Cryptocurrency hedge fund Three Arrows Capital is currently being liquidated and its effect can be seen around the industry. With 3AC collapsing, more crypto firms around the world are bracing for further bankruptcies.
This sharp drop in prices has attracted the ire of several financial regulators, pointing towards tougher legislation over the sector.
Singapore’s crypto sector faces significant setbacks
The Monetary Authority of Singapore (MAS), which had been welcoming of cryptocurrencies so far, might change its approach towards the sector, according to industry insiders. As per KPMG data, investment in Singapore’s crypto sector rose to $1.48 billion in 2022 – ten times more from 2021. But with current market conditions and the collapse of 3AC, industry players are skeptical of upcoming regulations in Singapore, Hoi Tak Leung, a senior technology sector lawyer at Ashurst told Reuters.
The entire crypto sector is experiencing the ripple effects of 3AC liquidation. According to local media reports, fund management company Mirana is suing 3AC in Singapore over a loan it extended to the crypto hedge company. Crypto lender Voyager also filed for bankruptcy last week after 3AC defaulted on a $650 million loan.
Crypto regulations are likely to remain in a gray area.
Most Asian regulators have always been harsh when it comes to crypto regulations. With more and more countries imposing heavy taxes on cryptocurrencies, the recent market collapse could give them a reason to go ahead with more strict regulations. Earlier, India imposed a 30% tax on cryptocurrencies, causing a widespread panic among the Indian crypto community. If Singapore goes ahead with more anti crypto regulations, other countries might follow suit and pass similar laws.
After Terra LUNA’s collapse South Korea formed a special committee as a watchdog over the crypto industry that would be responsible for policy preparation and supervision. If this trend follows, crypto regulations in most countries are likely to remain in a gray area for some time.
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