What is the role of stablecoins in digital assets ecosystem

What is the role of stablecoins in digital assets ecosystem

In my view, stablecoins are a form of private money. The concept is not new. As long as the community recognizes this as a form of money, then it is money.

Having said so, it depends on whether you are talking about dollar-collateralized, company-collateralized, cryptocurrency-collateralized, or non-collateralized stablecoins. Each kind of design comes with pros and cons. For the time being those that are properly collateralized and approved by a country’s financial services authority would be in favor and can be the forerunner.

This process is still in the research stage for many countries. Ideally, in the longer term, I would like to see interoperability between various stablecoins and CBDCs. This will then bring out the true meaning of crypto and a new era of financial systems.

– Anndy Lian

 

What is the role of stablecoins in digital assets ecosystem

The cryptocurrency market, which continues to tackle uncertainties around it, has seen the usage of stablecoins multiply in last couple of years. According to data by European Central Bank, stablecoins’ market capitalisation increased from €23 billion to around €150 billion in the Q1, CY2021. In September, 2021, around 75% of trading on cryptocurrency platforms involved stablecoins. Market behaviour suggests that stablecoins are being used to trade cryptocurrency assets. “Stablecoins act as intermediary when cryptocurrency investors want to exit a market position and re-enter it later. Stablecoins can help with trading between different cryptocurrency exchanges, and can also help investors with their financial stability when cryptocurrency markets are bearish in nature,” Sathvik Vishwanath, co-founder and CEO, Unocoin, a cryptocurrency exchange, told FE Digital Currency.

Reportedly, stablecoins such as Tether, USD Coin and Binance USD account for close to 90% of the total stablecoin market. According to experts, stablecoins can be used as a currency because of its collateral value being associated with the United States Dollar (USD). Information from Federal Reserve, a government body, mentioned that a two-tiered banking system, where banks are supervised under state and federal levels, can support both stablecoin issuance and maintain traditional forms of credit creation. “As stablecoins are backed by financial services authorities, it can be a frontrunner in the cryptocurrency space. In the longer-term, I believe interoperability between stablecoins and central bank digital currencies (CBDCs) will take place,” Anndy Lian, chief digital advisor, Mongolian Productivity, a governmental organisation, said.

It is believed that stablecoins can help to bridge the gap between cryptocurrencies and fiat currencies, due to their relatively low price volatility. “Stablecoins can be used to ensure monetary balance as companies can pay salaries and conduct transactions between different geographies. As stablecoins can be tracked, governments can implement regulations to excercise control over it without their complete ban,” Aliasgar Merchant, lead developer of relations, Akash Network, a decentralised cloud platform, stated.

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 “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”.

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Tax on virtual digital assets a concern for NFTs; impact may be short term: Experts

Tax on virtual digital assets a concern for NFTs; impact may be short term: Experts

A slowdown in cryptocurrency trading may have an impact on NFT transactions as well, although it could be a temporary phenomenon as investors await more clarity from the government.

The 30 percent tax on income from the transfer of virtual digital assets (VDAs) that came into effect from April 1 is a cause of concern not only for cryptocurrencies, which have seen a drop in trading volumes, but also for non-fungible tokens (NFTs) that gathered steam in India in the past year with the entry of sports and Bollywood celebrities.

“The immediate scenario is bleak for crypto and even bleaker for NFTs in India,” Raj Kapoor, strategic advisor at Acryptoverse, a crypto-marketing firm, told Moneycontrol. “NFTs in India will face a fallout with only unique models surviving. NFT creators here are popping up daily while collectors remain non-existent.”

Anndy Lian, Chairman, BigONE Exchange, a crypto trading platform, said the tax on VDAs in India will impact NFT sales.

“The overall market condition is not favourable. NFT sales will drop further and only the better assets will have a place in the crypto-verse,” he said.

He added that NFTs that are more speculative in nature and driven by profit will suffer hard when it comes to tax.

Vinu Peter Immanuel, a partner at Link Legal who tracks NFTs, said that with average trading volumes on top cryptocurrency exchanges dropping 80 to 90 percent from a few months ago, the impact will also be seen on NFTs.

“Since NFTs are traded mostly by using cryptocurrencies, any slowdown in cryptocurrency trading may have an impact on NFT transactions as well. Although it could be a temporary phenomenon where cryptocurrency investors have taken a step back and are waiting for more clarity from the government,” he said.

Short-term impact

However, Hitesh Malviya, founder of IBC (It’s Blockchain) DAO (decentralised autonomous organisation) said NFTs in India are not even a $10 million market in terms of daily sales.

“We have got limited traction here if we compare it to the west. In the US, marketplaces are doing over a billion dollar sales volume every month. Since it’s a limited market, I don’t see many people have got affected as we have less than 1 lakh Indians who have bought any NFTs,” Immanuel said.

Siddharth Jaiswal, founder of Sportzchain, said the new taxation policy will have a short-term impact on NFTs.

“For all of us, this is the first year for the cryptocurrency and NFT tax framework. For many, 30 percent may seem a lot, but if you see the kind of exponential returns, 30 percent may seem less. There have been exponential gains as well, to the tune of 300 to 500 percent, so 30 percent (tax) seems less. However, the same is subjective,” he said.

Malviya noted that while it’s a tough law for short-term traders as they will be required to pay 1 percent on each NFT trade, it would be fine for a long-term value investor like him.

“I don’t mind paying 30 percent tax on my crypto or NFT assets,” he said.

The government said a 1 percent tax would be deducted at source on the transfer of VDAs starting July 1.

“The TDS (tax deducted at source) on its own is causing major havoc for crypto exchanges because the high-volume daily traders have disappeared and these are the guys that provide liquidity to the exchanges. But this impact has so far just appeared on cryptocurrencies,” said Pratik Gauri, founder of 5ire. “Still, I think it’ll become more widespread and show up on all VDAs, precisely because the tax has some mandates, like not being able to write off losses from one deal into another that will have a significant impact on the trading on VDAs, be it cryptos, NFTs, or other VDAs.”

Positive outlook

While Lian and Jaiswal said the tax will have an effect on NFTs, they also believe the outlook for digital collectibles is positive.

“Utility-based NFTs should expect an increase. This increase would be in favour for the India market as they will help the industry to hit a new level of adoption,” said Lian.

He expects India to triple its NFT sales in the next year.

Sportzchain’s Jaiswal noted that NFT marketplaces are coming up with new strategies to smoothen the entire buying process, with less reliance on cryptocurrencies as the medium for buying these NFTs.

“For example, NFT marketplaces in India have introduced UPI as one of the payment modes to buy these NFTs. So a drop in the trading volumes will not adversely impact the market for NFTs,” he said.

Unified Payments Interface (UPI) is a real-time payment system that facilitates instant transfer of funds between bank accounts.

Acryptoverse’s Kapoor said NFT stakeholders should really look at India’s gaming sector for a strong product market fit with NFTs as this sector has exploded in the past year, recording 170 percent growth. Jaiswal also anticipates NFTs on game merchandise to see an upswing.

“Additionally, with metaverse applications also gaining momentum, the uptake of NFTs will only increase in the future,” he said.

However, Malviya said that in India, fan collectible NFTs are emerging with entertainment companies and actors launching digital assets to promote their movies or brands.

“While NFTs will be used as an emerging tool of branding by many lifestyle and entertainment firms, such NFTs will not value over time. These are hype-driven assets that might never get any value in the secondary markets,” he said.

 

Original Source: https://www.moneycontrol.com/news/trends/tax-on-virtual-digital-assets-a-concern-for-nfts-impact-may-be-short-term-experts-8378261.html

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 “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”.

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Singapore scales digital currency regulations as MAS gets additional power

Singapore scales digital currency regulations as MAS gets additional power

Singapore is stepping up its efforts to regulate the domestic digital currency industry, this time targeting firms that are based in the country but offering their services outside the city-state.

Last week, lawmakers in Singapore approved the Financial Services and Markets Bill 2022, which further expanded the jurisdiction of the Monetary Authority of Singapore (MAS), the country’s de facto central bank and digital currency regulator. The law covers virtual asset service providers (VASPs) who in digital currencies, exchanges, and firms that offer financial advice on the sale of such currencies and tokens.

Under the previous regulatory regime, the MAS only had authority over VASPs, which were based in the country and offered their services locally. This led to some regulatory loopholes in which a firm could claim to be regulated by the MAS, which is a reputable watchdog globally, but not be directly supervised by the regulator.

Alvin Tan, a board member of the MAS who spoke on behalf of Senior Minister Tharman Shanmugaratnam, said that the regulator was worried about the reputational risk that the loophole presented.

“Digital token service providers could easily structure their businesses to evade regulation in any one jurisdiction, as they operate mainly online. We could be exposed to reputational risks brought by DT service providers created in Singapore, and which provide services relating to virtual assets such as Bitcoin outside Singapore,” Tan said.

The new law was well received by some who believe that it will make the industry more reputable and further increase protections for investors. Legitimate firms operating within the confines of the law have nothing to fear, the law’s supporters say.

One of them is Anndy Lian, the chairman of Dutch exchange BigONE, who deems the new regulations reasonable.

“If you walk the ground hard enough, you will see many bad actors and dubious crypto companies using Singapore as a base of their operations. We need to properly regulate things so that the bad actors won’t affect this industry’s image,” Lian said, speaking to Nikkei Asia.

There are others who don’t support the new law, which they claim is just another burden being piled on by regulators on a nascent industry that could prove fatal to its growth.

“Sad, disappointed—we went 10 steps backwards. So MAS is making the assumption that the license is like gold—that everyone will want to get it?” One member of a digital currency group in the city-state stated.

There are also concerns related to the MAS’ processing of licensing applications. As CoinGeek reported in December, the MAS received about 180 applications for licenses by VASPs. Of these, 103 were either rejected or the applicants had withdrawn them after realizing they had not met the standards. At the time, only three firms had been granted operating licenses, with 70 applications being in consideration.

This long queue of applications was just with local firms that target the Singaporean market. VASPS will take longer to get licensed in the city-state with the new law. This will require some firms to move out of Singapore or dig deeper into their pockets to get through the scrutiny.

“For companies that are unable to fulfill the AML/CFT requirement, they will need to move out to other countries. But with more governments regulating cryptocurrency in different jurisdictions, these companies will soon find it hard to operate,” Desmond Yong, the chief strategy officer at Digital Treasures Center, commented.

This new MAS crackdown piles onto others, such as a ban on digital currency ads in public places, which kicked off in January, and the shutdown of digital currency ATMs.

 

Original Source: https://coingeek.com/singapore-scales-digital-currency-regulations-as-mas-gets-additional-power/

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 “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”.

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