Singapore recently confirmed a ban on crypto staking and lending, according to the latest news.
The Singapore Regulatory Authority has issued a specific restriction on cryptocurrency exchanges, prohibiting them from providing staking and lending services to retail customers.
In addition, Vitalik Buterin recently stated that he does not have all his ETH staked, but only a “small portion.” See below for all the details.
Summary
Singapore’s new crypto rules: ban on staking and lending for retail clients
As anticipated, the Monetary Authority of Singapore (MAS) has implemented new regulatory policies for crypto, which include a ban on staking and lending for retail customers.
In addition, by the end of 2023, MAS will require exchanges to move customers’ digital assets into a trust in order to avoid situations similar to that of FTX, which collapsed after accusations of mixing customer funds with corporate funds.
Not only that, Thailand also followed the same guidelines as Singapore, banning deposit services that offer returns to depositors and lenders, namely a ban on staking and lending.
We note that this move by Singapore comes amid renewed interest in Asia in embracing blockchain technology.
For example, Hong Kong, China’s autonomous territory, is promoting a pro-cryptocurrency policy, differentiating itself from the hostile approaches of the United States and China.
In fact, crypto companies in Hong Kong have been granted a one-year trial period to open a location and, if approved by the authorities, will be able to obtain a business license.
In addition, Hong Kong has established a task force to actively promote Web3. In South Korea, the government is also developing a strategy to regulate the cryptocurrency industry.
We see that large institutions and industrial companies continue to invest in the Web3 industry, such as the Bank of Korea and Samsung.
While Singapore bans staking, Hong Kong makes strides in the crypto sector
Hong Kong’s Securities and Futures Commission (SFC) recently announced that licensed crypto platforms will be allowed to offer their services to the retail public as well.
As part of this news, the regulator has introduced a new license specifically for trading crypto assets. Indeed, interested platforms will be able to apply for this license, provided they meet the guidelines set by the SFC.
The guidelines will include various aspects, such as security requirements for asset custody, segregation of client holdings, and cybersecurity standards.
Julia Leung, CEO of SFC Hong Kong, stressed the importance of establishing clear regulatory expectations to create a “responsible” and innovative development environment:
“Our regulatory approval for Hong Kong virtual assets follows the principle of ‘same business, same risks, same rules. The aim is to provide solid protection to investors and manage the main risks associated with these assets.”
We see that during the consultation period, the SFC received 152 pieces of feedback from various crypto entities, as reported in the announcement.
To ensure the protection of retail investors, a number of robust measures will be implemented, including good governance, a proper onboarding process, and thorough token analysis.
In addition, new admission and disclosure criteria will be introduced. Finally, the SFC announcement pointed out that most of the virtual asset trading platforms currently accessible to the public are not regulated.
Therefore, platforms that do not wish to comply with the new guidelines will have to proceed with the orderly closure of their operations.
Vitalik Buterin’s statements on staking his Ether
Vitalik Buterin, the co-founder of Ethereum, recently discussed his staking choices regarding Ether (ETH) and the risks associated with restaking practices on other emerging networks.
Specifically, during a 29 June episode of the Bankless podcast, Buterin explained that he is not staking all of his Ether because of the complexity of multi-signature wallets.
In fact, he revealed that he is staking only a small portion of his ETH and cited the complications associated with these wallets as the main reason, as we read:
“Because if you stake your ETH, the keys that access your funds must be public on an online subsystem. To be safe, it must be a Multisig. Multisig for staking is still quite difficult to set up; it’s complicated in a lot of ways.”
In response, on 30 June, Charles Hoskinson, co-founder of Ethereum and founder of Cardano, commented on Twitter that he was “at a loss for words” after learning that Buterin only stakes a small portion of his Ether.
In contrast, Hoskinson pointed out that “all” of his Cardano (ADA) is staked:
Buterin: “centralization risks are the main challenge”
In the same talk, Buterin also mentioned the EigenLayer protocol, which allows Ethereum validators and stakers to restake their assets on emerging networks.
Although the protocol is still in the testing phase and is scheduled to launch in the third quarter of 2023, Buterin pointed to the risks of centralization as the main challenge, as follows:
“Reliable stakers would be more valued by the system than unreliable ones. Reliable stakers are much less likely to be ‘cut’.”
For his part, Sreeram Kaanan, the founder of EigenLayer, emphasized the complex risks associated with restaking and stressed the importance of a constrained approach in its implementation:
“The constraints represent what is really good for the ecosystem and having constraints on building what new innovation can be released based on this concept.”
We emphasize that these discussions come after Buterin, in a post on 9 June, pointed out the shortcomings of Ethereum’s scaling infrastructure, stating that the blockchain “fails” without an adequate scaling system to make transactions economical.
In the same context, he also pointed to issues with smart contract wallets and the complexities associated with the user experience when managing multiple addresses simultaneously.
