EU regulator warns of DeFi risks; Upbit obtains initial approval for Digital Asset License in Singapore

Have you heard the latest news from the EU? Apparently, they are not so keen on the idea of decentralized finance (DeFi) and its implications for the financial system. In a recent report, the European Securities and Markets Authority (ESMA) warned of the risks and challenges posed by DeFi, especially when it comes to consumer protection, market integrity and financial stability.

One of the main issues that the ESMA raised was the concept of ‘code as law’, which means that the rules and outcomes of DeFi applications are determined by the underlying smart contracts, rather than by human intervention or oversight.

The ESMA argued that this approach could lead to legal uncertainty, operational failures, cyberattacks, fraud and manipulation. They also questioned whether DeFi users are fully aware of the risks and responsibilities involved in using such platforms, and whether they have adequate recourse in case of disputes or losses.

The ESMA also suggested that some DeFi activities may fall under the existing EU regulatory framework, depending on their features and functions. For example, some DeFi tokens may qualify as financial instruments or electronic money, and some DeFi platforms may provide investment services or payment services. Therefore, the ESMA urged DeFi providers to comply with the relevant rules and regulations, and to cooperate with the authorities and supervisors.

This report is not surprising, given that the EU has been taking a cautious and conservative stance on crypto-related matters. However, it also shows that the EU is paying attention to the developments and innovations in the DeFi space, and that it is trying to balance the potential benefits and risks of this emerging sector.

The ESMA acknowledged that DeFi could offer more efficiency, transparency, competition and financial inclusion, but also stressed the need for a level playing field and a sound governance framework.

Coinbase; The approval of a bitcoin spot ETF is partially priced in.

The cryptocurrency market has been anticipating the launch of a bitcoin spot exchange-traded fund (ETF) in the US for a long time. Many experts believe that such a product would boost the adoption and legitimacy of bitcoin as an asset class, as well as attract more institutional and retail investors to the space.

However, the US Securities and Exchange Commission (SEC) has been reluctant to approve any bitcoin spot ETF proposals, citing concerns over market manipulation, investor protection, and regulatory oversight. The SEC has only approved bitcoin futures ETFs so far, which track the price of bitcoin futures contracts rather than the underlying asset itself.

Coinbase, one of the largest and most influential cryptocurrency platforms in the world, has recently shared its view on the prospects of a bitcoin spot ETF in the US. In its Q3 2021 shareholder letter, Coinbase stated that it expects a bitcoin spot ETF to be approved in the US “in the next few years”, but also noted that some of the potential impact of such an approval is already reflected in the current market prices.

“We believe that a bitcoin spot ETF approval in the US is partially priced in, given that several bitcoin futures ETFs have already launched and are trading at a premium to NAV [net asset value],” Coinbase wrote. “We also believe that there is still significant upside potential for a bitcoin spot ETF approval, as it would likely increase retail demand and lower the barriers to entry for many investors who are interested in gaining exposure to bitcoin.”

Coinbase added that it is actively engaging with regulators and policymakers to advocate for a clear and consistent regulatory framework for cryptocurrencies, including a bitcoin spot ETF. The company said that it believes that such a framework would benefit not only Coinbase, but also the entire industry and its customers.

“We continue to work closely with regulators and policymakers to educate them on our industry and our products, and to provide feedback on proposed rules and guidance,” Coinbase wrote. “We believe that constructive dialogue and collaboration are essential to foster innovation and growth in the crypto economy, while also protecting investors and consumers.”

Upbit obtains initial approval for Digital Asset License in Singapore

Upbit, one of the largest cryptocurrency exchanges in South Korea, has announced that it has received a provisional license from the Monetary Authority of Singapore (MAS) to operate as a digital asset service provider in the city-state. This is a significant milestone for Upbit, as it aims to expand its global presence and offer its services to more customers in the rapidly growing Asian market.

According to a press release, Upbit applied for the license under the Payment Services Act (PSA), which regulates the activities of digital payment token (DPT) service providers in Singapore. The PSA requires DPT service providers to comply with various rules and standards, such as anti-money laundering, counter-terrorism financing, cybersecurity, and consumer protection. Upbit said that it has met all the requirements and demonstrated its commitment to operating in a safe and responsible manner.

Upbit is the first major Korean exchange to obtain the license from MAS, which is widely regarded as one of the most progressive and forward-looking regulators in the world. Upbit said that it will leverage its experience and expertise in the Korean market to provide high-quality services to its Singaporean customers, as well as to contribute to the development of the local blockchain ecosystem.

Upbit also said that it plans to launch its Singaporean platform in the first quarter of 2024, after completing the necessary preparations and obtaining the final approval from MAS. The platform will offer a variety of features and functions, such as spot trading, margin trading, staking, lending, and derivatives. Upbit said that it will support multiple fiat currencies, including Singapore dollar, US dollar, and Korean won, as well as over 200 cryptocurrencies.

Upbit’s CEO Lee Seok-woo expressed his gratitude and excitement for receiving the provisional license from MAS. He said: “We are honored and delighted to be recognized by MAS as a trustworthy and reliable digital asset service provider. This is a testament to our efforts and achievements in the Korean market, where we have established ourselves as a leading exchange with a strong reputation and customer base. We look forward to bringing our expertise and innovation to Singapore and serving our customers with the best products and services possible.”

Social finance apps Tomo and New Bitcoin City break above $1 million in TVL

In a remarkable feat of innovation and adoption, two social finance apps have surpassed the $1 million mark in total value locked (TVL) within a week of their launch. Tomo and New Bitcoin City are both decentralized applications (dApps) that leverage blockchain technology to create peer-to-peer lending and borrowing platforms with social features.

Tomo is a dApp that allows users to lend and borrow cryptocurrencies with their friends, family, and trusted contacts. Users can create personalized loan agreements, set interest rates and repayment terms, and chat with their lenders or borrowers within the app.

Tomo also rewards users for timely repayments and referrals with its native token, TOMO, which can be staked to earn passive income or used to access premium features.

New Bitcoin City is a dApp that enables users to create and join virtual communities based on their interests, hobbies, or goals. Users can pool their funds together to invest in various DeFi protocols, such as yield farming, liquidity mining, or NFTs, and share the profits among the members. New Bitcoin City also has a gamified interface that allows users to customize their avatars, explore the city, and interact with other residents.

Both Tomo and New Bitcoin City have attracted a lot of attention and capital from the crypto community, as they offer novel ways to engage with DeFi and socialize with like-minded people. According to DeFi Pulse, Tomo has reached a TVL of $1.2 million, while New Bitcoin City has achieved a TVL of $1.1 million as of October 16, 2023. These numbers are expected to grow as more users discover and join these innovative platforms.

The success of Tomo and New Bitcoin City demonstrates the potential of social finance as a new paradigm for DeFi. By combining financial services with social interactions, these dApps create more value and utility for their users, as well as foster a sense of community and trust among them. Social finance is not only a trend, but a movement that could redefine the future of finance.