Weekly Pizza Bits #9 - 21-Apr-2023
1) Luno services will be terminated in Singapore
Luno will be shutting down its crypto services in Singapore starting from 20-Jun-23. The two most probable reasons for this exit are:
Competition with other major licensed exchanges in Singapore such as Coinbase & Kraken.
The DCG bankruptcy news leading to the massive revenue loss of their Luno Savings service offered in Singapore.
Luno Malaysia is not affected for now. I have covered in my previous article about why Luno Malaysia will be alright at least for the time being.
For anyone living in Singapore and still has money in their Luno Singapore account, do remember to withdraw all cryptocurrency and/or SGD from their Luno Wallet by 19-Jun-23. Anyway, it’s always best for crypto users with large amounts of money in cryptos to be kept safely in their hardware wallets.
2) Congress are drilling SEC Chair Gary Gensler & calls for his removal from his duties.
You can watch the short clips of the congressmen questioning Gary Gensler in the links below:
Tom Emmer (this one’s the best so far!)
In summary, it was outlined that SEC Chairman Gary Gensler has been abusing his power by ordering subpoenas and well notices to many major crypto platforms such as Coinbase, Sushiswap, Tron without providing any clarity or details about how platforms are compliant, or how crypto assets are securities. (Weekly Pizza Bits Chapter 5 has covered a lot on this).
Remember the days when Gary Gensler shows so much promise in becoming the right man to bring crypto to the right direction with his impressive blockchain lecture in MIT back in 2018. Never have we expected to have someone who’s been so clueless about the innovation behind the whole crypto landscape and just hunts down every single crypto businesses without remorse.
Let’s see how it goes, but I don’t think it’ll be long before we may see a new replacement for SEC Chair, and I wonder who will be in line…
3) Stablecoin legislation has been drafted in Congress
In summary:
Decentralized & foreign stablecoins will become illegal in the US. The stablecoins mentioned are DAI, LUSD & RAI. This act makes it illegal for these stablecoin to be used in US, send them to an American business or person living in the US.
The stablecoin licensing process is more structured but discretionary, meaning the Congress can decide who gets to issue licensed stablecoins.
Allow stablecoins to be collaterized by insured deposits in some cases.
Stablecoin operators may have direct access to the Federal Reserve. E.g. Circle could have accounts at the Fed.
Perform study on CBDCs, including potential impacts of a CBDC on the competitive landscape of stablecoins.
These just shows the centralization power of the US Congress to handpick their favourite stablecoins to be used in the crypto space, while suppressing the innovation of other stablecoins that can bring further decentralization to make ones stablecoin more resilient from depegging while providing the permissionless properties of holding a stablecoin.
Another concern would be if USDC is the chosen one, are people in the US or have bank accounts in the US the only ones able to use the stablecoin because they can deposit their USD fiat to mint those USDCs while others outside of the US don’t? Does Metamask need to implement KYC for any wallet holders holding USDC in their wallet so that the Fed is able to trace the USDCs and the USD deposit backing numbers are correct?
Something to think about.
4) Japan has released a Web3 whitepaper to promote industry growth in the country
On the opposite spectrum of unfavorable crypto regulations, Japan has released a Web3 whitepaper to promote the growth of crypto in their country.
Feel free to read the full whitepaper here, but it’s only in Japanese, so I don’t understand what it says. However, Ken Kodama, CEO of Emurgo which is one of the entities that built Cardano, did a great short summary on what the whitepaper says and what it meant for the Web3 future in Japan.
The summary from Ken is:
The whitepaper is published by the LDP’s Web3 team (LDP stands for Liberal Democratic Party of Japan)
The whitepaper recognizes the widespread interest in Web3 and proposes that Japan should seriously establish itself as a leader in the space through favorable regulations and tax incentives.
The whitepaper advocates for:
(a) Standardizing crypto accounting guidelines,
(b) Clear registration process for stablecoin issuance
(c) Appoint a Web3 minister
(d) Issuing crypto visas for skilled workers to come to Japan.
This move will definitely encourage more Japan Web3 startups, investments in the Web3, create more jobs and add liquidity to the local crypto market. Hopefully Malaysia can follow Japan’s footsteps to also be on the radar of Web3 development.
5) SEC files charges against Bittrex Exchange for operating unregistered securities exchange
Oh, you think we’re done with SEC’s poor regulation of cryptocurrencies? Of course not, here’s another one.
SEC charges Bittrex for operating unregistered securities exchange. The lawsuit also names 6 tokens as securities, which are:
While the bottom half of these tokens are unknown to almost anyone including me, OMG, Dash & Algorand are well-known for being public networks that enables high-throughput, low-cost peer-to-peer transactions.
Back in my 1st Pizza Bits, I covered the definition of a financial security where
There is an investment of money
The investment is made into a “common enterprise”.
The investors expect to make a profit from their investment.
Any expected profits or returns are due to the actions of a third party or promoter.
If this definition is implemented into cryptocurrencies, it means every single crypto will be considered a security by the SEC as everyone expects some profit from investing into cryptocurrencies.
However, we can’t completely called cryptocurrencies as securities because they are definitely more than that. While many cryptocurrencies have different properties & use cases, all cryptocurrencies are digital currencies that can be used as a form of money to be exchanged for goods & services, just like fiat money. The only problem is that this use case is not widely adopted yet.
Therefore, there should be an updated revision on how to regulate cryptocurrencies properly. I would suggest taking some notes from Japan.
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