The Policy Pulse, 21 August 2023

Welcome to the Policy Pulse, your go-to source for the latest developments in the crypto and blockchain industry, policy, and regulatory landscape. 

Singapore’s New Regulatory Regime for Stablecoins

Singapore’s Monetary Authority (MAS) officially unveiled its regulatory framework for stablecoins, marking the culmination of a comprehensive review process that included public input from an October 2022 consultation.

According to the MAS, the primary focus of this framework is to ensure robust levels of value stability for single-currency stablecoins (SCS) that are pegged to the Singapore Dollar or any G10 currency. Some of the main features of the regulations include the following:

• Custody and Audit Requirements: Stringent mandates have been established for the custody and audit of reserve assets.
• Capital and Liquidity Obligations: Stablecoin issuers must adhere to capital requirements and maintain sufficient liquid assets.
• Prompt Redemption: Issuers are obligated to fulfill any redemption requests within a five-business-day timeframe.

In addition, MAS is preparing to introduce a classification termed “MAS-regulated stablecoins,” exclusively applicable to stablecoin issuers who meet all criteria outlined in the framework. This distinctive designation will enable users to differentiate compliant stablecoins from other digital payment tokens, creating a clear demarcation within the market.

The Ripple v SEC Saga Continues… 

Last week, the SEC filed a motion seeking permission to file an interlocutory appeal. 

For those not familiar with legal speak, an interlocutory appeal is an appeal that occurs before a trial or case is fully concluded at the trial court level. It allows a party to appeal a specific legal issue or ruling to a higher court before the entire case is resolved.

This particular appeal focuses on Judge Analisa Torres’ understanding of Ripple’s sales of XRP on exchanges and other distributions (e.g. employee remuneration and grants to third-party app developers).

At the beginning of this week, Ripple filed its opposition to the motion. However, on Thursday, Judge Torres granted the SEC’s request for an interlocutory appeal. 

On Friday, the SEC filed its motion to certify the appeal. Ripple will have until September 1st to file its objection.

The outcome of this case is important as it will have implications for the wider cryptocurrency industry, including the SEC’s ongoing case against Coinbase. 

Coinbase Gets Green Light For Futures Trading 

Speaking of Coinbase, the crypto exchange announced that it received the green light from the National Futures Association (NFA) to operate as a Futures Commission Merchant (FCM). This allows for eligible customers in the United States to access cryptocurrency futures directly from Coinbase’s platforms.

SEC on the Brink of Approving Multiple Eth ETFs?

The US Securities and Exchange Commission (SEC) is reportedly on the brink of granting approval for multiple exchange-traded funds (ETFs) applications centered on Ethereum futures, as reported by Bloomberg.

Noteworthy companies, including Volatility Shares, Bitwise, Roundhill, and ProShares, have already submitted applications for launching Ethereum futures-based

ETFs. The news had an immediate positive impact on Ethereum’s price, witnessing an 11% surge right after the announcement. This price increase occurred despite a wider market downturn that had transpired earlier.

On the other side of the Atlantic, Europe’s first spot Bitcoin ETF went live.

CBDC News

Over the past number of months, there’s been a marked increase in the number of countries and institutions testing CBDCs. This week there were a number of notable developments:

• Mastercard announced it is forming a CBDC Partner Program consisting of a number of prominent blockchain and crypto companies, including Ripple, Consensys, and Fireblocks. Apparently, the purpose of the program is to “bring a greater understanding of the benefits and limitations of CBDCs and how to implement them in a way that is safe, seamless and useful”. 
• Colombia’s Banco de la República issued a CBDC study in which it concluded that the best design would be one which is intermediated by commercial banks. They also recommended holding and spending limits as a way to “safeguard” users’ funds from security breaches such as cyber-attacks.