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Singapore Tells Binance to Halt Service in Latest Crypto Hit

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Binance Holdings Ltd. must stop offering services regulated in Singapore after a potential breach of local payment rules, adding to a mounting list of jurisdictions scrutinizing the world’s largest cryptocurrency exchange.

Binance may be in breach of the Payments Services Act for providing payment services to, and soliciting business from Singapore residents without an appropriate license, the Monetary Authority of Singapore said Thursday, in response to questions from Bloomberg.

As Binance didn’t apply for a license under local law, the MAS has added Binance.com to the investor alert list, which warns consumers that Binance isn’t regulated or licensed to provide any payment services locally.

The Singapore regulator’s warning marks the latest blow for Binance, which has grown quickly since its 2017 debut and doesn’t have a global headquarters. While Binance has also drawn scrutiny from regulators in the U.S., the U.K., Thailand, Malaysia and Japan, many crypto bulls say tougher frameworks are a sign of market maturity offering more protection for investors that could lure more money to digital assets.

‘Holistic View’

“MAS is likely to take a holistic view on the application and consider the fact that Binance (global) has been put on the investor alert list,” said Nizam Ismail, founder of Ethikom Consultancy, a Singapore-based consultant, which advises firms on compliance and regulation. “Binance (global) would have to show that it has remediated any shortcomings and that it will not, going forward, solicit trades from Singapore resident customers.”

Binance Holdings, which operates globally, has local affiliates in some countries like the U.S. and U.K. — and in Singapore, with Binance Asia Services, which operates Binance.sg. BAS recently submitted a license application and is currently exempted from holding a license for the provision of digital payment token services, according to the MAS. That application remains under review.

The company’s Singapore operations are conducted by a separate legal entity from Binance.com, with its own local executive and management team, and does not offer any products or services via the Binance.com website or other related entities, and vice versa, Binance Singapore said in an emailed reply to Bloomberg.

That entity earned S$645,291 ($480,840) in revenue for the financial year ending March 2020, compared with zero during the previous year, according to a filing to the Accounting and Corporate Regulatory Authority.

Singapore isn’t the first country to take action against Binance. The U.K. banned the exchange from doing regulated business in Britain and Japan’s Financial Services Agency has warned it’s operating without registration. In the U.S., Bloomberg reported it has been the subject of a probe by the Securities and Exchange Commission.

MAS has been engaging BAS and expects the firm to immediately begin an orderly suspension of its facilitation of transfers of digital payment token assets between BAS and Binance, according to the regulator. The Singapore unit of Binance will inform its customers of the appropriate arrangements as soon as practicable, according to MAS.

Binance CEO Zhao Changpeng, a Canadian citizen, resides in Singapore and is the majority shareholder of Binance Asia Services, according to ACRA. Temasek Holdings Pte.’s Vertex Venture Holdings Ltd. is an investor in Binance Asia.

The company recently hired Richard Teng, the former regulator who spent two decades at the MAS and Singapore Exchange Ltd., to lead its Singapore entity. Teng’s appointment follows comments from Zhao who said Binance would establish multiple headquarters globally and is looking for regional CEOs — as well as, potentially, his successor — with compliance experience a big focus in the selection process.

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Coinbase Bonds Fall Again After China Bans Cryptocurrency

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Coinbase Global Inc.’s debut junk-bond sale fell to fresh lows after the Chinese government banned all crypto transactions and vowed to stop illegal crypto mining.

Paper losses for investors that bought the two tranches of notes at par now stand at roughly $100 million.

The $1 billion 10-year 3.625% bonds dropped more than 1.5 points overnight to 94.5 cents on the dollar, while the $1 billion seven-year 3.375% notes fell more than a point to 95.5 cents, according to Trace bond pricing data.

Coinbase’s bonds had already whipsawed since pricing on Sept. 14 as markets traded down over fears that the Evergrande contagion could affect global markets, and after dropping plans to launch a new crypto lending platform after the U.S. Securities and Exchange Commission raised concerns over the plan.

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Here is Why Cryptocurrency, U.S-Dollar Quoted Commodities Drop this Week

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The United States is the world’s largest economy and cryptocurrency’s biggest investor, it means large number of capital inflow into the crypto space are from the United States and with the U.S economy battered and unstable due to COVID-19, foreign policy, etc US investors, mainly institutional investors, have been increasing their investments in crypto space, the new safe haven, in the last one year.

However, on Friday, the U.S commerce department released retail sales report, which measures US consumer spending that contributed over 70% of US GDP estimated at about $13.4 trillion. Retail sales that has been on the  decline for months and was predicted to come out at – 0.8%, unexpectedly came out at 0.7% in the month of August.

The unexpected improvement in consumer spending, in fact against the Consumer Confidence report that came out previously, bolstered U.S dollar attractiveness to 94 on dollar index as investors jumped on it and other dollar assets.

Why did investors jump on Dollar and how does it affect crypto and U.S dollar-quoted commodities?

The US dollar rose to a three-week high because capital inflow into American assets jumped as investors started predicting that the Federal Reserve (US central bank) could announce tapering (cutting down on bond buying -quantitative easing) at the Federal Open Market Committee (FOMC) meeting scheduled to be hold next week.

Quantitative easing is when government is buying debt (bonds) to support the economy. However, when government is cutting bonds purchase, it means the economy has started doing well enough to sustain itself without support.

This is why capital flow out of crypto space rose as institutional investors that are sustaining the crypto are now dumping their money on dollar assets – the very reason dollar value rose since Friday.

Market is about demand and supply, no demand in crypto space means falling/bearish market and demand in dollar means stronger US dollar – I actually bought dollar -sold GBPUSD- on Monday.

Here is why dollar quoted commodities like crude oil dropped. It is simple, because dollar products is now expensive for holders of other currencies. Therefore, demand for crude oil dropped against constant supply.

If FOMC announces tapering earlier than expected next week, crypto could fall even more!

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Fintech CEO: India’s Former Deputy Governor of RBI Right on Crypto

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Recently, R. Gandhi, the former Deputy Governor at the Reserve Bank of India, went on the record, saying that cryptocurrencies should be treated as an asset or commodity. Such treatment would ensure that they are governed by existing laws and regulations for exchanges. Once this happens, Gandhi noted that “…automatically, people can start buying, selling and holding.” He also noted that regulators would be able to retrieve information on holdings for purposes of taxation.

“This is important for a few reasons. First, India is preparing to test out its own central bank digital currency, so it makes sense that they would take a look at how they regulate all digital assets before the launch. Second, India is a major power, which, until recently, has not been the friendliest towards cryptocurrencies, so this new approach should be a welcome change of direction for those involved in the industry. Finally, it’s also worth discussing when you consider how India has typically interacted with assets and wealth,” said Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.

“India has long been a country which has been loyal to both cash and gold. Those kinds of cultural attitudes, many hypothesize, may be the largest hurdles for CBDCs. Can you educate enough of the populace to move them from cash to a digital asset of any kind? Now, you have a big name with RBI ties saying that the country needs to re-evaluate how it deals with cryptocurrencies. That’s telling,” noted Gardner.

“I’ve long believed that the education component will be as important as the technological component. You can build the most secure, most convenient digital currency on the planet. But, if it isn’t widely used, then it really doesn’t matter. Particularly in countries with a loyalty to a cash economy, the educational aspect of a central bank digital currency could present problems,” Gardner said.

Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.

“If I’m looking to support a CBDC from the RBI, I’d begin the educational component now. According to surveys, cryptocurrency usage in India is up significantly over the past couple years. However, now is the time to work with stakeholders and give the citizenry peace of mind. They need to explain why a CBDC would benefit them, and, most importantly, let folks ask questions so they can feel comfortable with the transition. All that takes time,” said Gardner.

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