The ambitious crypto sector of Singapore is the Asia-Pacific’s largest one by a few measures. It faced one uncertain future after the Three Arrows Capital’s current collapse. This crypto fund’s fall is a high-end causality of the worldwide digital asset downturn.
Cryptocurrency players of the financial hub in Southeast Asia have started to brace for more bankruptcies and legal battles. They expect that regulators at MAS may be becoming less accommodating. These regulators have a welcoming approach. It helped to attract firms from China, India, and other countries. So, if you are a trader, it is important to know Which Cryptocurrency Platform Is Better?
After current events, it looks like the MAS will be getting stringent on cryptocurrency and digital currencies. Investment in cryptocurrency and blockchain organizations in Singapore increased to nearly $1.48 billion last year. It has been ten times in the past year and almost half the total of Asia Pacific for 2021.
At MAS all regulators said that they have a hope of motivating cryptocurrency-related services. It is a sharp contrast with the ban on China. A cryptocurrency tax in India has crippled crypto trading apart from incoming Hong Kong rules that restricted cryptocurrency investing to many professionals.
More than 150 crypto companies have applied for the latest crypto payments license in 2020 from the MAS.
But so far only a handful received one. Yet the picture grew murky with Three Arrows Capital’s collapse. They began proceedings of liquidation in the British Virgin Islands on 27th June. All court filings showed it. It was after the worldwide downturn in digital assets left it unable to meet many dollars in obligations.
The current scenario in the sector
Three Arrows Capital never responded to one request for comment. Its liquidators told a bankruptcy court in the U.S. that they can never locate the founders, Zhu Su and Kyle Davies. The collapse of Three Arrows Capital created a ripple effect. This along with subsequent market chaos was swift and very severe. Vault, the Singapore–based cryptocurrency lending and trading platform said that it would be suspending withdrawals. The next day a rival cryptocurrency lender said that it planned to acquire the company.
Mirana, another fund, was seen to sue Three Arrows Capital in Singapore over one loan agreement. Local media mainly reported it. They cited court filings unavailable publicly. Yet Mirana never replied to any request for comments.
In the US, Voyager Digital, a crypto lender filed for bankruptcy a few days after Three Arrows Capital defaulted on one crypto loan priced at $650 million that was owed. Some cryptocurrency exchanges such as Genesis as well as Blockchain.com have disclosed losses on all dealings with Three Arrows Capital.
Rese Kehoe is the managing director of Kroll’s restructuring practice in Singapore. She said in the coming weeks it is expected that crypto-related businesses that face liquidity issues will use the mechanism of Singapore. It will be for court protection of firms to restructure.
They will keep on seeing cryptocurrency markets worldwide being affected by the contagion impact of current market events. It included a major crypto hub in Singapore.
Players of the crypto sector are wary of how regulators of Singapore may react. If Singapore finally decides to take a better approach toward crypto businesses later, other countries in Southeast Asia may follow suit. It may open up a gap for Hong Kong to step into space more meaningfully.
MAS never commented on this matter. On 30th June it issued one rare public reprimand to Three Arrows Capital to breach fund rules. It added that it was investigating the firm on prospective further breaches.
MAS wished to send one signal to the crypto industry. They were eager to inform us that Three Arrows Capital was already on their watch list. Such misdemeanors will normally get handled with a private wrap upon the knuckles.
The main question is if the MAS is going to be even more draconian in its approach toward the cryptocurrency industry. New rules in crypto borrowing, as well as lending, got identified. It was one regulatory focus.
Similar to regulators elsewhere, MAS indicated that it will be taking a tough stand on consumer protection and money laundering. Also, other risks are associated with the sector of digital currency.
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