The Need for Regulating Crypto
As per Aditya Narain et al., crypto assets have existed for more than ten years; however, initiatives to regulate them have only recently been elevated to the forefront of the list of priorities. This is partially due to the fact that cryptocurrency assets have just recently transitioned from being niche items looking for a use to becoming more widely used as speculative investments, hedges against unstable currencies, and prospective payment tools. Simultaneously, authorities have made it illegal for citizens to issue or possess crypto assets, engage in transactions with them, or utilise them for specific tasks like payments. On the other hand, some nations have been more hospitable and have even tried to court businesses to create markets for these assets. Consequently, there is a divided global reaction that neither ensures a level playing field nor prevents a race to the bottom as crypto actors relocate to the countries with the friendliest regulations and the least stringent access requirements.
The Financial Stability Board started keeping an eye on the markets for crypto assets, published a set of rules to govern how stablecoins are regulated globally, and is currently creating guidelines for a wider variety of crypto assets, such as unbacked crypto assets. Other standard-setters are getting in on the action by coming down on the prudential treatment of banks' exposures to crypto assets and on implementing guidelines for financial market infrastructures to systemically important stablecoin structures (Committee on Payments and Market Infrastructures and IOSCO) (Basel Committee on Banking Supervision). The fabric of regulation is being spun, and a pattern is anticipated to show. However, there is concern that more national bodies will become trapped in varying legal systems as time passes. To ensure a level playing field and close any regulatory gaps brought on by naturally cross-sector and cross-border issuance, the IMF urges a global response that is coordinated, consistent, comprehensive, and aligned with mainstream regulatory mechanisms across the activity and risk bandwidth.
What is a CMS License?
According to Monetary Authority of Singapore, to do business in Singapore in a way that complies with the Securities and Futures Act, a company must first get a capital markets services (CMS) licence. CMS licensees or CMS exempt enterprises are required to appoint representatives to carry out regulated activities on their behalf (such as banks).
Businesses such as broker-dealers, corporate finance advisers, credit rating agencies, managers of real estate investment trusts (REITs), fund managers, and operators of securities-based crowdfunding (SCF) must have a CMS licence.
HashKey on a License Acquisition Spree
HashKey Capital, Singapore Pte. Ltd. ("HashKey Capital Singapore" and together with its affiliates, the "HashKey Group") made the announcement at the Singapore Fintech Festival 2022 that it had received preliminary approval from the Monetary Authority of Singapore ("MAS") to operate as a licenced fund management company under the Capital Markets Services ("CMS") licence (LFMC).
HashKey Capital now has a Type 9 asset management licence from the Hong Kong Securities and Futures Commission (SFC), which enables it to manage a portfolio made up solely of digital assets. In addition, HashKey Capital is the first blockchain venture capital company to be designated as a "Recognized Investment Firm" by the Tech@SG programme.
The Singapore Economic Development Board (EDB) and Enterprise Singapore are working together to implement this initiative, which aims to aid startups and early-stage companies in Singapore in attracting and retaining top people for organisational growth and expansion. If a HashKey Capital portfolio business meets the programme requirements, the Tech@SG Programme will recommend the company to the Ministry of Manpower ("MOM"), reducing the likelihood that the MOM would reject the company's application for an employment permit.
What is Hashkey Capital?
HashKey Capital is the investment arm of the HashKey Group. It is a manager of assets that invests in blockchain technology and digital assets, managing over $1 billion in client assets since its establishment. The firm is headquartered in Hong Kong and Singapore and has strong ties to Japan and the United States.
It is Ethereum's earliest corporate investor, with the aim to connect Web2 and Web3 while bridging digital assets to the mainstream. Since 2015, HashKey Capital has invested in over 500 global initiatives ranging from Layer 1, protocols, crypto finance, Web3 Infrastructure, NFT, and Metaverse.
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Image credits: Arthur Mazi and Michael Förtsch.