SEC’s double whammy

In Token Issue this week, we analyze different crypto regulations from around the world and look at the impact of the US debt default scare. [Read from your browser]( Token Issue Welcome to Token Issue! Delivered every Friday, this free newsletter breaks down the biggest stories in Asia’s crypto scene and beyond. View past issues [here]( or [sign up here]( to receive future newsletters. Written by Deepti Sri Crypto journalist Hi {NAME} Welcome to the end of yet another dramatic week in cryptoland. This time, it's a battle between the crypto industry and the US government. In this war, the government has been investigating and suing "bad" crypto businesses while pressuring their banking partners to stop serving them. The year hasn’t had a shortage of significant events showing this conflict: prominent crypto exchanges like Binance and Coinbase being sued, major banking partners being shut down, and even celebrities facing lawsuits for promoting crypto projects. Government officials themselves have hinted at more actions to come. Senator Elizabeth Warren is building an "anti-crypto army" and may propose legislation to ban crypto in the US, saying that it is financing the country's opioid pandemic. The future outcomes could range from a complete ban to heavy regulation. Can crypto truly thrive as an alternative financial system free from centralized control? Regardless of the answer, we must acknowledge the hurdles it faces. The recent US debt default scare highlighted some of these challenges. One of our big stories for the week will give you a different perspective on the issue. The other will ensure you’re updated with crypto regulations from around the world. -- Deepti --------------------------------------------------------------- 🤿 THE DEEP DIVES 1️⃣ [Crypto regulations heat map: Where does your country rank?]( While progress has been made in addressing issues related to crypto regulations, comprehensive reforms are limited to a few countries. Our heat map examined regulations in different countries for general crypto activities, token trading, stablecoins, and NFTs. It also assessed aspects such as legality, government involvement, and availability of licenses. Among the countries analyzed, Thailand surprisingly topped the heatmap despite its previous crypto ban. It has now implemented regulations for crypto assets and even includes provisions for NFTs. Meanwhile, both Vietnam and China lack clear regulatory frameworks, with the latter taking an anti-crypto stance. 2️⃣ [Inflation and rising interest rates - not US default - will drive Asia to adopt crypto]( Despite concerns over a US debt default, the crypto market did not witness a significant surge in investments. The stability of Bitcoin's price failed to convince investors that it could serve as a reliable alternative during a financial crisis due to its inherent volatility. Additionally, the US banking crisis posed challenges in accessing Bitcoin as several crypto-friendly banks closed down. However, other factors - namely the rising interest rates and inflation in emerging markets like Southeast Asia, Africa, and Latin America - could drive crypto adoption instead. There is speculation that central banks in these regions may even consider Bitcoin as a reserve asset. --------------------------------------------------------------- 👀 ALL EYES ON... What everyone’s talking about. 1️⃣ SEC vs. Crypto The recent clash between the US Securities and Exchange Commission (SEC) and the two remaining giants in the crypto industry - Binance and Coinbase - has captured headlines and sparked debates around the regulation of digital assets. The SEC, under the leadership of Chairperson Gary Gensler, has been combative, asserting that most crypto tokens are securities and should be subject to the agency's oversight. However, the cases against the two exchanges have notable differences. The 13 charges against Binance, BinanceUS, and CEO Changpeng Zhao include offering unregistered securities through its BNB token and BUSD stablecoin. The SEC also alleges that Binance commingled user funds, Zhao exerted secret control over BinanceUS, and Binance allowed illegal trading by US citizens on its platform. Additionally, the SEC accuses Binance and Zhao of misusing customer funds by diverting them to a trading firm called Sigma Chain, which allegedly engaged in manipulative trading practices to inflate the crypto exchange's volume. Meanwhile, the five charges against Coinbase include operating as an unregistered broker, exchange, and clearing agency, as well as violating federal security laws through its Prime, Wallet, and staking products. The SEC says that Coinbase provided trading services for multiple illegal securities. However, this suit is met with criticism for a few reasons. For one, Coinbase has made [multiple attempts]( to register with the SEC, indicating ongoing legal proceedings. Moreover, in 2021, the SEC approved Coinbase's public listing application, raising questions about the sudden change in the regulatory stance. Its shares were also declared effective by the agency. It’s worth noting that the federal government still uses Coinbase to [sell seized crypto]( which means that - according to the SEC's allegations - the government is utilizing an illegal platform. The repercussions of these cases remain uncertain. Both Coinbase and Binance have expressed their intent to [fight back]( and advocate for clearer regulations. 2️⃣ [Temasek's compensation cuts following failed FTX investment]( The state-owned investment firm recently announced a series of compensation cuts for its senior management as well as for the team that recommended an investment in the now-bankrupt FTX. This move comes after Temasek initiated an internal review of its investment in the failed exchange, which resulted in a significant loss and subsequent [writedown]( of US$275 million. In a statement by Temasek chairman Lim Boon Heng that was posted on the firm's website, it said that the cuts were made as a demonstration of "collective accountability" by the team and senior management involved. However, the chairman clarified that no misconduct was found among the investment team. The exact amounts of the cuts were not specified in the announcement. Temasek’s decision to invest in FTX has been a [hot-button topic]( since news emerged that the crypto exchange - once lauded as a safe bet in the industry - was mismanaging customer funds.  --------------------------------------------------------------- ⭐ TO THE STARS Impactful developments and projects in Web3. 1️⃣ [CoW Protocol]( CoW Protocol is a decentralized trading protocol that aims to optimize trade execution and protect users from [miner extractable value exploits](. It operates by matching trades peer-to-peer, eliminating the need for intermediaries and potentially reducing transaction costs for users. The protocol searches multiple exchanges and aggregators to find the lowest available price for a trade, streamlining the process for users and ensuring they receive the most favorable pricing. 2️⃣ [Pudgy Penguins]( Pudgy Penguins recently launched a new line of toys that’s been making a lot of buzz. Within the first 48 hours of launch, the toys generated US$500,000 in sales and reached the top spot in multiple toy categories on Amazon. The floor price of Pudgy Penguins NFTs - which is what the toys are based on - also increased by nearly 33%. What makes these toys interesting is that they have the potential to make people money. Here's how it works: When someone purchases a Pudgy Toy, they can scan the QR code on the toy's "birth certificate." This grants them access to Pudgy World, an online clubhouse for Pudgy Penguins. Here, users can open trait boxes associated with their toy. The traits obtained through Pudgy World's unboxing experience are stored as NFTs. Users can customize their characters by selecting and applying these traits. Since they’re tokenized, the toy’s traits can be bought, sold, and traded in the Pudgy World marketplace. Owners of Pudgy Penguin NFTs also have a licensing deal that grants them a percentage of toy sales. --------------------------------------------------------------- MORE TO CHEW ON Stuff that’s good to know. 1️⃣ [USDC issuer Circle gets major payment institution license in SG]( With the license, Circle’s Singapore unit is now able to provide both digital payment token services and money transfer services in the city-state. 2️⃣ [Binance conducts layoffs amid crypto market downturn]( While the crypto exchange has begun laying off employees, it's still looking to fill hundreds of open roles. 3️⃣ [SG blockchain intelligence firm Nansen lays off 30% of staff]( Alex Svanevik, the firm’s CEO, attributed the decision to Nansen growing too fast‌ too quickly. 4️⃣ [Bali may sanction tourists who use crypto for payments]( An investigation by a local publication found that tourists in Bali had been using their crypto assets to pay for various services, which is illegal under Indonesian law. 5️⃣ [ANA takes flight in the NFT World]( Japanese airline All Nippon Airways has rolled out its own NFTs marketplace in partnership with its mobile gaming unit ANA Neo. Called the ANA GranWhale NFT Marketplace, the platform will focus on aeronautical-themed tokens.  --------------------------------------------------------------- That’s all for this issue - we hope you liked it. WAGMI! P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](  Copyright © 2023 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894