Binance APAC Head Resigns Amid Regulatory Challenges

Yuan Surpasses Dollar in China Cross-Border TradeThere has been a lot of talk in recent weeks and months about the continued use of the US dollar as the global reserve currency and newly published data from Beijing now demonstrates that the Chinese yuan became the most widely used cross-border currency in China for the first time in March.©Pexels/VOLKAN SORKUNErosion of dollar dominanceOver the course of the month of March, the US dollar was used in 46.7% of cross border transactions. That’s down 1.1% on the preceding month. Meanwhile, the yuan was the currency of choice in cross border Chinese trade last month, used in 48.4% of all cross border transactions.While this may seem impressive and it is encouraging for the Chinese authorities, it is still just a drop in the ocean when compared with the overall global cross border transaction statistics. Data produced by international financial messaging service, SWIFT, demonstrates that while the yuan’s share of global currency transactions relative to trade finance increased to 4.5%, that’s just a drop in the ocean. The same data set reveals that the US dollar accounted for around 84% of global cross border transactions in March.While it’s unlikely that the US dollar will be usurped in its global reserve currency role over the short to medium term, certain cracks are beginning to emerge that serve to weaken the leading fiat currency. According to a recent report by emerging market focused management firm Eurizon SLJ Capital, the dollar demonstrated a decline in reserve currency use of 8% in 2022. Since 2016, the leading international currency has declined in use on an adjusted basis by 11%. It also emerged this week that Argentina will begin to pay China in yuan for imports. The move comes at a time when the South American country is experiencing an acute shortfall in its dollar reserves following a drought-induced decrease in agricultural exports which would have ordinarily brought more dollars into the country’s coffers.SanctionsIn the case of Russia, China’s yuan replaced the US dollar in monthly trading volume in February for the first time, according to data compiled by Bloomberg. The emergence of the Russia Ukraine conflict in 2022, and more specifically the United States’ response to Russia as a consequence of the conflict, appears to have led to major change in terms of dollar use. Prior to the invasion, the trading volume of the Chinese yuan in Russia was negligible.The United States introduced a raft of sanctions that made it difficult for Russian banks and Russian corporations to trade internationally. It also confiscated sovereign funds held in US dollars belonging to Russia.It’s thought that this move has had wider repercussions as other nations have started to feel increasingly insecure in holding US dollars against that background. The logic is that any potential conflict between a nation and the United States could lead to a similar outcome. The US may have crossed a line that destroys confidence in other countries’ use of the US dollar.Implications for cryptocurrencyWhile these weaknesses in the global reserve status of the US dollar are unlikely to lead to its demise in that role any time soon, they may well be a bellwether of what plays out over the longer term. US dollar weakness is one aspect. Set against that, it’s hard to imagine the yuan being so dominant as to ever be the leading world currency relative to international trade.It’s far more likely that we may see several global ‘reserves’ share the role in the longer term. Bitcoin has been mentioned in the past as a candidate for this role given that it is not associated with any one nation. However, its current market capitalization and trading volume is minuscule by comparison with what would be required of a global reserve currency. That said, in a future where various currencies play a part in holding that reserve status, Bitcoin could very well see a modest but increasingly significant increase in its use for global trade purposes in the years ahead.

Paxos gets green light from Singapore regulator for USD stablecoinPaxos, a regulated crypto infrastructure company, has announced that it has received in-principle approval from the Monetary Authority of Singapore (MAS) for its new subsidiary, Paxos Digital Singapore Pte. Ltd.The company outlined in a press release that it published on Thursday that the new entity will be able to offer digital payment token services and issue a USD-backed stablecoin in compliance with Singapore’s upcoming stablecoin laws. Stablecoins are digital tokens that are pegged to the value of fiat currencies or other assets and are designed to minimize price volatility.Photo by Carlos Alberto Gómez Iñiguez on UnsplashRegulatory framework for stablecoinsThe MAS moved to finalize its regulation of stablecoins within the city-state in August. That regulation insists on stablecoin issuers holding reserve backing for a stablecoin in low risk, highly liquid assets. The regulator also puts an onus on the issuer to provide appropriate disclosures including audit results and to process redemption requests within five business days.According to Paxos, there is a strong global demand for the U.S. dollar, but it remains challenging for consumers outside the U.S. to access dollars securely, reliably and under regulatory protections. The in-principle approval from the MAS will enable Paxos to bring its regulated platform to more users around the world.The recently finalized stablecoin regulatory framework will apply to non-bank issued tokens that are linked to the Singapore dollar or G10 currencies, such as the euro, British pound and U.S. dollar. Additionally, it applies to stablecoins whose circulation exceeds five million Singapore dollars ($3.7 million). The framework aims to ensure that stablecoins are subject to appropriate governance, risk management, disclosure and consumer protection standards.Partnering with enterprise clientsPaxos said that once it receives full approval from the MAS, it will be able to partner with enterprise clients to issue the USD stablecoin in Singapore. Paxos already has experience in issuing stablecoins, such as the Paxos Standard (PAX) and the PayPal USD Coin (PYUSD), which are both backed by the U.S. dollar and cash equivalents. Paxos also issues monthly attestations and reserve reports to verify its compliance and transparency.Responding to this latest development, Paxos Head of Strategy, Walter Hessert, stated:“Global demand for the US dollar has never been stronger, yet it remains difficult for consumers outside the US to get dollars safely, reliably and under regulatory protections. This in-principle approval from the MAS will allow Paxos to bring its regulated platform to more users around the world. Because Paxos upholds the highest standards of compliance and oversight, global enterprises partner with us to power stablecoin solutions that drive their businesses and respond to their customers’ needs.”Paxos previously issued the Binance USD (BUSD) stablecoin, but was ordered by the New York Department of Financial Services (NYDFS) to stop issuing the token after the agency declared the stablecoin an unregistered security.The partnership between Paxos and the MAS is a significant step in bridging the gap between traditional finance and the emerging crypto industry. As more institutional clients seek exposure to digital assets, it becomes essential to provide them with secure and reliable solutions that meet their specific requirements.

Korea requires lawmakers and senior officials to declare crypto holdingsSouth Korea’s Ministry of Government Legislation announced on Thursday (local time) that 84 new legislative statutes are set to be implemented in December. Among these statutes, an amendment to the Public Service Ethics Act stands out, which will require lawmakers and senior government officials to report their virtual asset holdings.Photo by Huy Phan on UnsplashStarting Dec 14The Public Service Ethics Act requires public officials in political service, government officials of rank four or higher and executives of public service-related organizations to declare their own wealth as well as that of their spouses and lineal relatives. In Korea, public servants are ranked from one to nine, with one being the highest and nine being the lowest. As it stands, disclosing cryptocurrency holdings isn’t mandated, but this will change from Dec. 14 due to recent amendments. Records of cryptocurrency transactions will also be subject to disclosure.Possible restrictions on departments or employeesFurthermore, the leader of a national or local government organization has the authority to enforce restrictions on the acquisition of virtual assets for specific departments or employees under their jurisdiction. This action is applicable if their roles are associated with accessing cryptocurrency information or having an impact on the crypto market. In such scenarios, the chief officer is obligated to report their methods of imposing these restrictions to the pertinent government ethics committee. The committee then holds the right to recommend adjustments to these strategies.