Day: April 2, 2024

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The Monetary Authority of Singapore (MAS) is broadening its regulatory framework for crypto service providers through amendments to the Payment Services Act, aiming to enhance user protection and safeguard financial stability.

Announced on Tuesday, the amendments will be implemented in stages, starting from April 4. The MAS emphasized that these changes will encompass custodial services for digital payment tokens (DPTs), facilitation of DPT transmission, and cross-border money transfers, even in cases where funds are not received in Singapore.

Under the amended regulations, the MAS will have the authority to impose requirements related to anti-money laundering (AML), countering the financing of terrorism (CFT), user protection, and financial stability on DPT service providers.

Transitional arrangements will be provided for entities affected by the expanded regulatory scope. However, affected entities must notify the regulator within 30 days and submit a license application within six months from April 4.

According to Angela Ang, a senior policy advisor at blockchain intelligence firm TRM Labs and former MAS regulator, this expansion brings long-awaited regulatory clarity to crypto custody players in Singapore.

Kelvin Low, a law professor at the National University of Singapore, remarked that these changes were anticipated and unlikely to surprise industry players. He suggested that any decisions by crypto exchanges or firms to exit Singapore due to these changes would have been made well in advance.

In addition to regulatory amendments, the MAS released guidelines outlining consumer protection measures that DPT service providers must adhere to under the Payment Services Act. These measures include segregating customer assets, maintaining proper books and records, and ensuring the security and integrity of customer assets. The guideline is slated to come into effect on October 4.

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Crypto.com is set to introduce its digital asset trading services in South Korea by the end of this month, as announced on Tuesday. This move comes as part of Crypto.com’s acquisition of local exchange OK-BIT in 2022.

The forthcoming platform from Crypto.com will replace the operations of OK-BIT, which is gradually winding down its services. Eric Anziani, President and COO of Crypto.com, expressed excitement about entering the South Korean market, emphasizing its significance for the company’s growth and the keen interest of South Korean consumers in crypto.

The South Korean trading platform Crypto.com will adhere to strict regulations set by local authorities for crypto exchanges. Operating under the name Crypto.com App, the platform will enable South Korean retail investors to engage in cryptocurrency and non-fungible token (NFT) trading. However, institutional clients will not be served, as South Korean-based institutions are restricted from direct crypto investments.

Furthermore, South Korea mandates that local crypto exchanges establish banking partnerships to offer fiat-to-crypto trading services, aiming to mitigate risks related to money laundering and market manipulation. While Crypto.com’s initial services will focus on crypto-to-crypto exchange, the company aims to secure a local bank partnership to provide a comprehensive trading experience, according to South Korean news agency News1.

In a parallel development, Binance made its entry into the South Korean market last year by acquiring a majority stake in local exchange Gopax. However, regulatory concerns surrounding Binance’s legal issues in the U.S. have led to delays in approving structural changes to Gopax. Binance has been actively seeking to address compliance issues by reducing its shares in Gopax and engaging in discussions with financial regulators in South Korea.

South Korea boasts one of the world’s largest and most active cryptocurrency markets, with its five fully licensed exchanges—Upbit, Bithumb, Coinone, Korbit, and Gopax—processing nearly $3 billion worth of crypto transactions in the past 24 hours, according to CoinGecko data. During the peak of Bitcoin’s price surge earlier this year, South Korea’s crypto trade volume briefly surpassed that of its stock market.

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Spot Bitcoin exchange-traded funds (ETFs) witnessed a significant surge in trading volume in March, reaching a staggering $111 billion. This notable increase, nearly tripling the trading volume from February, underscores the sustained interest of investors in BTC.

According to data provided by Bloomberg ETF analyst Eric Balchunas, spot Bitcoin ETF trading volume soared to $111 billion in March, compared to the $42.2 billion recorded in February. The remarkable performance in March reinforces the growing appeal of spot Bitcoin ETFs among investors.

BlackRock’s Bitcoin ETF, IBIT, continues to dominate the market share in trading volume, followed closely by Grayscale’s GBTC and Fidelity’s FBTC. Balchunas highlighted IBIT’s growing dominance, surpassing GBTC in market share, and likened it to the “GLD of Bitcoin.”

On April 1, cumulative spot Bitcoin ETFs experienced net outflows totaling $86 million, with Grayscale’s GBTC witnessing significant outflows of $302.6 million. Conversely, BlackRock’s IBIT ETF saw inflows of $165.9 million, while Fidelity’s FBTC recorded inflows of $44 million.

BlackRock and Fidelity’s spot Bitcoin ETFs amassed approximately $18 billion and $10 billion, respectively, in assets under management last month and have proven to be the most successful in terms of inflows.

However, Grayscale’s GBTC has faced substantial outflows, surpassing $15 billion in total outflows after experiencing over $300 million in outflows on April 1. GBTC’s assets under management have plummeted by 46% to $22 million, according to data from Coinglass.

Spot Bitcoin ETFs have significantly impacted the BTC markets, contributing to a surge to new all-time highs in March. Market participants anticipate a new market cycle fueled by the success of ETFs and the upcoming Bitcoin supply halving, which is less than 20 days away.

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Volatility in the cryptocurrency market has triggered liquidations surpassing $400 million in the past 24 hours. Bitcoin positions alone accounted for $130 million in liquidations, predominantly affecting long positions.

The recent volatility in the crypto market led to a surge in liquidations on centralized exchanges, coinciding with Bitcoin’s decline below the $67,000 mark, followed by a broader downturn across the crypto space.

According to data from CoinGlass, liquidations totaling over $427 million were recorded across various centralized crypto exchanges in the past day, with the majority, approximately $342 million, stemming from long positions.

Bitcoin bore the brunt of the liquidations, with over $130 million in liquidations within the same period, of which $90 million represented long positions.

Liquidations occur when a trader’s position is forcibly closed due to insufficient funds to cover losses, typically resulting from adverse market movements depleting initial margin or collateral.

The cascade of liquidations coincided with Bitcoin’s drop below $67,000, having traded above $71,000 the previous day. The largest cryptocurrency by market capitalization has seen a decrease of over 4.2% in the last 24 hours, currently hovering around $66,500.

Meanwhile, the GMCI 30 index, reflecting the top 30 cryptocurrencies, experienced a 6.8% decline to 143.40 over the past day, with the second-largest cryptocurrency, ether, plunging by 6.5% to $3,319.

Following the market downturn, analysts at crypto trading firm QCP Capital highlighted signals from the options market, indicating the liquidation spree led by large retail-heavy exchanges.

QCP analysts noted, “Once again, the options market provided an early signal to a sharp downside move, particularly the downside skew in risk reversals.” They further emphasized the rapidity of the downturn, attributing it to significant liquidations on retail-heavy platforms like Binance, resulting in flat perp funding rates after reaching as high as 77%.

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Agora, a stablecoin issuer, has successfully raised $12 million in seed funding, according to reports. Leading the round is venture firm Dragonfly, with additional contributions from General Catalyst and Robot Ventures.

Agora’s primary objective is to introduce a USD-pegged stablecoin, backed by cash reserves, U.S. Treasury bills, and overnight repurchase agreements. The company aims to establish partnerships with exchanges and other crypto entities, initially targeting non-U.S. clientele.

Nick Van Eck, co-founder of Agora and son of Jan Van Eck, CEO of investment firm VanEck, will oversee the management of funds in Agora’s reserves, as reported by Bloomberg.

Despite strong competition in the USD-pegged stablecoin market, with Tether and Circle dominating a significant portion, Agora is poised to carve its niche. Tether holds 55.34% of the total Ethereum stablecoin supply, while Circle’s share comprises 30.61%, according to data from The Block’s Data Dashboard.

Notably, VanEck’s spot bitcoin exchange-traded fund HODL garnered significant attention following its approval on January 11. The ETF experienced a surge in volume, with a reported 1,000% increase in early February. On April 1 alone, HODL recorded $22.82 million in USD volume, indicating substantial investor interest.

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Ethena has initiated the claim process for its governance token (ENA) airdrop, allocating 750 million tokens, equivalent to 5% of its total supply of 15 billion, to eligible participants. The project has announced that the token will commence trading on various centralized exchanges, starting at 4:00 a.m. EST.

This airdrop follows the “shard campaign,” a reward initiative aimed at early adopters, allowing user engagement through referral links and rewarding them with shards (or points). The number of tokens allocated to each user is determined by the total shards accumulated by April 1.

Ethena Labs, the development firm behind the synthetic dollar project Ethena, also known as USDe, has been supportive of the stablecoin, referred to as an “Internet Bond” and a “synthetic dollar.” In February, Ethena Labs secured $14 million in a strategic funding round, valuing the project at $300 million. The funding round was co-led by Dragonfly and Maelstrom, the family office of BitMEX founder Arthur Hayes.

Unlike traditional stablecoins, USDe implements a distinctive mechanism that doesn’t rely on direct fiat or asset backing. Instead, it employs strategies such as hedging derivative positions against collateral held by the protocol and an arbitrage system for minting and redeeming USDe, aimed at maintaining its peg to the US dollar.

In essence, USDe utilizes methods like shorting ether futures and earning yield through staking with Ethereum validators to generate a protocol yield, which is then shared with stablecoin holders.

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Bitcoin plunged by $5,000 within a span of 24 hours as interest rates surged, marking a turbulent start to April for cryptocurrencies and related stocks, especially mining stocks.

The flagship cryptocurrency, Bitcoin, experienced a more than 6% decline on Tuesday, dropping to $65,150.00, resulting in a two-day loss of around 7%, according to Coin Metrics. This decline followed a trading price of approximately $70,000 on Monday morning. The drop was attributed to data indicating growth in the manufacturing sector for the first time since September 2022, coupled with cooling investor bets on June rate cuts. Bitcoin is currently down about 11% from its all-time high reached on March 14.

Ether also faced a decline, losing 6% to trade at $3,240.27.

Concurrently, the 10-year U.S. Treasury yield reached its highest level of the year, while the U.S. dollar, which typically has an inverse relationship with bitcoin, hit its highest level in nearly five months.

The decline in Bitcoin’s price was possibly exacerbated by a large bitcoin holder, or “whale,” who transferred more than 4,000 bitcoin to the Bitfinex exchange late Monday night. Data from CryptoQuant indicates a spike in the exchange’s reserves, which typically signifies increased selling activity, aligning with the sudden drop in bitcoin’s price late Monday night.

Stocks associated with bitcoin’s performance also experienced declines. Cryptocurrency exchange Coinbase dropped 4%, while software provider MicroStrategy, which largely trades as a proxy for the price of bitcoin, lost nearly 7%. The largest mining stocks, Marathon Digital and Riot Platforms, experienced losses of 7% and 6%, respectively. CleanSpark, one of the best-performing miners this year, slid 6%.

The month of April could prove to be tumultuous for cryptocurrencies and related stocks, particularly mining stocks, as investors are eyeing the bitcoin halving event, which is set to slash the reward, and therefore revenue, of bitcoin miners in the second half of the month. While this event could negatively impact miners’ performance, historically it has set bitcoin up for rallies of 300% or more in the following months.

Despite the recent downturn, Bitcoin is still up 53% for the year 2024.

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