The latest indication of strain in the cryptocurrency market is the suspension of withdrawals, swaps, and deposits by Hodlnaut, a Singapore-based bitcoin lender and borrower.
The cryptocurrency lender also declared it will revoke its March in-principal permission for a licence from the Monetary Authority of Singapore (MAS) to offer digital token payment services. According to a MAS spokeswoman, the approval was revoked as a result of the request.
Hodlnaut stated that the action was taken “to focus on stabilising our liquidity and maintaining our assets” and was motivated by “current market conditions.” The company is the most recent in a long line of cryptocurrency players to have issues as a result of a strong market sell-off that began in May with the demise of two linked coins, Luna and TerraUSD.
Other notable failures include Singapore-based fund Three Arrows Capital and U.S. crypto lender Celsius, both of which declared bankruptcy this month.
According to court documents, Hodlnaut was listed as one of Celsius’ institutional clients.
In recent months, a number of cryptocurrency startups have encountered challenges in Singapore, a significant hub for blockchain and cryptocurrency in Asia.
Early in July, the Singapore-based cryptocurrency loan and trading platform Vauld stopped allowing withdrawals. Later that month, the Southeast Asia-focused cryptocurrency exchange Zipmex also stopped allowing withdrawals, though it has subsequently allowed them for specific goods.
“In addition to technology hazards, digital payment token service providers licenced by MAS under the (Payment Services) Act are subject to regulation for money laundering and terrorism financing risks. They are not required to protect customer funds or digital tokens from bankruptcy risk, and they are not subject to risk-based capital or liquidity regulations, according to a MAS spokeswoman.
They stated that the “spillover” to Singapore’s domestic financial system from the current upheaval in the cryptocurrency market has been “extremely minimal” and cited this as the reason why “MAS has been continuously reminding the general public that dealing in cryptocurrencies is highly risky.”
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