First Mover Asia: Singapore’s Regulators Will Be Eyeing Local Crypto Companies After Terra Collapse; Bitcoin Rebounds

So will other cryptos hammered last week by the toxic mix of geopolitical unrest, rising interest rates, recessionary fears and the implosion of the terraUSD (UST) stablecoin and the LUNA token that backs it.

Bitcoin was recently trading above $31,000, up nearly 6% over the past 24 hours and more than 16% from the $26,600 depths it sank to mid-Friday. 

"Bitcoin did indeed face downward pressure that saw it losing the $30K support, but it did not fall below the 25K level," Joe DiPasquale, the CEO of crypto fund manager BitBull Capital, wrote to CoinDesk.

Ether, the second largest crypto by market cap, was recently up similarly and changing hands at about $2,100 after earlier in the week dropping below $1,800 for the first time in two months. 

Most major altcoins spent Sunday well in the green, recovering some of the ground they lost last week as the crypto market cap tumbled by $300 billion. 

SOL rose more than 10% at one point, although its $55 price was down from over $70 at the start of the week.

ADA, AVAX and AXS posted increases ranging between 9% and 11%. BCH was among the few losers earlier Sunday.

Crypto gains dovetailed with equity markets that finally enjoyed some good news Friday after six straight days of declines. 

The tech-focused Nasdaq closed up 3.8%, while the S&P 500 and Dow Jones Industrial average rose 2.3% and 1.4%, respectively. 

Still, the week's economic bad news is unlikely to shake investors from their risk-averse positions of recent months.

On Wednesday, the U.S. Commerce Department announced that consumer prices had risen 8.3% in April, slightly better than the previous month but nevertheless a sign that inflation driving a range of goods and services would linger. 

Even the once torrid housing market has felt shockwaves as mortgage rates have risen over 5.3%, increasing the difficulty for would-be homeowners to finance their purchases. 

Investors have been concerned that U.S. central bank hawkishness was inadequate to tame rising prices without throwing the economy into recession.

In an email Friday, Hargreaves Lansdown Senior Investment and Markets Analyst Susannah Streeter highlighted "investor worries over inflation, supply concerns the UST fall, which sent LUNA tumbling to a fraction of a cent.

"For now the crypto wild west is taking a breather after reeling from the crash brought on by the collapse of a so-called stablecoin," Streeter wrote, adding: 

"This latest plunge in the wheel of fortune demonstrates that speculating in cryptocurrencies is extremely high risk and are not suitable for investors who don’t have money they can afford to lose.’’

BitBull's DiPasquale noted that "a near-term bounce" in Bitcoin "is still intact but a proper reversal needs more buying activity." 

He called last week's low "a decent buying opportunity for long-term exposure," but also warned that "the coming month may bring additional volatility as more concrete steps by the FED to fight inflation come to the fore."

As the week closed in Asia, LUNA and UST were de-listed from most exchanges as the Terra blockchain was halted for nine hours (currently resumed) and the market seemed to reject a recovery plan.

The question on many people’s minds is, how will token holders be made whole? That’s where things get complicated.

Terraform Labs, the Singapore-registered company behind the Terra protocol, doesn’t have a permanent office.

The Singapore address it provides is a registration agent, home to hundreds of Singaporean companies. Its offices are rented co-working spaces worldwide; like many Web 3 startups, there’s no formal headquarters.

The only assets the company has are from the Luna Foundation Guard. This non-profit organization, also registered in Singapore and overseen by Do Kwon, controls the wallets that were to support the UST peg during times of extreme volatility. 

The majority of these wallets are now empty, with the only thing of value remaining being the approximately $69 million in avalanche token (AVAX).

Singapore’s regulators are aware of the trend of crypto companies using a Singaporean entity to conduct business abroad with no material ties to the country. 

In April, its Parliament passed a bill into law that included provisions that require domestically registered crypto companies that do business abroad to be licensed primarily for anti-money laundering reasons, but leaves the door open in the future for this to expand.

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