Half a world away — Gary Gensler’s SEC dominates discussion at Singapore’s Token 2049

He was not there. But Gary Gensler was still the center of attention at the Token 2049 crypto conference in Singapore on Wednesday and Thursday.

The head of the US Securities and Exchange Commission (SEC) has become the crypto industry’s biggest bogeyman in the year since the last Token 2049 conference in the Southeast Asian city-state.

In that time, the Terra stablecoin platform has collapsed, the FTX cryptocurrency exchange has collapsed, and a trio of crypto-friendly US banks have collapsed. The price of Bitcoin fell, started rising again, and then stagnated. As the crypto winter set in, consuming $2 trillion from the market, a general malaise spread across the industry.

Then there’s Gary Gensler and the SEC.

“Can I get a ‘Fire Gary Gensler’ out of the crowd?” said host and crypto evangelist Balaji Srinivasan during a fireside chat Thursday with the Winklevoss brothers, founders of cryptocurrency exchange Gemini Trust Company LLC. Like many of the big US names appearing at Token 2049, all three openly expressed their disdain for Gensler and the regulator he leads.

“Now when the SEC sues a company, it’s like a rite of passage. It’s strange if you haven’t been sued by the SEC at this point,” Cameron Winklevoss said. Along with his twin brother Tyler, he was targeted by Gensler’s SEC when the regulator sued Gemini in January for allegedly illegally selling unregistered securities to retail clients.

“It used to be a big deal. It used to mean something. It used to mean you might be doing something wrong. Now you’re probably doing something right,” Winklevoss added.

The SEC is currently pursuing legal action against some of the biggest names in the crypto industry, from software company Ripple Labs to major cryptocurrency exchanges such as the US branch of Binance Holdings and Coinbase Global. The regulator maintains that almost all cryptocurrencies except Bitcoin are securities, meaning it has the power to legislate on the legality of their use – a definition that the broader crypto industry is seeking.

“It’s not security, is it? It’s like asking: Is this car a horse? You know, okay, it moves a little bit like a horse. It performs some of the functions of a horse. But obviously it’s very different from a horse,” Srinivasan said.

Introduction of blockchain in Asia

The gloomy mood that was spreading half a world away in the USA had subsided over several panel discussions on Token 2049. But the sprawling Marina Bay Sands conference center in the heart of Singapore’s central business district was still bustling throughout the two-day event.

Formula 1 was in town ahead of Sunday’s Singapore Grand Prix and it was an opportunity for blockchain companies, including Hong Kong-based OKX, lead sponsor of this year’s token 2049, to show their commitment to the sport. Glass-fronted skyscrapers towered over the traditional red-roofed Hawker food courts, where racing fans, crypto bros and well-heeled city dwellers took a break from the heat with satay sticks and a glass of chilled beer.

On Friday night, the lucky few will attend Token 2049’s wrap party at a rooftop nightclub at Marina Bay Sands overlooking the race track – all for a cool $180 a ticket – where McLaren cars will feature the new livery Sponsors OKX will compete against each other. Various F1 drivers, including AlphaTauri team’s Daniel Ricciardo and Alpine’s Pierre Gasly, also made heavily staged promotional appearances at Token 2049.

Everything was appropriately glitzy for an event in Singapore. The city-state with around 5.5 million inhabitants is a growing center of the global crypto industry. It is currently competing with its Asian neighbors to the north – particularly Hong Kong – for recognition as the region’s main cryptocurrency hub.

In August, Singapore became the first country in the world to set rules for stablecoins – a digital asset class pegged to fiat currencies with an estimated current value of $124 billion. Regulatory clarity and favorable tax rules have made the city-state one of the most attractive locations for blockchain companies from around the world to establish themselves.

“Here in Singapore we are fortunate to have very competent regulators looking at crypto and blockchain and trying to understand and engage with the sector,” said Norwegian Alex Svanevik, co-founder and CEO of Singapore based blockchain analysis company Nansen, during an interview.

Svanevik said that since he lives in Singapore, he has felt the momentum of building the blockchain industry in the Asian region.

“I think the three main destinations that people talk about a lot are Singapore, Dubai and Hong Kong. All three have quite different strategies when it comes to how they approach the crypto industry. But Korea and Japan are potentially huge markets, and for many exchanges they are already huge markets. That’s why I think it’s wise for people to look to Asia,” he said.

However, despite the city’s high concentration of global and regional crypto companies, Singapore is not the region’s most important growth market. The 2023 Global Crypto Adoption Index released by blockchain analytics firm Chainalysis on Wednesday, the first day of the token conference, found that growth in Singapore is slower than other parts of the world, particularly in other parts of the South and Southeast Asia.

Singapore ranked 76th in the Chainalysis Adoption Index, up from 63rd last year. But regional neighbors Vietnam, the Philippines, Thailand and Indonesia also made it into the top ten, as did the South Asian markets of Pakistan and India, with India topping the global list.

Michael Gronager, founder and CEO of Chainalysis, said during an interview at the event that a number of important conclusions can be drawn from the results. The most important thing is that the Asia region plays a pioneering role as a global growth market.

“Asia was mobile before the rest of the world was. That didn’t mean we never mobilized,” he said. “This is a region with typically early technology adoption. This is technology and this is the early adoption of technology. So I think this is more of a sign of where the rest of the world is going than anything else.”

U-turn in the USA

The US ranked third in Chainalysis’ Blockchain Adoption Index despite its ongoing regulatory issues. This value is a sign, Gronager said, that crypto activity remains high in the world’s largest economy. However, Token 2049 panelists agreed that the regulatory standoff in the US has created a bottleneck for the industry.

During the event’s opening panel, Mike Belshe, CEO of digital asset custody service BitGo, said a lack of regulatory clarity poses a danger to consumers.

“Regulators and lawmakers need to be clear about their priorities as to what counts first,” he said. “Frankly, the top priority in crypto regulation should be focusing on the fundamentals, ensuring assets are safe and cannot be pressured.”

Could the US reverse course and follow jurisdictions like Singapore in Asia and find a happier compromise between regulators and industry that would benefit users? Brad Garlinghouse, CEO of Ripple Labs, who also appeared during the opening round, said that to do this, politics must first be taken out of the discussion.

“We are talking about the US because it is a large economy and they are quite hostile to cryptocurrencies. But I think, you know, it doesn’t feel political here in Singapore. It feels like they are making smart policies that are driving innovation here locally,” he said.

Other jurisdictions such as the United Kingdom, Dubai and Switzerland are also moving in the same direction, he added.

For Hong Fang, CEO of OKX and another panelist at the opening session, it is the pragmatic approach to regulation in Asia that has led to breakthroughs in rulemaking and compromise between governments, lawmakers and the crypto industry.

“We can only control what we can control, which is developing the right product, continuing to focus on technology and supporting responsible regulation and engagement so that we can actually ensure that we have a healthy environment,” Fang said.

A number of conference attendees said over the two days that they welcome the ongoing bear market and period of regulatory scrutiny as an opportunity to rid the industry of its bad actors and spur an increase in innovation.

“Increasing scrutiny of the industry is actually a good thing to some extent because it encourages discussion about what is right and what is wrong,” she said.

“It’s a good thing to get people to actually focus on what’s important to the customer, which is customer protection. And to that end, I think regulation and technological innovation are in harmony,” Fang added.