Cryptocurrency hedge fund Three Arrow Capital (3AC) declared bankruptcy in late June, and its aftermath can be seen in the crypto industry.
After the collapse of 3AC, other crypto firms began to prepare for any further shocks.
The crypto market was at its lowest since April, the crash of TerraUSD (UST), a stablecoin pegged to the US dollar, caused the prices of Bitcoin, Ethereum and other cryptos to fall.
With the market in crisis, 3AC was just another victim of the crypto crash and shed light on the issue of regulation of cryptocurrency or digital virtual assets.
Several financial regulators are developing or preparing to implement strict legislation to regulate the sector.
Singapore Crypto Struggles
The Monetary Authority of Singapore (MAS) has had a very welcoming approach to cryptocurrency, attracting businesses from China, India and beyond.
It is expected that after the collapse of 3AC, MAS will come up with strict regulations to monitor the crypto market, becoming less dovish.
According to data from KPMG, investments in the crypto sector grew tenfold in 2022 – to $1.48 billion.
“After recent events, it seems likely that the MAS will become stricter on crypto and digital assets,” said Hoi Tak Leung, senior technology sector counsel at Ashurst. Reuters.
The ripple effect of 3AC’s bankruptcy and subsequent market turmoil was swift and severe. Valud, a Singapore-based crypto lending and trading platform suspended withdrawals last week.
According to local media, Mirana, a fund management company, is suing 3AC over a loan deal. US-based crypto lender Voyager also filed for bankruptcy last week, over a $650 million default by 3AC.
Crypto regulations are still Dice
Asian regulators have been very strict in regulating cryptocurrencies. Singapore had been very liberal with him and promoted the crypto market, but after the bankruptcy of 3AC, they are expected to change their stance. Many countries have imposed heavy taxes on crypto and the recent stock market crash might just be another nail in the coffin.
India has imposed a 30% tax on cryptocurrencies, causing panic among Indian crypto investors. After imposing 1% TDS on crypto transactions from July 1, the crypto market is down in India and Indian crypto finance companies have also faced its backlash. If Singapore follows the same, chances are that other countries will follow and pass similar laws.
South Korea has formed a special committee as a crypto market watchdog after the Terra LUNA crash. The committee is responsible for policy development and oversight. If this trend continues, countries will need to regulate crypto with changing market patterns in mind.