Cryptocurrency losses top $275bn in a single day as instability spreads

Cryptocurrency losses top $275bn in a single day as instability spreads

TOKYO — More than $275 billion has been wiped off the value of the global crypto market in the space of 24 hours, after the collapse of a cryptocurrency that was supposed to be pegged to the U.S. dollar sparked mayhem.

As of Thursday afternoon in Asia, the total market capitalization of global cryptocurrency was $1.14 trillion, down more than 19% on the same time Wednesday, according to CoinMarketCap. Dozens of digital coins lost a quarter or more of their value, and even bitcoin, the largest and oldest cryptocurrency, was down 14%.

A crisis of confidence among crypto investors has been spreading since the weekend, when TerraUSD became unmoored from the U.S. dollar, which it was supposed to be shadowing. TerraUSD, also known as UST, was one of the most popular “stablecoins,” which are meant to have the same value as a real-world currency and have become a backbone of some crypto trading.

UST’s supposed peg to the dollar was based on a complicated algorithmic interaction with other cryptocurrencies, which turned out not to work.

The price of UST fell as low as 23 U.S. cents on Wednesday, and while it recovered to a level around 60 cents on Thursday, that is far below the $1 peg it is meant to maintain. Do Kwon, the Stanford University-educated developer behind UST, tweeted: “I understand the last 72 hours have been extremely tough on all of you. Know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this.”

“The snowball effect on the whole market is big,” said Anndy Lian, chairman of the Netherlands-registered crypto trading platform BigONE Exchange. “UST deviates too much from the $1 mark, resulting in more panic in the market. Investors who are already fleeing risky assets amid fears over rising inflation and possibly a recession start to panic sell as bitcoin falls below their expectation.”

Ethereum, the second-largest cryptocurrency after bitcoin, was down more than 20% in 24 hours to Thursday afternoon, while other well-established and popular coins lost even more value. XRP and Polkadot were both down around 30%. Dogecoin, a joke cryptocurrency hyped last year by Tesla CEO Elon Musk, was down by a third, according to CoinDesk.

The collapse of UST has already caught the eye of regulators, many of whom have issued stern warnings about the potential risks to financial stability posed by stablecoins.

In a hearing before the Senate Banking Committee on Tuesday, U.S. Treasury Secretary Janet Yellen said it proved there should be federal regulations. “This simply illustrates that this is a rapidly growing product and there are rapidly growing risks,” she said.

Most popular stablecoins, like Tether and USD Coin, claim to support their peg to conventional currencies such as the U.S. dollar by holding the same amount of fiat currency. Tether traded as low as 96 cents, versus its claimed $1 value, at one point on Thursday.

UST is known as an “algorithmic” stablecoin, using a complex mix of code and a sister token called Luna to stabilize prices. It relied on a mechanism that incentivized investors to maintain the peg, automatically adjusting the supply to maintain value.

Despite its riskier nature, UST gained popularity for a decentralized finance application called Anchor Protocol, which paid out interest in the form of cryptocurrency to users who lent out their UST.

The price began to fall below $1 late last week, after an interest rate hike by the U.S. Federal Reserve and a sharp drop in the crypto market. Amid the turmoil, the sister token Luna also sold off. This resulted in the algorithm becoming unable to work properly, breaking UST’s linkage to the dollar.

Additional reporting by Wataru Suzuki in Tokyo and Dylan Loh in Singapore.

 

Original Source: https://asia.nikkei.com/Spotlight/Cryptocurrencies/Cryptocurrency-losses-top-275bn-in-a-single-day-as-instability-spreads

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 Chairman, Asia for BigONE Exchange and Chief Digital Advisor, Mongolia Productivity Organisation. Anndy is part of the Gyeongsangbuk-do Blockchain Special Committee, Government of Republic Korea, together with industry experts such as Brock Pierce. 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 and was previously the Advisory Board Member of Hyundai DAC Technology.

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”.

You can read more about Anndy’s work at www.anndy.com

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The Edge Markets: Singapore’s wary crypto embrace leaves top mogul in the cold

The Edge Markets: Singapore’s wary crypto embrace leaves top mogul in the cold

(Jan 12): Binance Holdings Ltd Chief Executive Officer Changpeng Zhao was putting on a brave face.

An affiliate of the world’s largest cryptocurrency exchange had just withdrawn its application to run a bourse in Singapore. Zhao, the richest person in cryptocurrency with a fortune of about US$90 billion, took to Twitter to say the affiliate’s investment in another exchange — one that was regulated — made the application “somewhat redundant.”

As it turns out, the other exchange has a licence to trade some things — such as shares in private companies and tokenized assets — but not cryptocurrencies. More importantly, the real reason for the withdrawal was that Binance’s affiliate didn’t meet Singapore’s criteria for protecting against money laundering and terrorist financing, a person familiar with the matter said after it happened last month. Binance denies this, saying it pulled the application on strategic and commercial grounds.

“There is a very clear line drawn in the sand,” said Lena Ng, a partner at Clifford Chance who advises cryptocurrency players in Singapore and internationally.

The cryptocurrency industry is attracting the attention of regulators around the world, with US Securities and Exchange Commission Chair Gary Gensler labelling it the “Wild West” and saying it needs more oversight. The Singapore example shows the regulatory process won’t always be easy for the companies involved, even as states express openness to the concepts and technologies.

Ravi Menon, the managing director of the Monetary Authority of Singapore, the central bank and financial regulator, laid out Singapore’s approach in an interview with Bloomberg in October. The city-state sees promise in areas such as decentralisation, smart contracts and encryption, and wants to be well-positioned if they become integral to our economies, he said. But there are also “serious risks,” he said, giving the examples of money laundering and terrorist financing.

“It could lead to nowhere, or it could lead to a lot of risk and turmoil, or it could lead to a very good outcome for the economy and the society,” Menon said of the crypto phenomenon. “We have to look at it in terms of scenarios, and prepare ourselves for any of those outcomes.”

Singapore’s Payment Services Act came into effect in January 2020, providing a framework for regulating areas from trading Bitcoin to using tokens for payments. Under the law, MAS hands out so called digital payment token licences to crypto companies that make it through the application process.

The act’s introduction helped accelerate an inflow of crypto players into the Southeast Asian city.

Crypto.com, the world’s fourth-largest cryptocurrency bourse, relocated its headquarters from Hong Kong in 2021 and is seeking a licence. An affiliate of Huobi Group, which operated China’s biggest crypto exchange before last year’s blanket ban, is also applying, and its co-founder Du Jun has spent the last two years in Singapore. Binance’s Zhao, for that matter, had also been based in the city-state for the past two years.

All told, some 170 firms applied, including Coinbase Global Inc, the exchange that went public in the US last year in a landmark moment for the crypto industry. Gemini Trust, the bourse founded by Tyler and Cameron Winklevoss, is also among the applicants. Companies that have put in an application are allowed to operate in the city under a grace period until the regulator says otherwise or they drop out.

But about 100 applicants have already withdrawn or been rejected. Most failed to meet Singapore’s criteria for preventing illicit flows of funds, a person familiar with the matter has said.

In fact, only four are known to have received their licences, including Independent Reserve, an Australian cryptocurrency exchange, and the brokerage unit of DBS Group Holdings Ltd, Singapore’s largest bank. One other company, local startup Coinhako, said it had received in-principle approval.

“We don’t need 160 of them to set up shop here,” Menon said in the October interview. “Half of them can do so, but with very high standards.”

Singapore is taking a middle ground between the extremes of China, which banned all crypto transactions in September and vowed to stop illegal crypto mining, and El Salvador, which adopted Bitcoin as legal tender that same month.

It’s an approach that has similarities with other Asian financial centres.

Hong Kong, Singapore’s main rival as the region’s leading financial hub, uses a so-called “opt-in” regulatory regime for crypto exchanges, meaning they can apply to be regulated. It has approved one firm. The authorities are in the process of passing laws to enable a new licensing regime.

Japan had recognized 15 companies as cryptocurrency exchange operators as early as 2017, making it one of the pioneers of crypto regulation. As of December, it had given licences to 30 such firms.

South Korea had accepted registrations by 24 crypto-trading exchanges to operate in the country as of Dec 23. Only four of them are allowed to provide trading services in Korean won.

Singapore has advantages for becoming a crypto hub in its low-tax regime and lack of a levy on capital gains, according to Ulisse Dellorto, the Asia-Pacific head of blockchain analytics firm Chainalysis. The city-state also has an edge in ease of doing business, robust infrastructure and connectivity, and the fact that it’s already a financial center, said Gerald Goh, co-founder and Singapore CEO of Sygnum, which runs a digital-asset bank in Switzerland and an asset manager in the Asian city.

Some 350 firms focusing on blockchain and cryptocurrency already operate on the island, according to Chia Hock Lai, co-chairman of the Blockchain Association Singapore, which promotes blockchain technology. That translates into about 3,500 jobs, based on a median staff size of 10, he said.

But the case of Binance, which generated at least US$20 billion of revenue last year according to a Bloomberg analysis, suggests expanding at all costs isn’t necessarily the priority.

There were already signs the writing was on the wall for Zhao’s firm in September, when Singapore’s regulator added Binance.com, the group’s main platform, to its Investor Alert List of unregulated entities that may have been wrongly perceived as licensed or regulated by MAS. It told Binance Holdings to stop offering services regulated in the city-state, allowing only the Singapore entity to serve local residents.

Then in December, almost two years after it applied, Binance withdrew from the process.

“This certainly won’t damage Singapore’s reputation as a crypto hub,” said Neal Cross, a financial-technology entrepreneur and former chief innovation officer of the bank DBS. “In fairness, it may enhance it. Crypto is still nascent and has a long way to go before it becomes a major player in our wealth portfolios, but to make that happen, it needs to happen in a place that is firm but fair.”

A spokesperson for Binance said it’s continuing to work closely with partners and government agencies in Singapore to support the growth of blockchain and cryptocurrency initiatives in the country.

Cross said openness to crypto will yield benefits because blockchain and decentralised finance are likely to make up a large part of the financial services industry in the future. Asked about potential downsides, he said there are two.

“One is the failure of such exchanges” and “the losses incurred by mom and pop investors as these aren’t government-guaranteed”, he said. “Secondly, crypto is notoriously hard to track and hence can open up new pathways to money laundering, but I feel MAS are on top of this with their current regulation.”

MAS’s Menon has repeatedly said Singapore doesn’t want its people speculating on Bitcoin and other volatile cryptocurrencies.

“MAS frowns on cryptocurrencies or tokens as an investment asset for retail investors,” he said in a December speech. Cryptocurrency prices “are not anchored on any economic fundamentals and are subject to sharp speculative swings. Investors in these tokens are at risk of suffering significant losses.”

Bitcoin, the largest cryptocurrency, more than doubled from the start of 2021 through a high in November before tumbling for the rest of the year. In 2018, it plunged 74%. The digital token slid less than 0.1% on Wednesday to trade at US$42,649.75.

People chasing digital investment opportunities should exercise caution and participate “responsibly”, Minister for Communications and Information Josephine Teo said Jan 11.

Singapore’s desire to protect its public from crypto trading has echoes in its policy for its two casinos, which have been a big economic success but came with concerns its people would be affected by gambling. In response, the government charges a S$150 (US$111) daily entry fee for citizens and permanent residents, while foreigners get in for free.

To be sure, not everyone is positive about Singapore’s crypto strategy.

“When Binance left, it became a statement that Singapore doesn’t welcome the big boys,” said Anndy Lian, the chairman of cryptocurrency bourse BigONE Exchange. “Many people are going for Dubai, because they see Singapore as not welcoming, and don’t know the real reasons behind that.”

Binance itself has turned to the Middle East, signing a cooperation agreement with the Dubai World Trade Centre Authority last month on the emirate’s planned virtual asset ecosystem. It also got in-principle approval from Bahrain’s central bank to be a crypto-asset service provider in the kingdom. And it appointed Richard Teng, a high-profile hire who joined Binance’s Singapore affiliate as its CEO in August, as the global entity’s head of the Middle East and North Africa.

Meanwhile, back in Singapore, a billboard for Crypto.com shouted its message in bold at a busy crossing on the Orchard Road shopping belt. “Fortune favours the brave,” it declared.

That may be true, or it may also favour the cautious. For Huobi Singapore CEO Edward Chen, the key is to get the mix just right.

“It is important to find the right balance between regulation and mitigating risks while still maintaining a competitive edge,” Chen said.

 

Original Source: https://www.theedgemarkets.com/article/singapores-wary-crypto-embrace-leaves-top-mogul-cold

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 Chairman, Asia for BigONE Exchange and Chief Digital Advisor, Mongolia Productivity Organisation. Anndy is part of the Gyeongsangbuk-do Blockchain Special Committee, Government of Republic Korea, together with industry experts such as Brock Pierce. 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 and was previously the Advisory Board Member of Hyundai DAC Technology.

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”.

You can read more about Anndy’s work at www.anndy.com

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Anndy Lian Shares His Views with Cointelegraph: Crypto Exchanges Speak Out as Binance Takes CoinMarketCap’s Top Spot

Anndy Lian Shares His Views with Cointelegraph: Crypto Exchanges Speak Out as Binance Takes CoinMarketCap’s Top Spot

Always happy to share my thoughts with my media friends and people in the business. This time round I have the chance to speak to Joseph Birch where I gave him my comments on how I felt about the Binance taking CoinMarketCap’s top spot. The is the part of what I have told him.

Anndy Lian — a blockchain advisor, investor and prolific Twitter commentator — told Cointelegraph that while an exchange owning a rating platform is far from perfect, there are potential benefits to be had if good corporate governance and firm regulations are in place:

“Take Binance for example, people will start to gossip that Binance is on top of the charts because they are the owners. But is this true, we are not sure. I believe as well, if there are proper compliance and governance and also arm length relationship would be good enough too for this example for Binance and Coinmarketcap. They have to properly address this to all the stakeholders to assure them of the independence between the 2 companies. They can also look at having all the data is stored in a decentralised platform to ensure data integrity.”

You can read the whole article below or go to Cointelegraph to read this and many other articles.

Read More

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 Chairman, Asia for BigONE Exchange and Chief Digital Advisor, Mongolia Productivity Organisation. Anndy is part of the Gyeongsangbuk-do Blockchain Special Committee, Government of Republic Korea, together with industry experts such as Brock Pierce. 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 and was previously the Advisory Board Member of Hyundai DAC Technology.

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”.

You can read more about Anndy’s work at www.anndy.com

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