also expressed concerns about stablecoins and their implications for the financial system. The Financial Stability Board (FSB), an international body that monitors and makes recommendations about the global financial system, has issued a report on stablecoins that outlines 10 high-level recommendations for their regulation and oversight. The President’s Working Group on Financial Markets (PWG), a group of senior U.S. officials that advises the president on financial matters, has also issued a statement on stablecoins that calls for a comprehensive regulatory framework for them.

However, Gensler’s view is not yet translated into any concrete action or proposal. He has stated that he is working with his fellow regulators at the CFTC, the Federal Reserve, the Treasury Department, and other agencies to address the issues raised by stablecoins. He has also stated that he is open to engaging with Congress and the industry to develop a clear and consistent regulatory regime for stablecoins.

Gensler’s Implications for the Crypto Industry and the Investors

Gensler’s stance on Bitcoin, other cryptocurrencies, and stablecoins has significant implications for the crypto industry and the investors. Depending on how he implements his vision and how the industry responds, his stance could have positive or negative effects on the innovation, growth, and adoption of the crypto space.

On the positive side, Gensler’s stance could provide more clarity, certainty, and legitimacy for the crypto industry and the investors. By applying the existing laws and rules to the crypto space, Gensler could create a level playing field for all market participants and foster fair competition and cooperation. By enforcing compliance and accountability it could enhance investor protection and market integrity and reduce fraud and manipulation. By engaging with Congress and the industry, he could further develop a comprehensive and consistent regulatory framework for the crypto space that balances innovation and regulation.

On the negative side, Gensler’s stance could also pose more challenges, costs, and barriers for the crypto industry and the investors. By asserting the SEC’s jurisdiction and mandate over a large segment of the crypto space, Gensler could create more confusion, uncertainty, and conflict among different regulators and jurisdictions. By imposing registration and reporting requirements, Gensler could increase the regulatory burden and complexity for the crypto projects and platforms. By initiating enforcement actions and litigation, Gensler could deter innovation and investment in the crypto space.

Conclusion

In conclusion, Gensler’s stance on Bitcoin, other cryptocurrencies, and stablecoins is a reflection of his background, philosophy, and intentions as the SEC chair. He is a crypto-friendly but also crypto-savvy regulator who understands the potential benefits and risks of the nascent industry. He is also a pragmatic but principled regulator who believes in applying the existing laws and rules to the crypto space consistently and fairly.

It is important to note that his stance has significant implications for the crypto industry and the investors. It could provide more clarity, certainty, and legitimacy for the crypto space, but it could also pose more challenges, costs, and barriers for the crypto space. The ultimate outcome of his stance will depend on how he implements his vision and how the industry responds to his actions.

 

 

Source: https://www.securities.io/gary-gensler-crypto-perspective-why-bitcoin-is-not-a-security-but-refuses-to-say-its-a-commodity/

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”.

www.anndy.com
j j j

Bitcoin Ordinals profitability falls in July, but total inscriptions pile on

Bitcoin Ordinals profitability falls in July, but total inscriptions pile on

Revenue for NFT services on the Bitcoin network, or the aggregate value of marketplace fees and creator royalties, declined over July even as total Ordinals inscriptions crossed 20 million.

A screenshot of Ordinals Punks, from Bitcoin Ordinals Market
Image: Ordinals.Market

The profitability of Ordinals inscriptions, an iteration of non-fungible tokens (NFTs) on the Bitcoin network, declined throughout July, Forkast Labs data show.

Monthly NFT services revenue, or the sum of marketplace fees and creator royalties on the Bitcoin network, fell to US$1.22 million in July from US$3.13 million in June, suggesting lower profitability for Ordinals sales on the Bitcoin network.

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Ordinals is an iteration of NFTs on Bitcoin, the world’s first and largest blockchain network by market capitalization. Bitcoin had a market capitalization of US$562 billion as of Tuesday, dominating 48.2% of the total cryptocurrency market.

Despite lower profitability, Ordinals broke a daily inscriptions record on July 30 with 422,164, after reaching 20 million total inscriptions on July 28, showing the market’s continued support and interest in Bitcoin-native NFTs, according to data from Dune Analytics. The network exceeded 21 million total inscriptions on Tuesday.

Kadan Stadelmann, chief technical officer of blockchain infrastructure firm Komodo, said that the oversaturation of Ordinals is among the main factors contributing to the declining profitability of Bitcoin NFTs.

“With an influx of new projects and artists entering the space, buyers now face a plethora of options, diluting the value and appeal of individual pieces,” Stadelmann told Forkast.

Tom Tirman, the chief executive officer of NFT rental platform IQ Protocol, suggested that the persistent creation of Ordinals could be a strategic move by investors who — having missed out on prior opportunities — are aiming to position themselves advantageously for the anticipated future expansions of Bitcoin NFTs.

“As we often see in other vital innovations recorded in the industry in the past, Ordinals are bound to regain their momentum after a remarkable use case is tagged with them,” he said.

Profits from secondary market sales have also been declining. The average sale price for Ordinals fell to US$214.03 in July from US$900 in June and US$1,178 in May, according to CryptoSlam data. At its peak in March, Ordinals traded at an average value of US$9,357.

According to Yehudah Petscher, NFT strategist at Forkast Labs, the weaker Ordinals price reflects lower NFT sales volume, as declining interest from buyers pushes sellers to lower prices.

“There’s too much potential on the crypto side of things for traders to want to trade NFTs or Ordinals right now, and there’s also a bit of a liquidity issue. Simply put, traders are out of money. Bitcoin and crypto in general running will fix both of these issues,” said Petscher.

Not just Bitcoin

Although key performance indicators for Ordinals tumbled in July, the Bitcoin network maintained its position as the month’s second most active blockchain in the world for NFTs ranked by sales volume with over US$64.9 million, trailing Ethereum’s US$273.9 million, CryptoSlam data shows.

“The decline in total revenue for NFT services on the Bitcoin network after May does not necessarily signify a lack of interest in Ordinal inscriptions specifically,” Anndy Lian, author of NFT: From Zero to Hero, told Forkast. “Instead, it points to a broader trend in the NFT market as a whole. The decrease in revenue is likely indicative of a general downturn in the NFT market, affecting all types of NFT services and not just Ordinal inscriptions.”

David Atterman, the chief executive officer of crypto-based engagement platform Most.Fan, agreed with Liann, attributing the falling profitability of Ordinals to the poor performance of the overall NFT market.

“Projects that do not carry utility for new users and that do not focus on mass adoption, quickly lose their significance and are unlikely to recover at the next bull run,” said Atterman.

According to Petscher, the next NFT bull run will follow the cryptocurrency market.

“We also need to see some type of innovation happen in NFTs to bring back traders who have realized that currently, there’s not much substance that’s worth investing in,” he said.

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Standard Chartered, a British multinational bank, said in a July research report that Bitcoin prices will top US$120,000 in 2024, fueled by Bitcoin’s halving event set to occur in April 2024. The halving will reduce Bitcoin’s current supply inflow of 6.25 BTC every 10 minutes to 3.125 BTC. Each halving cycle to date has resulted in a new price record for Bitcoin.

Source: https://forkast.news/bitcoin-ordinals-profitability-inscriptions/

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”.

www.anndy.com
j j j