First Mover Asia: Singapore Wants More Control Over Crypto Companies That Call It Home but Aren’t There; Major Cryptos Drop
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Good morning. Here’s what’s happening:
Prices: Bitcoin and other major cryptos were off after hawkish remarks by Federal Reserve Governor Lael Brainard.
Insights: Singapore tightens restrictions on crypto companies that register there but do not have a physical presence in the city-state.
Technician's take: BTC buyers could remain active on pullbacks into the Asia trading day.
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Bitcoin (BTC): $45,890 -1.1%
Ether (ETH): $3,466 -1.5%
Bitcoin, ether fall slightly
Bitcoin continued its recent restlessness on Tuesday, falling sharply after hawkish remarks by U.S. central bank Governor Lael Brainard, and amid the latest onrush of unsettling news from Ukraine. Other major cryptos were similarly in the red with DOGE and CELO the two significant outliers. The former rose over 17% at one point and the latter about 9%.
Bitcoin, the largest cryptocurrency by market capitalization, was recently trading just below $46,000, down from a high earlier in the day above $47,000 and off about 1% over the past 24 hours,. Ether, the second-largest crypto by market cap, was changing hands at a little over $3,400, down roughly 1.5%.
Crypto prices dovetailed with major equity markets, which were largely off as investors considered additional interest rate hikes to curb inflation, which has soared to nearly 8% in the U.S. The tech-focused Nasdaq fell 2.2%, while the S&P 500 dropped 1.2%. In a speech at the Federal Reserve Bank of Minneapolis, Brainard called the reduction of inflation of “paramount importance."
“The committee will continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting,” she said.
Meanwhile, Europe continued to wrestle with the moral and economic issues stemming from Russia's unprovoked invasion of neighboring Ukraine. Recent photos showing the slaughter of civilians in the town of Bucha near the Ukraine capital of Kyiv has brought mass condemnation. Spain, Denmark and Sweden, among others, expelled Russian diplomats while the U.S. and other countries that have condemned Russia are readying new economic sanctions.
U.S. President Joe Biden and the leaders of other countries have called for banning energy imports from Russia, a measure already undertaken by Lithuania. Germany, Europe's largest economy, has been a notable resister, saying that such measures would ignite a recession and cost the country jobs. "An immediate embargo of Russian natural gas would be the wrong way to go," said Lars Klingbeil, co-leader of German Chancellor Olaf Scholz's Social Democratic Party, said in an interview with a German news show.
Other crypto news has been more upbeat. MicroStrategy (MSTR) said on Tuesday that it had acquired an additional 4,100 bitcoins worth about $190 million. The news came less than two weeks after Terra's Luna foundation announced its commitment to purchase at least $3 billion in bitcoin.
Still, the events have not had a big impact on bitcoin, which itself may be a sign of the market's increasing maturity. "The market is big enough that it doesn't really matter much," Cory Klippsten, the CEO of the bitcoin savings platform Swan Bitcointold CoinDesk TV's "First Mover" program on Tuesday, adding: "Bitcoin marches on. Tiktok, next block."
S&P 500: 4,525 -1.2%
DJIA: 34,641 -0.8%
Nasdaq: 14,204 -2.2%
Gold: $1,920 -0.5%
Singapore's effort to control crypto companies That Call the city state home but aren’t there
There’s a mini-boom in Taiwan of Web 3 companies. Over the past two years, dozens of high-profile projects have emerged from Taipei.
But where are these companies registered? Singapore.
Taiwan’s business registration process is a drawn-out process that requires a great deal of patience. If all goes to plan, the registration is complete in two to six months.
By contrast, the process takes 72 hours in Singapore and sometimes less than a day.
So it's understandable that many crypto companies – especially those based in Asia – choose Singapore. If your only asset is code and the team distributed, you can get picky about the jurisdiction in which you want to register. Why deal with Taiwan’s sclerotic bureaucracy when you can instead pick somewhere that operates with a sense of urgency?
But authorities in Singapore seem to be growing uncomfortable with the scale of this arrangement. Hundreds of crypto firms are registered there but have no material ties to the city-state, and are outside of the grasp of regulators.
The Singapore government is moving to change this. Earlier this week the Parliament passed a law that will require crypto businesses based in the city-state but only doing business overseas to be licensed, making them accountable to the authorities in the island these firms call home on paper.
In the reporting on the issue, there wasn’t much discussion of why this is occurring, nor was there mention of a particular event that spurred this decision.
As much as the crypto industry likes to talk about regulatory nomadism, there are reasons why this makes regulators uncomfortable. If a company has no physical ties to an area aside from the paper, there’s not really a way for regulators to compel a company to follow its directives. There are no offices to raid or assets to seize. Things like money laundering and terror financing come into the picture.
This is why Binance’s institutional investors want it to "settle down" and find somewhere to call home. Committing to a jurisdiction and placing assets and personnel there makes regulators breathe easier, compared with a company that is registered in one place and operates in another.
Still, Singapore’s move on licensure shouldn’t be seen as another chapter in its recent, less-friendly attitude toward crypto. Rather, it’s a simple ask for companies to commit to playing by the rules – rules that are still conducive to running a crypto business.
Bitcoin Range-Bound; Support at $43K-$45K
Bitcoin (BTC) is stabilizing after a 3% price drop during the New York trading day.
The cryptocurrency has failed to break above resistance at $47,000 over the past few days, which indicates a loss of upside momentum. Still, lower support around $43,000 and $45,000 could stabilize the pullback.
Momentum signals remain negative on the daily chart, similar to what occurred in early February. This time, however, bitcoin has broken above $43,000 with positive momentum on the weekly chart. That means buyers could remain active on pullbacks.
The relative strength index (RSI) on the daily chart is declining from overbought levels, similar to what occurred in October of last year. Still, overbought signals can persist for a few months before a significant downturn in price.
9 a.m. HKT/SGT(1 a.m. UTC): Australia and New Zealand Banking Group commodity price (March)
9:45 a.m. HKT/SGT(1:45 a.m. UTC): Caixin (China) Services PMI (March)
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Said and heard
"The significance of holding power over a global network should be obvious. Whether it’s OPEC, SWIFT, the Strait of Hormuz or internet infrastructure, it’s clear how well-positioned stakeholders can leverage their measure of control over a network to exert influence. With Bitcoin, however, much of the authority rests in hash power. That’s where mining comes in as a matter of national security." (AAX Head of Research and Strategy Ben Caselin for CoinDesk) ... "The reality is that Russia’s financial position is stronger in the short term than many expected but still weak in the long term. Some of the actions that Russia has taken to prop up the ruble are taking its financial system back to the way it was under the Union of Soviet Socialist Republics, which crumbled in 1991." (The New York Times op-ed writer Peter Coy) ... "Last year was the largest ever for crypto donations by far. According to Fidelity Charitable, the financial services giant’s nonprofit that advises donors on charitable giving, around 45% of cryptocurrency investors donated to charities in 2020, compared to 33% of general investors." (CoinDesk contributor Tanvi Ratna)