- Bitcoin is taking a beating. Tesla no longer accepts it, China is clamping down and the US is warning about how cryptocurrencies ‘facilitate illegal activities’
- But the two Asian financial hubs have for years calibrated ways to tap the market while guarding against money laundering, tax evasion and terror financing.
Bitcoin took a beating following the move and was at one point down nearly 50 per cent from its all-time high, while Ether fell to a two-month low last Sunday.
The same week, the United States Treasury Department said it would require any cryptocurrency transfer of more than US$10,000 to be reported.
“Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion,” the department said in a release.
Asia-based industry observers say while the intensifying regulatory scrutiny is inevitable given the growing clout of the sector, officials may find some insights from Hong Kong and Singapore on how to deal with the matter.
Both financial hubs, among the most plugged-in societies in the world, have for years been calibrating ways to tap the lucrative cryptocurrency market while guarding against money laundering, tax evasion and terrorism financing.
Antonio Fatas, a professor of economics at Insead, said the heightened global regulatory scrutiny came amid concerns that the volatility of digital currencies could pose a risk to financial stability.
This was also a point raised by US Federal Reserve Chairman Jerome Powell, who indicated that greater regulation may be needed.
There had also been an increasing number of hacking episodes in which ransoms were demanded in cryptocurrencies, which had served as a “wake-up call” about the dangers of unregulated money, Fatas said.
“There is no doubt that these two phenomena will lead to increasing regulation of cryptocurrencies,” he said, adding that the regulation of cryptocurrency-exchanges and intermediaries had started in some countries.
This includes Singapore, where discussions to tighten rules on such digital assets began several years ago.
Former deputy prime minister Tharman Shanmugaratnam had in 2018 warned lawmakers of the dangers of digital currencies, saying that cryptocurrencies were “an experiment” – albeit one that was growing fast internationally.
