An illustration of bitcoin on Euro banknotes.

Nicolas Economou | NurPhoto via Getty Images

The extreme movements up and down are relatively common for bitcoin and are expected to continue.

"The only thing I can expect for sure is volatility," said David Yermack, a professor of finance at New York University Stern School of Business. "From day one, this has been a risky investment for people."

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Bitcoin has seen both astronomical growth over the last decade and major selloffs at various points in between. Although many bulls point to its past performance as a sign that the cryptocurrency will continue to surge in the future, that might not happen, according to Yermack.

"It's a purely speculative asset," he said, adding that while bitcoin has grown in popularity, it's still not considered a mainstream investment, meaning that many have little information about the asset.

"You should never invest in anything that you don't understand," said Yermack.

Financial experts generally advise that people looking to invest in bitcoin allocate a small amount of their portfolio that they'd be okay with losing entirely to the asset. The U.K.'s Financial Conduct Authority just issued a similar warning.

"People should only invest really what they're willing to lose," said Daniel Polotsky, CEO of CoinFlip, one of the largest bitcoin ATM companies in the U.S.

He added that people near retirement, those who will need the money they're investing near term or people who are looking to trade frequently to make a profit may want to reconsider bitcoin as an asset for those goals.

"Maybe there are more opportunities to make money because it's so volatile, but it can get very addicting very quickly to start trading back and forth," he said. "And, most of the people that do that lose money."

People should only invest really what they're willing to lose

Daniel Polotsky

CEO, CoinFlip

If you are going to assign part of your portfolio to a speculative asset like bitcoin, take a disciplined approach and impose rules for buying and selling, said David Sacco, an economics professor at the University of New Haven.

"You can get experience and not blow yourself up in the process," he said.

There are also potential ways to invest in the idea of cryptocurrency without putting money directly into an asset as volatile as bitcoin, according to Yermack. That could mean investing in large technology companies utilizing Blockchain such as IBM or media companies with their own digital currencies, such as Facebook.

In addition, Coinbase, the largest U.S. cryptocurrency exchange, recently filed for an initial public offering, meaning it could be available to retail traders in the future.

To be sure, there are many bulls who see bitcoin exploding in value in the future as adoption continues and more large institutional investors buy into cryptocurrency.

To those determined to hold bitcoin for the long run, the most recent selloff after hitting a record high is not a huge concern.

"This is definitely to be expected," said Polotsky, adding that he expects bitcoin to continue to climb in the future and sees the recent dip as a potential buying opportunity for those that expect to hold the asset long-term.

"I think today we saw some profit taking investors liquidating, but if you're a bitcoin bull and you have a long-time preference, you know that corrections are normal," said Harry Alford, co-founder of Humble Ventures, on "Squawk on the Street" Monday.

He's not fazed by the recent selloff, he added, and believes that cryptocurrency can lead to financial freedom for Black Americans or other groups. "We're going to see a lot of skepticism turn into curiosity," he said.

Those who want to invest in bitcoin should assess where they stand with other personal finance and investing goals to determine if they have some extra money to put into a risky asset.

If you do, then it's fine to put some money in bitcoin, and to buy on a day when it's down, said Anjali Jariwala, a certified financial planner and CPA and founder of Fit Advisors in Torrance, California.

"Throw some money into it and kind of let it stay in there and season for a while," she said. "Just so you're not making decisions every time there's a fluctuation in price, which at this point happens every few days."

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Bitcoin's roller-coaster ride shows why people should be cautious before investing in cryptocurrency - CNBC

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Stefan Thomas, a German-born programmer living in San Francisco, has two guesses left to figure out a password that is worth, as of this week, about $220 million.

The password will let him unlock a small hard drive, known as an IronKey, which contains the private keys to a digital wallet that holds 7,002 Bitcoin. While the price of Bitcoin dropped sharply on Monday, it is still up more than 50 percent from just a month ago, when it passed its previous all-time high of around $20,000.

The problem is that Mr. Thomas years ago lost the paper where he wrote down the password for his IronKey, which gives users 10 guesses before it seizes up and encrypts its contents forever. He has since tried eight of his most commonly used password formulations to no avail.

I would just lay in bed and think about it, Mr. Thomas said. Then I would go to the computer with some new strategy, and it wouldnt work, and I would be desperate again.

Bitcoin, which has been on an extraordinary and volatile eight-month run, has made a lot of its holders very rich in a short time, even as the coronavirus pandemic has ravaged the world economy.

But the cryptocurrencys unusual nature has also meant that many people are locked out of their Bitcoin fortunes as a result of lost or forgotten keys. They have been forced to watch, helpless, as the price has risen and fallen sharply, unable to cash in on their digital wealth.

Of the existing 18.5 million Bitcoin, around 20 percent currently worth around $140 billion appear to be in lost or otherwise stranded wallets, according to the cryptocurrency data firm Chainalysis. Wallet Recovery Services, a business that helps find lost digital keys, said it had gotten 70 requests a day from people who wanted help recovering their riches, three times the number of a month ago.

Bitcoin owners who are locked out of their wallets speak of endless days and nights of frustration as they have tried to get access to their fortunes. Many have owned the coins since Bitcoins early days a decade ago, when no one had confidence that the tokens would be worth anything.

Through the years I would say I have spent hundreds of hours trying to get back into these wallets, said Brad Yasar, an entrepreneur in Los Angeles who has a few desktop computers that contain thousands of Bitcoin he created, or mined, during the early days of the technology. While those Bitcoin are now worth hundreds of millions of dollars, he lost his passwords many years ago and has put the hard drives containing them in vacuum-sealed bags, out of sight.

I dont want to be reminded every day that what I have now is a fraction of what I could have that I lost, he said.

The dilemma is a stark reminder of Bitcoins unusual technological underpinnings, which set it apart from normal money and give it some of its most vaunted and riskiest qualities. With traditional bank accounts and online wallets, banks like Wells Fargo and other financial companies like PayPal can provide people the passwords to their accounts or reset lost passwords.

But Bitcoin has no company to provide or store passwords. The virtual currencys creator, a shadowy figure known as Satoshi Nakamoto, has said Bitcoins central idea was to allow anyone in the world to open a digital bank account and hold the money in a way that no government could prevent or regulate.

This is made possible by the structure of Bitcoin, which is governed by a network of computers that agreed to follow software containing all the rules for the cryptocurrency. The software includes a complex algorithm that makes it possible to create an address, and associated private key, which is known only by the person who created the wallet.

The software also allows the Bitcoin network to confirm the accuracy of the password to allow transactions, without seeing or knowing the password itself. In short, the system makes it possible for anyone to create a Bitcoin wallet without having to register with a financial institution or go through any sort of identity check.

That has made Bitcoin popular with criminals, who can use the money without revealing their identity. It has also attracted people in countries like China and Venezuela, where authoritarian governments are known for raiding or shutting down traditional bank accounts.

But the structure of this system did not account for just how bad people can be at remembering and securing their passwords.

Even sophisticated investors have been completely incapable of doing any kind of management of private keys, said Diogo Monica, a co-founder of a start-up called Anchorage, which helps companies handle cryptocurrency security. Mr. Monica started the company in 2017 after helping a hedge fund regain access to one of its Bitcoin wallets.

Mr. Thomas, the programmer, said he was drawn to Bitcoin partly because it was outside the control of a country or company. In 2011, when he was living in Switzerland, he was given the 7,002 Bitcoin by an early Bitcoin fanatic as a reward for making an animated video, What is Bitcoin?, which introduced many people to the technology.

That year, he lost the digital keys to the wallet holding the Bitcoin. Since then, as Bitcoins value has soared and fallen and he could not get his hands on the money, Mr. Thomas has soured on the idea that people should be their own bank and hold their own money.

This whole idea of being your own bank let me put it this way: Do you make your own shoes? he said. The reason we have banks is that we dont want to deal with all those things that banks do.

Other Bitcoin believers have also realized the difficulties of being their own bank. Some have outsourced the work of holding Bitcoin to start-ups and exchanges that secure the private keys to peoples stashes of the virtual currency.

Yet some of these services have had just as much trouble securing their keys. Many of the largest Bitcoin exchanges over the years including the onetime well-known exchange Mt. Gox have lost private keys or had them stolen.

Gabriel Abed, 34, an entrepreneur from Barbados, lost around 800 Bitcoin now worth around $25 million when a colleague reformatted a laptop that contained the private keys to a Bitcoin wallet in 2011.

Mr. Abed said this did not dim his enthusiasm. Before Bitcoin, he said, he and his fellow islanders had not had access to affordable digital financial products like the credit cards and bank accounts that are easily available to Americans. In Barbados, even getting a PayPal account was almost impossible, he said. The open nature of Bitcoin, he said, gave him full access to the digital financial world for the first time.

The risk of being my own bank comes with the reward of being able to freely access my money and be a citizen of the world that is worth it, Mr. Abed said.

For Mr. Abed and Mr. Thomas, any losses from mishandling the private keys have partly been assuaged by the enormous gains they have made on the Bitcoin they managed to hold on to. The 800 Bitcoin Mr. Abed lost in 2011 were a small fraction of the tokens he has since bought and sold, allowing him to recently buy a 100-acre plot of oceanfront land in Barbados for over $25 million.

Mr. Thomas said he also managed to hold on to enough Bitcoin and remember the passwords to give him more riches than he knows what to do with. In 2012, he joined a cryptocurrency start-up, Ripple, that aimed to improve on Bitcoin. He was rewarded with Ripples own native currency, known as XRP, which rose in value.

(Ripple has recently run into legal troubles, in part because the founders had too much control over the creation and distribution of the XRP coins.)

As for his lost password and inaccessible Bitcoin, Mr. Thomas has put the IronKey in a secure facility he wont say where in case cryptographers come up with new ways of cracking complex passwords. Keeping it far away helps him try not to think about it, he said.

I got to a point where I said to myself, Let it be in the past, just for your own mental health, he said.

Read more here:
Lost Passwords Lock Millionaires Out of Their Bitcoin Fortunes - The New York Times

The U.K. Treasury has released a consultation paper to gather feedback from stakeholders concerning the governments regulatory approach to cryptocurrencies and stablecoins.

The consultation solicits opinions on how the U.K. can make sure its regulatory framework is equipped to harness the benefits of new technologies, supporting innovation and competition, while mitigating risks to consumers and stability, and incorporates advice from the Cryptoassets Task Force.

With a large proportion of crypto assets falling outside regulatory oversight, the Treasury says they may pose a risk to consumers and lack financial safeguards.

The U.K. is planning a a staged and proportionate approach to new crypto asset developments, taking a focus in the paper on stablecoins cryptocurrencies that generally aim to have a stable value by being backed by assets such as the U.S. dollar.

[T]he landscape is changing rapidly. So-called stablecoins could pave the way for faster, cheaper payments, making it easier for people to pay for things or store their money. There is also increasing evidence that [distributed ledger technology] could have significant benefits for capital markets, potentially fundamentally changing the way they operate, said John Glen, M.P., the Treasurys economic secretary, said in the papers introduction.

However, he said, such developments could pose a range of risks to consumers and, depending on their uptake, to the stability of the financial system.

The consultation focuses particularly on developing a sound regulatory environment for stablecoins, which the U.K. government considers have most urgent risks and opportunities.

Since the announcement of the Facebook-backed libra project (now rebranded as diem), regulators and governments worldwide have raised concerns over the potential effects of so-called global stablecoins on financial stability and even monetary sovereignty.

The U.K.s Financial Conduct Authority has already issued guidance on crypto assets including exchange tokens like bitcoin, ether and XRP setting out which do and dont fall under its jurisdiction in July 2019.

This new consultation will focus on the roles of crypto assets and stablecoins in payments and investment, as well as the use of blockchain or distributed ledger technology in financial markets. It will also look at additional regulatory actions that might be required in the space.

The paper marks the second Treasury-led crypto consultation. The first, announced last summer and concluded in October, set out plans to increase oversight into cryptocurrency promotions in order to protect investors. The results will be published in due course, the Treasury said in the new paper.

The FCA recently banned the sale of derivatives and exchange-traded notes, saying it considers the products to be ill-suited for retail consumers due to the potential harm they pose.

Responses to the consultation paper are being accepted until March 21.

Read more from the original source:
UK Treasury Calls for Feedback on Approach to Cryptocurrency and Stablecoin Regulation - CoinDesk - CoinDesk

Cybercriminals robbed victims of almost US$4 billion across 122 attacks against cryptocurrency platforms and holdings last year, according to a recent report.

Attacks against blockchain wallets earnt hackers an average of $112 million per breach (Credit: pixabay, Creative Commons Licence)Atlas VPN, a virtual private network provider, said on Tuesday that the overwhelming majority of these losses stemmed from attacks against blockchain wallets digital resources that allow users to store and manage cryptocurrency with hackers netting a total of $3.03 billion at an average of $112.12 million per breach.

Cryptocurrency exchanges also proved key targets, with 28 breaches over the past twelve months resulting in $300 million worth of losses.

The global coronavirus pandemic has seen an explosion in illegal activity online, with the United Nations warning of an increase in internet-enabled criminality of more than 600% by the middle of last year, at an average rate of one attack taking place every 40 seconds.

Most notable had been the meteoric rise in the number of pandemic-related phishing scams, leveraging pervasive fears among the public so as to extort money from victims, as well the increased incidence of malware attacks against public and private institutions alike.

Atlas VPN nevertheless noted in its report that the attacks against cryptocurrency platforms in 2020 had actually failed to top the record-breaking number observed in 2019.

The decline may owe to the sheer extent of attacks across the previous year, when 33 hacks were recorded in January alone, or perhaps the increased value of cryptocurrency, with growing investment online amid economic downturn, or even simply the growth in opportunities for internet-enabled criminality in other areas.

Continued here:
Cryptocurrency Hackers Steal $3.8 Billion in 2020 - OCCRP

And that has meant cryptocurrency startups too have caught investors attention. CoinSwitch Kuber, a cryptocurrency investment platform, is the latest startup to raise $15 million from Ribbit Capital and San-Francisco based crypto-focused investment firm Paradigm.

This marks Ribbit Capitals first investment in a cryptocurrency firm in India.

While the crypto landscape in India remains nascent, it has been an exciting past 12 months and over time we believe India could be one of the largest global crypto markets. Ashish and the CoinSwitch team have shown tremendous resilience and strong execution in a challenging market, giving us confidence in their potential to build a market leader in the years to come, said Matt Huang, Co-founder and Managing Partner at Paradigm and Arjun Balaji, Investment Partner at Paradigm in a statement.

The Series A funding round also saw participation from Sequoia Capital India and CRED founder Kunal Shah.

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Amid all the Bitcoin hype, another Indian cryptocurrency startup CoinSwitch Kuber gets $15 million in funding - Business Insider India

In the recent years, Singapore has emerged as a global hubin technologies such as cryptocurrencies and blockchain.Simultaneously, the Monetary Authority of Singapore, has beentaking steps to actively regulate cryptocurrency business inSingapore. In this piece, we look at the Singapore government'sattitude towards cryptocurrency businesses, the new cryptocurrencyregulation and licensing regime, and the challenges andopportunities facing cryptocurrency businesses inSingapore.

Singapore offers a balanced regulatory and legal environment forcryptocurrencies. The Monetary Authority of Singapore(MAS), Singapore's financial regulatory body,believes in regulating the cryptocurrency ecosystem to monitor anyrisks associated with crypto activities, such as money launderingand terrorist financing, while also ensuring that it doesn'tstifle innovation. The statement given by Singapore's DeputyPrime Minister Tharman Shanmugaratnam in an interview, mostaccurately sums up Singapore's attitude towardscryptocurrencies: "We will continue to encourageexperiments in the blockchain space that may involve the use ofcryptocurrencies. Some of these innovations could turn out to beeconomically or socially useful. But equally, we will stay alert tonew risks."1 In line withthis, MAS has been working towards regulating cryptocurrencyexchanges operating in Singapore. Simultaneously, MAS has alsoissued warnings to investors and the public of the risks ofinvesting in crypto products.2Singapore has also been experimenting with blockchain technologyfor development of cryptocurrency and digital payments.3 Under Project Ubin, MAS ispartnering with blockchain technology company and financialinstitutions to make inter-bank payments using blockchaintechnology.4

Legally, Singapore offers a neutral regime for the growth oftransactions involving cryptocurrency. Singapore law is commonlyused as the governing law in cryptocurrency related contractsbecause of its advanced dispute resolution laws, and a reputationfor being an arbitral friendly and neutral regime.5 In addition, cryptocurrencies arelegal in Singapore and therefore, any contract involvingcryptocurrencies would not be considered illegal.6 This has been the main reason forSingapore to have emerged as the cryptocurrency hub in Asia.

In January 2020, the Payment Services Act (PSA)came into effect to regulate traditional as well as cryptocurrencypayments and exchanges. The intention behind introducing PSA was tostreamline payment services under a single piece of legislation,and calibrate regulations according to the risks such activitiespose by adopting a modular regulatory regime.7 The PSA provides a framework toobtain license to operate cryptocurrency business in Singapore andoutlines money laundering compliances to be met by cryptocurrencyoperators. We discuss a few relevant provisions below:

(1) Digital payments token: The PSA uses theterm "digital payments token" to refer to virtualcurrencies and defines it as any digital representation of valuethat:

a. is expressed as a unit;

b. is not denominated in any currency, and is notpegged by its issuer to any currency;

c. is, or is intended to be, a medium of exchangeaccepted by the public, or a section of the public, as payment forgoods or services or for the discharge of a debt;

d. can be transferred, stored or traded electronically;and

e. satisfies such other characteristics as MAS mayprescribe.8

A few Digital Payments Token (DPT) recognizedby MAS includes Bitcoins and Ether. The PSA further recognizesdigital payment token service as dealing in digital payment tokensand facilitating the exchange of digital payment token.9

(2) License: Any person carrying out digitalpayment token service has to obtain a payment institution license,unless exemptions apply.10 Astandard payment institution license applies to companies withpayment transactions up to $3million per month and a major paymentinstitution license has to be obtained by companies with paymenttransactions which exceed $3million per month. An application forboth these licenses has to be made by a company incorporated inSingapore or overseas, has its permanent place of business orregistered office in Singapore; and has at least one executivedirector who is a Singapore citizen or a permanent resident or is aperson belonging to a class of persons prescribed by the MAS.11

(3) Anti-money laundering (AML)/Countering thefinancing of terrorism (CFT): MAS has released a separatenotice on AML/CFT guidelines for DPT service providers. As per theNotice, DPT service providers are required to set up robustcontrols to detect and prefect money laundering and terrorismfinancing.12 All DPT paymentservice providers have to implement certain measures as a part oftheir internal AML/CFT policy which includes:

a. customer due diligence by verifyingtheir identities and businesses;

b. monitoring of customers' transactions for signsof money laundering and terrorism financing;

c. screening of customers against relevantinternational sanctions list by the United Nations; and

d. maintain detailed records of customers activitiesand out in place a process to report suspicious transactions toMAS.13

MAS also made the Securities and Futures Act(SFA) applicable for public offerings or issues ofdigital tokens and in May 2020, released a new Guide to DigitalToken Offerings. Offers or issues of digital tokens to the public(Offer) will be regulated by MAS if the digitaltokens are "capital market products".14 Capital market products under theSFA include securities, units in a collective investment scheme,derivatives contracts and spot foreign exchange contracts forpurposes of leveraged foreign exchange trading.15 MAS will determine whether adigital token, its characteristics and the rights attached to it,is a type of capital markets products.16

(1) Prospectus requirements and exemptions: Any offerof digital tokens to the public which constitutes securities,17 securities-based derivativescontracts or units in a collective investment scheme, requirescompliance with all the requirements under the SFA includingpreparation of a prospectus in accordance with the SFA andregistration of the offer with MAS.18 However, an Offer may be exemptedfrom these requirements if:

a. the Offer is a small personal offer not exceedingSGD 5 million, within any 12 month period;

b. the Offer is a private placement offer made to notmore than 50 persons within any 12-month period;

c. the Offer is made only to institutional investors(as defined under the SFA);

d. the Offer is made only to accredited investors (asdefined under the SFA).19

(2) Approved exchanges: Only an approvedexchange or a recognized market operator can establish or operate amarket.20 Normally, digital tokensare issued by primary platforms, a platform on which one or moreofferors of digital tokens may make primary offers or issues ofdigital tokens.21 Typically,persons operating a primary platform has to obtain a license fromMAS.

(3) Capital market services license under the SFA: If aperson is operating a primary platform in Singapore in relation todigital tokens which constitutes "capital marketproducts", it will be considered as a "regulatedactivity" under the SFA. Any person carrying on a business inany regulated activity under the SFA requires a capital marketservices (CMS) license. Such a license will onlybe granted if the applicant, which must be a corporation, meetsminimum financial and other requirements as prescribed by theMAS.22 The SFA also providescertain exemptions from the requirement to hold capital marketsservices license.23

In July, 2020, MAS proposed the introduction of a new set ofregulations to govern the financial sector in Singapore, which willalso have impact on the cryptocurrency industry. The intentionbehind the proposed regulations is to protect Singaporeans fromunsuitable entities who can increase the risk associated withcrypto businesses and to clamp down on financial crime in thecrypto ecosystem.24 MAS mainlyintends to introduce new provisions for putting in place thefollowing:

(1) A harmonized andexpanded power to issue orders: MAS has the power to issueprohibition orders to bar persons from conducting certainactivities or holding key roles in financial institutions for acertain period, in cases of serious misconduct.25 However, MAS derives this poweronly from the DFA and the Financial Advisers Act(FAA). MAS cannot issue prohibition orders topersons regulated under other Acts. Therefore, the new proposedlegislation will allow MAS to issue prohibitory orders againstcrypto businesses in case of misconduct.26

(2) Anew Part to regulate virtual asset service providers forAML/CFT: MAS wants to introduce new standards toregulate virtual asset service providers on matters of moneylaundering and terrorism financing, based on the revisedinternational standards of the Financial Action Task Force, theglobal money laundering and terrorist financing watchdog.27 MAS also intends to haveregulatory oversight on entities based in Singapore conductingcrypto business outside of Singapore, for money laundering andterrorism financing related concerns.28

(3) A harmonised power to imposerequirements on technology risk management: MAS wantsto introduce a high maximum penalty for breaches of technology riskmanagement requirements.29 MASintends to introduce a power to issue directions to or makeregulations concerning any financial institution or class offinancial institution for management of technology risks, cybersecurity risks, deliverer of financial services and dataprotection.30

(4) Providing mediators, adjudicators andemployees of an operator of an approved dispute resolution schemewith statutory protection from liability: MAS wantsfinancial institutions to subscribe to a MAS approved disputeresolution scheme to provide the customers with an independent andaffordable avenue for resolving disputes.31

(1) Banking challenges: In the recent past,several start-ups operating cryptocurrency businesses in Singaporefaced operational issues with banks in Singapore. Banks ceaseddoing businesses with cryptocurrencies operators and arbitrarilyclosed their bank accounts.32Speculators believed that this was due to concerns surroundingmoney laundering and terrorism financing, especially due toincreasing initial coin offerings by cryptocurrency businesses,equivalent to initial public offerings in the crypto industry.33 However, to help boost its fintecheconomy, in 2018, MAS agreed to help crypto businesses set up bankaccounts in Singapore by strengthening crypto regulatory regime.34 As MAS started taking measures toregulate the cryptocurrency industry, few banks have startedallowing bank accounts to be opened by crypto businesses. Forinstance, Luno, a cryptocurrency exchange which halted itsactivities in 2017 owing to closure of its bank accounts, resumedoperations in Singapore towards the end of 2019 after its bankaccounts were opened.35 Havingsaid that, the woes of crypto businesses are far from over. Bankingcontinues to remain a challenge and different banks have differentapproaches. Businesses are subjected to extensive diligence beforethey are offered bank accounts, and many banks will outrightdecline such privilege to companies that have any touch points withcryptocurrency.

(2) Increased regulatory powers with MAS: Theproposed Omnibus Act gives MAS broad powers to issue prohibitionorders against crypto businesses and provides a high penalty forbreach technology risk management requirements. The enhancedregulatory powers with MAS may be a cause for concern for cryptobusinesses and especially start-ups looking for a more flexiblepenalty regime.

(3) Regulation of overseas crypto-firms: The biggestchange being proposed under the Omnibus Act is the regulation ofoverseas crypto businesses. This implies that virtual asset serviceproviders will have to ensure that their overseas operations meetthe same regulatory standards as their Singapore operations.36

(1) Crypto-friendly attitude: Singapore'scrypto-friendly attitude and flexible regulatory offers anenvironment to facilitate growth and innovation in the fintechindustry. MAS has been supportive of crypto start-ups and firmsexperimenting with cryptocurrency and blockchain technologies. Thisfriendly climate has been a magnet for several big cryptobusinesses from countries like Australia, Japan and China settingshop in Singapore.37

(2) Regulatory clarity and certainty: Stakeholders fromthe cryptocurrency industry welcomed some of the regulatory changesbrought by MAS, especially the licensing regime under the PSA.Major crypto businesses such as Japanese-based Liquid Group Inc.and London-based Luno have expressed their eagerness to apply for aMAS license, which offers regulatory clarity and certainty tocrypto businesses operating in Singapore.38

(3) Increased consumer confidence in licensedcrypto-operators: The licensing regime under the PSA will helpincrease consumer confidence in the crypto businesses operating inSingapore. Consumers will also be more comfortable in trustinglicensed crypto operators.

(4) Improved access to banking services: Thenew licensing regime under the PSA will facilitate easier access totraditional banking services to crypto businesses. In fact, theAssociation of Cryptocurrency Enterprises and Start-ups recentlyreleased a Code of Practice , under its Standardization of Practicein Crypto Entities (SPICE) initiative, with support from theAssociation of Banks in Singapore and the MAS to help cryptobusinesses apply for a license under the PSA.39 These measures will lead toincreased trust between crypto businesses and banks in Singapore,and improve their access to banking services.

(5) New AML/CFT provisions reduce risk of financialcrimes: The AML/CFT provisions under the PSA reduces the riskof financial crimes which can take place on a crypto platform. TheCode of Practice released by the Association of CryptocurrencyEnterprises and Start-ups also seeks to help crypto businesses putin place robust AML/CFT measures. The Code also promotes bestpractices, including Know-Your-Customer, to help crypto businessescomply with the new regulatory framework.40 While the regulatory regime isrisk-focused, it also offers a flexible framework for crypto-firmsto continue their businesses.

Footnotes

1. Bitcoin.com, No strongcase to ban crypto trading, Singapore says, 7 February, 2018,https://news.bitcoin.com/no-strong-case-to-ban-crypto-trading-singapore-says/.

2. Monetary Authority ofSingapore, Reply to Parliamentary Question on regulation of cryptoderivatives on Approved Exchanges, 6 January, 2020, https://www.mas.gov.sg/news/parliamentary-replies/2020/reply-to-parliamentary-question-on-regulation-of-crypto-derivatives-on-approved-exchanges.

3. Asia Times, Why Singaporeis emerging as global crypto leader, https://asiatimes.com/2020/10/why-singapore-is-emerging-as-global-crypto-leader/.

4. Coin Telegraph,Singapore's Government Blockchain Experiment is a Road toRegulatory Understanding, 20 February, 2018, https://cointelegraph.com/news/singapores-government-blockchain-experiment-is-a-road-to-regulatory-understanding.

5. Anthony Soh and Feei Sy Tham,Singapore: Why Singapore has become Asia's Cryptocurrencyand Blockchain Hub, 15 January, 2020, https://www.mondaq.com/fin-tech/883798/why-singapore-has-become-asia39s-cryptocurrency-and-blockchain-hub.

6. Id.

7. Han Ming Ho & JodephineLaw, Singapore, The Virtual Currency Regulation Review,Ed. 3, September 2020, https://thelawreviews.co.uk/edition/the-virtual-currency-regulation-review-edition-3/1230199/singapore.

8. Section 2, Payment ServicesAct, 2019, https://sso.agc.gov.sg/Acts-Supp/2-2019/Published/20190220?DocDate=20190220.

9. Part 3, First Schedule,Payment Services Act, 2019.

10. Section 5 and 6, PaymentServices Act, supra note 12.

11. Section 6, Payment ServicesAct, supra note 12.

12. Scorechain,Cryptocurrencies Regulatory Landscape in Singapore, https://blog.scorechain.com/cryptocurrencies-regulatory-landscape-in-singapore/.

13. Comply Advantage,Payment Services Act in Singapore, https://complyadvantage.com/knowledgebase/payment-services-act-singapore/.

14. Monetary Authority ofSingapore, A Guide to Digital Token Offerings, 26, May 2020, https://www.mas.gov.sg/-/media/MAS/Sectors/Guidance/Guide-to-Digital-Token-Offerings-26-May-2020.pdf.

15. Section 2(1), Securities andFutures Act, 2001, https://sso.agc.gov.sg/Act/SFA2001.

16. Id.

17. As defined under Section2(1) SFA, this includes: (a) debentures or stocks issued orproposed to be issued by a government; (b) debentures, stocks orshares issued or proposed to be issued by a corporation or bodyunincorporated; (c) any right, option or derivative in respect ofany such debentures, stocks or shares; (d) any right under acontract for differences or under any other contract the purpose orpretended purpose of which is to secure a profit or avoid a loss byreference to fluctuations in - (i) the value or price of any suchdebentures, stocks or shares; (ii) the value or price of any groupof any such debentures, stocks or shares; or (iii) an index of anysuch debentures, stocks or shares; (e) any unit in a collectiveinvestment scheme; (f) any unit in a business trust; (g) anyderivative of a unit in a business trust; or (h) such other productor class of products as the Authority mayprescribe.

18. Sections 240 and 296,Securities and Futures Act, supra note 19.

19. Sections 272A, 302C, 274,304 and 305, Securities and Futures Act, supra note19.

20. Section 6, Securities andFutures Act, supra note 20.

21. Monetary Authority ofSingapore, A Guide to Digital Token Offerings, supra note18, at 2.8.

22. Section 82, Securities andFutures Act, supra note 19.

23. Section 99, Securities andFutures Act, supra note 19.

24. Blockchain News, MASproposes new regulations to tighten crypto businessactivities, 22 July, 2020, https://blockchain.news/news/mas-proposes-new-regulations-tighten-crypto-business-activities.

25. Monetary Authority ofSingapore, Consultation Paper on a New Omnibus Act for theFinancial Sector, at 5, 21July, 2020, https://www.mas.gov.sg/-/media/MAS/News-and-Publications/Consultation-Papers/2020-July-Consultation-on-FSMA/Consultation-Paper-on-a-New-Omnibus-Act-for-the-Financial-Sector.pdf(hereafter, MAS, Consultation Paper on a New Omnibus Act forthe Financial Sector).

26. Id.

27. Id. at6.

28. MAS, Consultation Paperon a New Omnibus Act for the Financial Sector, supranote 29, at 10.

29. Id. at18.

30. Id.

31. Id. at19.

32. Bitcoin.com,Singapore-based Bitcoin Startups Deal with Bank AccountClosures, September 26, 2017, https://news.bitcoin.com/singapore-based-bitcoin-startups-deal-with-bank-account-closures/.

33. Id.

34. The Star, Singapore willhelp crypto firms set up local bank accounts, October 10,2018, https://www.thestar.com.my/business/business-news/2018/10/10/singapore-will-help-crypto-firms-set-up-local-bank-accounts.

35. The Business Times,Crypto firm Luno plans Singapore reboot after bank accountsopen, November 1, 2019, https://www.businesstimes.com.sg/banking-finance/crypto-firm-luno-plans-singapore-reboot-after-bank-accounts-opened.

36. Coindesk, Singapore mayextend crypto regulation to include overseas activities, 21July 2020, https://www.coindesk.com/singapore-mas-considers-extending-crypto-regulation-overseas-activities.

37. Lottie Wells, WhySingapore is Emerging as Global Crypto Leader, Asia Times,October 10, 2020, https://asiatimes.com/2020/10/why-singapore-is-emerging-as-global-crypto-leader/.

38. Bloomberg, New SingaporeLaw Allows Global Crypto Firms to Expand Locally, January 28,2020, https://www.bloomberg.com/news/articles/2020-01-27/singapore-launches-new-regime-for-cryptocurrency-payments-firms.

39. ACCESS, ACCESS rolls outCode of Practice to facilitate application of payment serviceprovider license under Singapore's Payment Services Act,August 13, 2020, https://www.access.org.sg/blogs/press-release/access-rolls-out-code-of-practice-to-facilitate-application-of-payment-service-provider-licence-under-singapore-s-payment-services-act.

40. Coindesk,Singapore's Central Bank backs new Code of Practice forcrypto companies, August 14, 2020, https://www.coindesk.com/singapores-central-bank-backs-new-code-of-practice-for-crypto-companies.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.

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Cryptocurrency Regulation In Singapore: Challenges And Opportunities Ahead - Technology - Singapore - Mondaq News Alerts

David Marcus, now head of Facebook Financial or F2, testifying about Facebook's proposed digital currency previously known as Libra, during a Senate Banking, House and Urban Affairs Committee hearing on Capitol Hill in Washington, DC, July 16, 2019. The cryptocurrency was renamed Diem in December 2020.

Saul Loeb | AFP | Getty Images

Facebook should be given the "benefit of the doubt" by regulators in its ambitions to launch the cryptocurrency it backs and its digital wallet, the head of the company's financial services arm said on Monday.

David Marcus, the head of Facebook Financial, also known as F2, said he hopes both the cryptocurrency called Diem and the social networking firm's wallet Novi will launch next year.

"I hope that we get to participate with Novi and Diem and the big changes of 2021, pending regulatory approvals where we need to obtain them," Marcus said at the Singapore FinTech Festival, addressing a question on the biggest changes for financial services in the year ahead.

Facebook's cryptocurrency project has been a rollercoaster since it was announced last year, facing huge criticism from regulators, a scaling down of ambitions and a rebrand.

The cryptocurrency was initially called Libra and was designed to be managed by a non-profit consortium consisting of several companies called the Libra Association. Facebook had planned to launch a wallet called Calibra that would allow users to send this cryptocurrency to each other.

One Libra coin was initially supposed to be backed by a basket of currencies. But regulators raised a number of concerns from the impact Libra could have on financial stability to issues over data privacy and money laundering.

In April, the Libra Association scaled back plans and said it wouldoffer stable coins backed by just one nation's currency, rather than a single coin backed by several currencies.

And last week, the Libra Association changed its name to the Diem Association. Earlier this year, Facebook changed the name of its digital wallet Calibra to Novi.

Last month, the Financial Times reported that the cryptocurrency Diem is preparing to launch as early as January, citing three people familiar with the matter.

The Diem Association is currently waiting for approval from the Swiss Financial Market Supervisory Authority as the organization is based in Switzerland, the FT reported.

Marcus was not asked about this report specifically during the course of the panel.

Though Diem is described as a cryptocurrency, it is not like bitcoin which is perhaps the most well-known digital coin. It has a central organization behind it, something that bitcoin doesn't. It is also backed by fiat currency, again a point of difference with bitcoin.

The Facebook executive implored regulators, which have heavily criticized the company's cryptocurrency efforts, to give Diem and Novi a chance.

"I don't think what we are asking for is just immediate trust. I think what we're asking for is at least to have the benefit of the doubt," Marcus said.

He argued that Facebook could have built the cryptocurrency in a "closed way" only making it available to users of WhatsApp and Messenger, two apps that the company owns. But instead, the social network has entered a consortium with other companies.

"I think you'd be hard-pressed to find any company that has done this in recent history of actually building something, investing considerable amount of resources into it, and then saying ok, we are going to relinquish our power here and we are going to try to make it as open ecosystem as it can be and basically tie one or both hands in our backs when it comes to enabling competition on the very thing that we've created," Marcus said.

"I think all of those things that we've done which has created all kinds of complications in the execution of this vision is I think a good reason to give us the benefit of the doubt in terms of our intentions and what we plan to do here."

The push to launch Diem and Novi comes at a time when central banks are also exploring their own digital currencies. China has already begun some real-world trials of a digital yuan.

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Facebook hopes the cryptocurrency it backs will launch in 2021, top exec says - CNBC

Last year, when Facebook officials were hauled in front of Congress to defend their plans for a cryptocurrency called Libra, they arrived with a pitch about financial inclusion. With Libra, people anywhere in the world would have access to a common payment network, they said, whether or not they had access to a bank. All it would take was a phone and a Facebook account.

Representative Rashida Tlaib, (DMichigan) a member of the squad of progressive first-term lawmakers, had heard similar pitches before. Her Detroit district, the third-poorest in the country, is populated with the very unbanked people Facebook executives were describing. In the past, they had been promised faster tax returns, paycheck advances, or check cashing without a checking account. But these offerings came with little regulation, and often with excessive fees or interest rates. Now, here was Libra, a cryptocurrency that also seemed poised to fall through the regulatory cracks, backed by an industry with a lot of power and data. She wondered if this was the next iteration.

People dont realize that this is coming. I feel like a mama bear, and I have to watch out for what is coming for my district and my neighborhood, Tlaib says. Thats why she wants to talk with you about a thing called stablecoins.

Not familiar? Eyes glazing? Its a bit niche, for now. Stablecoins are a form of digital currency that, as the name suggests, hold a constant value. Thats what Libra is, technically, but there are many other flavors. Stablecoins might be backed by an actual currency or a basket of assets, or they might use algorithmic tricks to hold steady, but the point is that their price in, say, dollars, doesnt change. Its a promise. Stablecoins were initially used to help with buying and selling volatile cryptocurrencies like bitcoin. But increasingly, some stablecoins, like Libra, have been proposed for more common uses, like paying for actual stuff. Thats because they can be fast, easy to use on phones, and are, well, stable.

I feel like a mama bear, and I have to watch out for what is coming for my district and my neighborhood.

Representative Rashida Tlaib (DMichigan)

The problem is that stablecoins are not much more familiar to members of Congress and regulators than they are to you and me. In the Facebook hearings last year, everyone seemed to want Libra to be regulated, but the unanswered question was how. So this week, Tlaib introduced a bill, cosponsored by representatives Stephen Lynch (DMassachusetts) and Chuy Garcia (DIllinois), that offers a possible solution: requiring stablecoins that promise a fixed value in US dollars to be issued by banks. That, the legislators argue, constitutes taking a deposit, which is something only banks can donot tech companies nor the associations they set up to issue coins on their behalf.

That logic takes aim squarely at Facebooks stablecoin plans. This year, while we were worrying over social distancing and reproduction values, Libra went through major changes. Instead of a global, borderless coin backed by a number of currencies and assets, its now proposed as a series of coins for different places: a coin for Europe denominated in euros, a coin for the United States denominated in dollars, and so on. Thats given some relief to central bankers who were concerned that Facebook's currency would compete with their ability to control the local money supply. Libra also abandoned a plan to eventually let anyone build services on its network, a feature that raised money laundering concerns, in favor of a closed system controlled by its official members.

Oh, and there were a few naming tweaks along the way. Facebooks Calibra division, which is designing the companys Libra wallet, now wants to be called Novi. And earlier this week, Libra itselfboth the currency and the association that issues itbecame Diem. Got that? Novi deals Diem. Think of it as an effort to assert the projects independence from Facebookthough, as a reminder, the company did come up with the idea, built most of the technology, set up the association with close allies, and will likely provide by far the most users for whatever coins are eventually issued.

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A Member of the Squad Takes on Cryptocurrency - WIRED

The top U.S. banking regulator has confirmed that positive cryptocurrency regulation is coming in a matter of weeks, by the end of the Trump term. Its going to work for everybody, said the regulator, adding that the new regulation will make it easier for crypto investors to know how to invest, therefore attracting more institutional investors.

Acting Comptroller of the Currency, Brian Brooks, answered some questions about the upcoming U.S. cryptocurrency regulation in an interview with CNBCs Squawk Box on Friday.

Brooks is the administrator of the federal banking system and chief officer of the Office of the Comptroller of the Currency (OCC). The OCC supervises nearly 1,200 national banks, federal savings associations, and federal branches of foreign banks that conduct approximately 70% of all banking business in the U.S.

Regarding the new U.S. cryptocurrency regulation, Brooks said: Were very focused on getting this right. We are very focused on not killing this, and it is equally important that we develop the networks behind bitcoin and other cryptos as it is we prevent money laundering and terrorism financing. He elaborated:

Believe me, there is a balance here and its going to work for everybody theres going to be very positive messages coming out.

Brooks answer was in response to a question about a rumor that the Treasury Department may be rushing out crypto regulation before the end of the Trump term. Coinbase CEO Brian Armstrong voiced his concerns on Twitter on Nov. 25. He wrote: We heard rumors that the U.S. Treasury and Secretary Mnuchin were planning to rush out some new regulation regarding self-hosted crypto wallets before the end of his term. Im concerned that this would have unintended side effects.

What we do need is clarity about what is allowed, and so we need some guidance for example whether banks can connect directly to blockchains as payment networks, the answer has to be yes, explained Brooks, who previously served as the chief legal officer at Coinbase. He emphasized that some aspects of the new regulation will provide clarity around the nature of crypto assets.

While noting that its a dangerous world out there, the top banking regulator stressed:

Nobody is going to ban bitcoin. Nobody is going to ban some of these transmission technologies so I think its going to be a lot less bad than than people worry about.

When asked about whether he believes more regulation will benefit the crypto industry, the OCC chief said: I dont think we need 50 regulations instead of two, but what we do need is clarity about whats allowed.

He continued: We need some guidance, for example, about whether banks can connect directly to blockchains as payment networks. The answer has to be yes We need the answers about can banks custody cryptocurrencies so that institutions feel comfortable adopting. And you saw what happened when we gave that clarity.

Brooks was specifically asked whether people should expect new U.S. crypto regulation by the end of the Trump term. I think youre going to see a lot of good news for crypto by the end of the Trump term, he replied, adding:

So you have clarity across a variety of areas that I think youll be seeing just in the next 6 8 weeks, which will make it easier for crypto investors to know how to invest, to know how institutions can be in this asset class.

Those are the things that are driving prices at this point, he opined. You know it may have been a bubble two years ago, but with more clarity, institutions that see this as a real thing are going to adopt at scale, which theyve already started to do. So stay tuned.

Do you think the new U.S. crypto regulation will benefit the crypto industry and bitcoins price? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Top US Banking Regulator Reveals Positive Cryptocurrency Regulation Coming in Weeks | Regulation - Bitcoin News

It may just be a coincidence, but Bitcoin emerged just a few months after the mighty Lehman Brothers filed for bankruptcy in September 2008, heralding the Wests Great Recession and eliciting a great gush of liquidity from central banks that sceptics saw as an overstretch of fiat money. The big flaw of a currency unbacked by any valuable, in their view, was its vulnerability to oversupply and thus eventual loss of purchasing power. Like gold, might value not be retained more reliably by a token-of- exchange whose scarcity was insulated from fallible human intervention? It is not clear exactly what motivated Bitcoin, a privately-created cryptocurrency based on blockchain technology that is reputed to have its supply restrained by its digital design, but its 2020 boom after the covid crisis began to spawn trillions of dollars of extra cash has been too spectacular to ignore. On Monday, it hit an all-time peak of $19,800 per unit, surpassing its previous high of 2017. It is up by 140% so far this year and could be headed higher still.

Bitcoins vertiginous rise is not difficult to explain. In essence, it reflects investor dissonance with frenetic cash creation by central banks, globally. While it does have a few rivals, this cryptocurrency appears to have the pioneers advantage. It is seen not only as a reliable store of wealthperhaps in the same league as goldbut also as a hedge against the inflationary risks of monetary-easing policies that may have gone overboard, as some seem to suspect. With economies reeling under the pandemics fallout on commercial activity, risk-free bonds offering negligible returns (if any), and so much investment money chasing so few safe assets, it was perhaps inevitable that Bitcoin would attract large sums. Its value hinges on its much-touted supply limit. Its software rules are said to specify that only 21 million coins will ever be minted, with a widely-accessible online ledger keeping account. New units of it need to be mined" digitally, a long process that devours electricity and requires e-puzzles to be cracked. Given the claimed cap on Bitcoins final count, its minting rate has been set for a terminal decline: the number that miners can win halves every four years. This last happened in May, when the pace of tokens entering circulation fell to 6.25 every 10 minutes from 12.5.

The Bitcoin phenomenon may have ridden its way up on investor conservatism at the very opposite end of modern monetary theory", by which money can limitlessly be issued until inflation breaks out, but central banks may be forced to reckon with it soon. While their initial response ranged from dismissal to denouncement, it now seems here to stay. Yet, its success should dismay us. Like gold, it serves no clear productive purpose. It is used by shady operators on the dark web, remains highly volatile, and has highly concentrated holdings. It could plausibly stay this way till 2140, when the last token is scheduled for mining. But, as Indias apex court ruled, there is no reason to ban the buying and selling of cryptocurrency. Central banks, however, may need to be more vigilant of their currencies real value, especially as Facebook seeks the approval of Swiss authorities for Libra, a stablecoin" backed by the US dollar that it expects to launch in January. They may want to launch virtual money of their own, as the European Central Bank and others have proposed. What seems at stake here is the future of money, sovereign control over which is considered integral to economic management. But let regulation not scotch innovation.

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Bitcoins corona boom and the future of money - Mint