Chinese Subsidiary of DBS Bank Launches e-CNY Product Offering

Coinbase Acquires License to Enhance Crypto Operations in SingaporeUS crypto exchange business Coinbase has reached a significant milestone in its Singapore operations by obtaining a Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS).The achievement, announced by the firm via a blog post published on Sunday, represents a pivotal moment for Coinbase as it expands its digital payment token services in Singapore to serve both individuals and institutions. The issuance of the full MPI license comes approximately one year after Coinbase initially received in-principle approval from MAS.Photo by Duy Nguyen on UnsplashEnabling broader service offeringThe importance of this development lies in Coinbase’s ability to provide advanced services, not only to individual traders but also to institutional investors. Hassan Ahmed, the country director of Coinbase Singapore, stressed the significance of this full license, stating that it will play a crucial role in strengthening relationships with stakeholders, especially regulated entities like banks. The regulatory milestone is anticipated to further cement Coinbase’s presence in the institutional finance sector in the region.Coinbase’s commitment to the Singaporean market has been evident in its continuous expansion initiatives. The company established a technology hub in Singapore last year, actively recruiting and training product managers and engineers specializing in Web3 technologies.In May the firm extended its product offering to Singaporean customers, introducing fee-less purchases of the USDC stablecoin and introducing digital asset staking. Meanwhile Coinbase Ventures, the firm’s investment arm, has also demonstrated confidence in the region by investing in more than 15 Web3 startups within Singapore over the past three years.Singapore earmarked for growthSingapore has emerged as the focal point for Coinbase’s Asia-Pacific institutional business, owing to its progressive stance on cryptocurrencies and a robust Web3 ecosystem boasting over 700 Web3 companies. According to Coinbase’s surveys, 25% of Singaporeans perceive cryptocurrencies as the future of finance, and 32% have had some form of crypto asset ownership. These statistics underscore Singapore’s growing importance in the global cryptocurrency landscape.Coinbase’s interest in meeting the demands of the local market is evident with the introduction of funding options like PayNow and the banks’ Fast And Secure Transfers (FAST) service, in addition to the integration of the Singpass onboarding system earlier this year.Despite facing regulatory challenges, including a lawsuit from the US Securities and Exchange Commission (SEC) accusing Coinbase of operating illegally, the exchange continues to explore avenues to grow and expand the business further. In August, Coinbase reported a significant improvement in its financials, with a narrower net loss and higher-than-expected revenue. This performance is reflected in its appreciating stock prices, which have more than doubled in 2023.This move places Coinbase among a select group of just over a dozen firms licensed to offer digital payment token services in Singapore. Last month, institutional investor-focused AsiaNext was officially designated as a Recognized Market Operator (RMO) by MAS. The firm was building on previous success in Singapore, having acquired a Capital Markets Services (CMS) license from MAS in June.That same month USDC stablecoin issuer Circle was awarded a full trading license. Other crypto firms to achieve licensing success in the city-state include Crypto.com and Blockchain.com.

Many commentators in the crypto space were pointing to a lowering of interest rates last week by the Federal Reserve in the United States as being a positive development for the pricing of digital assets. However, the introduction of a stimulus package to revive the Chinese economy may also have a role to play. Stimulus packageBloomberg reported on Sept. 24 that People’s Bank of China Governor Pan Gongsheng had cut a key short-term interest rate. Furthermore, the Bank of China governor plans to implement a reduction in the reserve requirements that are applied to the country’s banks. The Reserve Requirement Ration (RRR) will be cut by 50 basis points, which will mean that $142 billion will be freed up for new lending.  Additionally, a package of measures has been introduced to rejuvenate China’s beleaguered real estate market, lowering the borrowing costs related to $5.3 trillion in mortgages.Photo by Eric Prouzet on UnsplashBullish for crypto?Jamie Coutts, chief crypto analyst at financial research platform Real Vision, took to X to comment on the development. Coutts wrote: “The bottom is in for global central bank liquidity for this cycle. Sit back and watch the other CBs fall into line. In a credit-based fiat fractional reserve system, debasement is a feature, not a bug.” Coutts signed off with a “Bitcoin” hashtag, with the inference that the development will have positive implications for Bitcoin. Similarly, market analysts at Singaporean crypto-asset trading firm QCP Capital perceive the move as being bullish for crypto and risk assets more generally. QCP Capital analysts stated: "We believe more easing is coming from the People's Bank of China (PBoC), and they have communicated as much, and combined with the U.S. Federal Reserve joining the global cutting cycle, all major central banks, except Bank of Japan, are now ready to inject more liquidity into the market. The macro space continues to look more and more bullish for risk assets, including crypto."  Taking that consideration further, the QCP Capital analysts suggest that market participants in the crypto space may be caught off guard by a resultant uptick in crypto pricing, stating: "We know how explosive crypto prices can be, and with so many bullish catalysts, we think the next move higher will leave many people surprised and sidelined.” Fed rate cutsMany market commentators were similarly enthused last week following an announcement in the U.S. by Jerome Powell, Federal Reserve Chairman, of a 50 basis point rate cut, with the suggestion that further cuts may be implemented going forward. However, not all market pundits are of the same view. Some believe that small interest rate cuts occurring in an overall high rates environment won’t move the needle and that it’s only in a zero rates environment where Bitcoin and crypto skyrocket.  Arthur Hayes, co-founder of BitMEX and Chief Investment Officer (CIO) at the Maelstrom Fund, asserted in his keynote speech at TOKEN2049 in Singapore last week that he wasn’t enthusiastic about rate cuts driving crypto.  “While I think a lot of people are looking forward to a rate cut, meaning that they think the stock market and other things are going to pump up the jam, I think the markets are going to collapse a few days after the Fed’s rates,” he stated. Markets didn’t collapse subsequently although it seems that they are responding to this latest monetary stimulus introduced by China.

While Indonesia has been recognized as one of the world's swiftest embracers of cryptocurrencies, it has faced a notable setback more recently, with a 60% decline in transaction volumes on local exchanges compared to the preceding year. High taxesIn a recent report by CoinDesk Indonesia, the publication speculates that the imposition of high taxes may be a pivotal factor dissuading traders and impacting the overall market dynamics. Indonesia’s tax system treats crypto assets as commodities, with the burdensome taxes arising as a direct consequence of that classification. The tax framework in Indonesia subjects crypto assets to both income tax and value-added tax (VAT), treating them akin to commodities. Leading crypto exchanges in the country reveal that the cumulative tax load on each transaction could surpass the trading fees imposed by exchanges, potentially discouraging users from engaging in crypto transactions. Oscar Darmawan, the CEO of the leading Indonesian crypto exchange INDODAX, told CoinDesk that users bear an income tax of 0.1% and a VAT of 0.11% on every crypto transaction. Additionally, exchanges are required to remit a 0.04% fee to the recently established national crypto bourse. Darmawan clarified that “this places a significant financial burden on the domestic crypto industry." expresses Darmawan in an interview with CoinDesk Indonesia, underscoring the challenges faced by the industry due to the current tax structure.Photo by Nataliya Vaitkevich on PexelsAn international issueThe tax treatment of digital assets has been a bugbear for the crypto space on an international basis. In Japan, it arose last month that the country’s lawmakers were considering applying an exemption for companies from paying taxes on unrealized cryptocurrency gains. It has since transpired that such an amendment will be applied to its fiscal 2024 tax reform plan. India has applied a heavy tax burden where crypto is concerned, with a 30% tax applied to capital gains relative to the sale of crypto assets. Additionally, 1% taxation applies by way of a tax deducted at source (TDS) on crypto transactions. The use of cryptocurrency for the purchase of goods and services in the United States remains a stumbling block, given that the current tax code treats such a scenario as a taxable event. Last year, two U.S. senators attempted to address that issue, by including a $200 exemption for purchases made with cryptocurrency. Calls for crypto asset reclassificationIn response to this dilemma in Indonesia, some stakeholders within the local crypto industry advocate for a paradigm shift in the classification of crypto assets. They propose treating crypto as securities instead of commodities, anticipating that this alteration could alleviate the tax burden on users. Yudhono Rawis, the CEO of the exchange platform Tokocrypto, asserts: "Both stocks and crypto are tradable assets with profit potential … Thus, implementing the same tax regime for both these investment instruments would be more equitable and consistent." The industry anticipates regulatory changes in the near future, as crypto oversight in Indonesia is set to transition from the commodities regulator to the Financial Services Authority (OJK) in January 2025.