FTX bankruptcy is another test of nerves for Asian crypto regulators

(Bloomberg) – Crypto’s latest existential crisis, courtesy of Sam Bankman-Fried’s epic face, has erupted amid sweeping planned changes to digital asset rules in Asian hubs including Hong Kong and Singapore.

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The fall of its FTX exchange showed that the world did not have the true picture of its operations. As a result, officials in both jurisdictions and elsewhere are called upon to ensure greater transparency, particularly about client assets.

The immediate focus in Asia is on “disclosure of leverage ratios, any conflicts of interest with user funds, details of those funds and risk management,” said Cici Lu, founder of Venn Link Partners, a digital asset consulting firm.

For now, Hong Kong and Singapore are sticking to diverging regulatory paths. Two weeks ago, Hong Kong took a more welcoming stance, detailing its plans to become a crypto hub with legalized retail and dedicated exchange-traded funds. Singapore, on the other hand, is cracking down on the retail business of crypto, focusing instead on the productive applications of blockchain technology.

Hong Kong Finance Secretary Paul Chan in a blog post on Sunday indirectly referenced FTX’s November 11 bankruptcy while adding that the industry is “hopeful” for the virtual asset market. from the city.

He argued that this is because Hong Kong is on track for a rulebook that provides the transparency, compliance and investor protection needed to deal with the risks extended by the so-called crypto winter.

The Hong Kong Securities & Futures Commission said local licensed entities’ exposure to FTX is “not material.”

Singapore argues that FTX’s woes confirm the city-state’s focus on consumer safeguards, such as a proposed ban on leveraged token purchases by mom-and-pop investors.

Asked at a conference whether the FTX imbroglio changes the Monetary Authority of Singapore’s approach to crypto, its chief financial technology officer, Sopnendu Mohanty, said on Wednesday “we remain on course. , we remain on the commercial approach to space”.

The central bank is “willing to innovate” if the risks are contained, he added. The monetary authority is also currently reviewing the license application from local FTX.com subsidiary Quoine Pte. following recent developments.

Elsewhere in the Asia-Pacific region:

  • Japan’s financial services agency is studying the exposure of the local digital asset industry to FTX, but so far sees minimal impact.

  • Australian administrators have identified at least 20,000 investors seeking to recoup their losses.

  • Indonesia has banned trading in FTX’s native FTT token and said it will revise its list of legally recognized crypto assets.

For crypto market prices: CRYP; for the best crypto news: TOP CRYPTO.

–With help from Norman Harsono.

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