From Singapore to China, Elsewhere, Digital Assets Regulation Will Only Intensify in 2021
Following institutional interest in digital assets soaring over recent months, showing they are gaining popularity, further scrutiny and greater attention from regulators are bound to arise as 2021 goes by. This is according to Michael Ou, CEO of CoolBitX which runs a market-ready compliance solution, Sygna Bridge.
Companies like MicroStrategy, Square and Paypal last year became some of the latest to enter the space. They brought a huge influx of capital flows into digital assets which drove cryptocurrency prices higher and in turn prompted additional retail and institutional investors to turn their eyes onto the digital assets sector.
It’s natural for regulators to pay attention to the crypto space with these developments even though some from within the ecosystem may have a different opinion about that, Ou said.
“While some may dismiss regulations as stifling and potentially detrimental to the overall development of the digital assets ecosystem, regulations are, in fact, crucial and necessary for both mainstream and institutional adoption of digital assets,” says Ou, whose Sygna Alliance consists of a consortium of Virtual Asset Service Providers (VASPs) across the APAC region, most of which have commenced internal testing and implementation of the Sygna Bridge solution.
Top crypto exchange DigiFinex is the latest to join the Alliance as its 25th member that will integrate Sygna Bridge to comply with both global and local regulations like the Financial Action Task Force (FATF) “Travel Rule”.
As a leading region for crypto-related activities, Asia has been on the verge of staying at the forefront of crypto adoption with comprehensive regulatory regimes—such as Singapore’s Monetary Authority of Singapore (MAS) PSN02—which regulates VASPs for the prevention of money laundering and countering the financing of terrorism.
Ou states: “This phenomenon is already pronounced in Asia, with countries such as Singapore and Hong Kong introducing FATF-ready regulatory framework for crypto businesses operating in their respective jurisdictions. Cryptocurrency hotspots like Japan and Korea are also taking incremental steps towards raising regulatory standards, implementing AML and CTF regimes for the digital asset industry. In China, we are seeing a clear, comprehensive framework for cryptocurrencies as the People’s Bank of China (PBOC) prepares to launch its own digital currency.”
Elsewhere, a statement from Janet Yellen, the US nominee for treasury secretary, this week suggested that the incoming Biden administration could be hostile to cryptocurrencies and ramp up regulation. After Bitcoin saw a surge in interest with its price soaring by about 300% in the past year, she notes that many cryptocurrencies are used “mainly for illicit financing” and calls on lawmakers on the need to “examine ways in which we can curtail their use”.
Yellen’s words trail those of the European Central Bank President, Christine Lagarde, who had called for global regulation of Bitcoin a week earlier saying “There has to be regulations and this has to be applied and agreed upon at a global level…”.
Though not directly linked with their comments, the prices of Bitcoin have since dipped by more than 20% – from its highest of almost $42,000 on Jan 8 to $31,681 as at this writing – over the past two weeks.
“Taken together,” Ou adds, “regulation in the digital assets space will only intensify in 2021 and the years ahead, as continued developments and growth prompt nations and jurisdictions to hasten their pace of progress. The result is a more progressive and well-structured global ecosystem that supports the proliferation and maturation of the industry as a whole.”