November 20th, 2025

India’s debt-backed stablecoin challenge to US dollar dominance explained

As governments worldwide debate the merits and dangers of digital currencies, India appears poised to launch its own state-backed stablecoin that uses government debt as collateral.

Proponents argue that the Asset Reserve Certificate (ARC) could hasten the global drive towards de-dollarisation, lower India’s borrowing costs and create a “virtuous cycle” for public funding by diversifying the country’s investor base.

By tying the token to sovereign debt, developers aim to create a transparent system that complements the central bank’s monetary framework and limits outflows of local liquidity into dollar-backed cryptocurrencies.

The ARC, under development by international blockchain giant Polygon and India-based fintech Anq, would function as a stablecoin: a cryptocurrency engineered to maintain a steady value, avoiding the volatility that plagues speculative digital assets like bitcoin.

Every unit of the regulated digital token would be backed one-to-one by Indian government securities or treasury bills – debt instruments issued by the state to finance public spending – maintaining a steady value pegged to the rupee while operating on private blockchain infrastructure.

Its backers say that by tying the digital token directly to sovereign debt, India could keep local liquidity at home instead of letting it leak offshore.

“Success could establish India as the template for upholding private blockchain innovation while maintaining financial sovereignty,” Benjamin Grolimund, general manager of cryptocurrency exchange Flipster, told This Week in Asia.

ARC could enable “significant crypto market capture” for the world’s most populous nation, he said. “India’s move asserts the trend towards de-dollarisation as other [Asia-Pacific] hubs advance their own currency-backed stablecoin frameworks”.

‘Legal limbo’

India, home to one of the world’s largest crypto user bases, has seen surging adoption among both its vast diaspora and a young, digitally native population.

Digital currencies are helping to meet the diaspora’s remittance needs, while young Indian adults are increasingly embracing crypto trading, according to a recent Chainalysis report.

Yet cryptocurrencies remain unregulated in the country, neither illegal nor formally sanctioned, following a 2020 Supreme Court decision that overturned a ban by the central bank amid concerns about its potential for money laundering and terrorism financing.

The ARC’s success could depend on whether India can establish regulatory frameworks to address consumer protection, market conduct and financial stability.

Analysts note the need for legislative clarity: would ARCs be recognised as digital government securities or as payment instruments? Would oversight fall solely under the central bank or be shared with the Securities and Exchange Board of India?

Defining the regulator will be crucial, as will clarifying if non-residents can hold the token, whether settlements can occur offshore and what mechanisms exist for clean conversion between rupees and foreign currency.

“Without statutory backing, disputes over redemptions, custody failures or censorship could land in legal limbo,” warned Anndy Lian, a Singapore-based adviser on blockchain policy.

Risks vs rewards

While Singapore, Hong Kong and Japan have experimented with similar digital tokens, India’s ARC could be the first public, tradeable stablecoin issued privately but backed by state assets.

“India may do something no other major economy has attempted; turn its government securities into a programmable digital asset,” said Raj Kapoor, chairman of the India Blockchain Alliance.

Such a token would align with the Indian central bank’s push to introduce a digital currency and secure the benefits of crypto without dollar-denominated dependence, Kapoor said.

Success is far from certain, however. Overcentralisation risks rebranding government bonds without meaningful innovation, while under-regulation could introduce legal and financial vulnerabilities.

“The risk is that, if over-controlled, it becomes just dematerialised G-Secs [government securities] in a new wrapper with little innovation,” Kapoor said.

But if designed with care, it could be the catalyst that pulls decentralised finance and global liquidity into India’s bond market, strengthening the rupee and setting a new global benchmark.

Source: https://www.scmp.com/week-asia/economics/article/3333378/indias-debt-backed-stablecoin-challenge-us-dollar-dominance-explained?registerSource=loginwall

Anndy Lian

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

March 29th, 2024

Decentralized Transactions Challenge Howey Test’s Application to NFTs

The key question is whether NFTs meet the Howey test criteria for classification as securities under federal laws.
In the NFT industry, adopting best practices includes transparency, fraud prevention, respecting intellectual property, and ethical conduct.

Non-fungible tokens (NFTs) are unique digital assets that can represent anything from art and music to virtual land and gaming items. They have exploded in popularity and value in recent years, attracting the attention of celebrities, investors, and regulators alike. The legal status of NFTs remains unclear and controversial, especially in the United States, where the Securities and Exchange Commission (SEC) has the authority to regulate securities and protect investors from fraud and manipulation.

One of the key questions that arises is whether NFTs are securities under the federal securities laws, and specifically, whether they meet the criteria of the Howey test, the legal framework established by the Supreme Court in 1946 to determine whether an instrument is an investment contract and thus a security. Howey test has four elements, I will argue that NFTs are not securities. On top of that, I will also address some of the counterarguments and challenges that NFTs may face in the future, and suggest some possible solutions and recommendations for the industry and the regulators.

NFTs are not investments of money, but rather purchases of digital goods

The first element of the Howey test is whether there is an investment of money or something of value in exchange for the instrument. This element is usually easy to satisfy, as most financial transactions involve some form of payment. However, in the case of NFTs, the payment is not an investment, but rather a purchase of a digital good.

They are not shares, bonds, or derivatives that represent a claim or a right to a future cash flow or a share of profits. Rather, they are digital tokens that prove ownership and authenticity of a unique digital asset. In my point of view, they are similar to other digital goods, such as e-books or music downloads, that consumers buy for personal use and enjoyment, not for investment purposes.

NFTs are not common enterprises, but rather individualized and decentralized transactions

The second element of the Howey test assesses the presence of a common enterprise, where investors’ fortunes are tied to the success of an issuer or third party. However, in the case of NFTs, no such common enterprise exists. Transactions are decentralized and individualized, with various artists and creators minting NFTs across different blockchain networks like Ethereum or Solana. NFT buyers rely on blockchain‘s public ledger to verify authenticity, rather than trusting a specific issuer or promoter.

NFTs do not generate profits, but rather subjective value and utility

The third element of the Howey test concerns whether there’s a reasonable expectation of profits. Unlike traditional investments, NFTs don’t generate income or appreciate based on others’ efforts. Instead, their value comes from subjective qualities like rarity, originality, and cultural significance, rather than anticipated financial returns. NFT buyers don’t expect profits but rather value the assets for their intrinsic qualities and utility.

NFTs are not dependent on the efforts of others, but rather on the creativity and innovation of the creators and the community

The fourth element of the Howey test examines whether profits stem from the efforts of others. Unlike traditional securities, NFT profits aren’t reliant on issuer or third-party services. NFT value is driven by the creativity and innovation of artists and developers, not centralized platforms. Buyers assess and appreciate digital assets based on personal judgment, rather than external influences.

Counterarguments and challenges

Despite the arguments in favor of NFTs, potential challenges from regulators and courts may arise in the future. One such challenge is the classification of certain NFTs as securities under regulatory tests like the Howey or Reves tests. Depending on their characteristics, some NFTs could represent real-world assets or rights, potentially falling under the definition of securities, especially if they promise future cash flows or resemble investment instruments.

Moreover, even if NFTs don’t meet all elements of the Howey test, they might still be deemed securities through a flexible analysis. For instance, if they are marketed as investments or show characteristics of speculative opportunities, they could create expectations of profit, thus falling under securities regulations. Additionally, if buyers pool funds or share risks and rewards, or if the NFTs’ value depends on underlying asset performance, regulators might consider them securities.

Furthermore, beyond securities laws, NFTs could be subject to various other regulations based on their nature and function. Anti-money laundering and sanctions regulations might apply if NFTs facilitate illicit transactions. Tax regulations could come into play if NFT transactions generate taxable income or capital gains. Consumer protection laws might be relevant if NFTs involve deceptive practices or breach contracts. Intellectual property regulations could be triggered if NFTs infringe upon original creators’ rights.

My take: Possible solutions and recommendations

Given the uncertainty and complexity of the legal landscape surrounding NFTs, it is important for the industry and the regulators to work together to find possible solutions and recommendations that can balance the interests and needs of all the stakeholders. Here are some suggestions from me that may help to achieve this goal:

Industry stakeholders should adhere to best practices and standards to improve transparency, accountability, and compliance in the NFT market. This includes clear disclosure of terms and conditions for NFT transactions, implementing measures to prevent fraud and illegal activities, and respecting intellectual property rights. Additionally, they should engage in responsible and ethical behavior, avoiding harm to the environment, society, or public interest.

Regulators should adopt a flexible approach to regulate the diverse NFT market. Avoiding overly restrictive frameworks is crucial to foster innovation and growth. Recognizing nuances among NFT types and consulting with industry and community for feedback is essential. Continuous monitoring and evaluation of market evolution are necessary to update policies accordingly.

Conclusion

NFTs are a new and exciting phenomenon that has revolutionized the digital economy and culture. They offer unprecedented opportunities and challenges for the creators, consumers, and regulators of the digital assets.

The legal status and implications of NFTs are still unclear and uncertain, and may vary depending on the facts and circumstances of each case. Therefore, it is important to understand and address the potential legal issues and risks that may arise from the creation, distribution, and consumption of NFTs, and to seek appropriate solutions and recommendations that can foster a healthy and sustainable NFT market.

Source: https://www.financemagnates.com/cryptocurrency/decentralized-transactions-challenge-howey-tests-application-to-nfts/

Anndy Lian

www.anndy.com

j j j

October 21st, 2023

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.nasdaq.com/articles/coinbases-mpi-license:-a-game-changer-for-crypto-in-singapore-but-a-challenge-for