‘Most dangerous product in crypto’ vexes Singapore

{"text":[[{"start":7,"text":"A company offering what consumer advocates have called “the most dangerous product in crypto” has become one of the industry’s hottest names. "}],[{"start":14.5,"text":"But Hyperliquid Labs is also raising the heat in Singapore, a city-state averse to risk and scandal where it has made its home."}],[{"start":22.1,"text":"Hyperliquid’s founder and chief executive, Jeff Yan, is set to speak on Wednesday at Token2049, a conference being hosted in Singapore dubbed “the world’s largest crypto event”."}],[{"start":33.75,"text":"The company is known for its risky perpetual futures or “perps”. The crypto-based derivatives allow traders to speculate on the price of everything from oil and cryptocurrencies to stocks in otherwise inaccessible markets without having to make or accept delivery of assets."}],[{"start":50.05,"text":"Perps, which do not expire and deploy a mechanism that anchors them to the spot prices of assets they track, gained mainstream attention at the start of the Iran war as traders used them to make off-hours bets on turbulent energy markets."}],[{"start":64.2,"text":"But consumer advocates have called them “the most dangerous product in crypto” because of their often highly leveraged and open-ended structure. Hyperliquid Labs’ presence in Singapore has posed a dilemma for the Monetary Authority of Singapore, which regulates the industry and has cautiously embraced crypto."}],[{"start":82.25,"text":"The regulator is keen to promote innovation in digital assets among institutions but believes cryptocurrencies are too risky for the general public. It has taken measures to discourage their use and warned investors in June that it did not regulate Hyperliquid’s perps."}],[{"start":97.35,"text":"“We are not aware that Hyperliquid is regulated in any major jurisdiction,” MAS told the FT."}],[{"start":null,"text":"

"}],[{"start":103.75,"text":"People familiar with the regulator’s thinking said MAS did not believe Hyperliquid was based in Singapore due to its “decentralised nature” and thus should not fall under its jurisdiction."}],[{"start":115.2,"text":"Yet Hyperliquid Labs confirmed to the FT that it was based in the city-state. Job ads posted as recently as last week asked applicants if they were able to “work in the Singapore office”, and company documents seen by the FT show Singapore as its registered headquarters."}],[{"start":133.2,"text":"The company said Hyperliquid, which is unregulated, “is not, and has never claimed to be, licensed or authorised by MAS”, adding that it respected the role of regulators and “remains committed to engaging constructively with them”."}],[{"start":146.64999999999998,"text":"MAS’s wariness stems from Singapore’s chequered history with crypto."}],[{"start":151.49999999999997,"text":"Once called a “crypto paradise”, the city-state has been a favourite destination over the years for exchanges to set up their headquarters, thanks to its reputation as a secure and innovative financial centre. But the collapse of several businesses has tarnished that reputation."}],[{"start":166.89999999999998,"text":"Terraform Labs, the company that defrauded investors in the $40bn crash of TerraUSD digital tokens in 2022, was registered in Singapore, while crypto hedge fund Three Arrows Capital began as a registered fund management company in Singapore before filing for bankruptcy in the US."}],[{"start":null,"text":""}],[{"start":185.39999999999998,"text":"Last year, MAS caught the industry off guard by announcing that unlicensed crypto exchanges operating in Singapore had to close or move abroad within a matter of weeks. Analysts said the short timeframe was the regulator’s way of flushing out unwanted players in an industry that had caused embarrassment."}],[{"start":204.09999999999997,"text":"“The regulatory work . . . is partly a response to those instances,” said Jordan Wain, head of global policy at blockchain data provider Chainalysis. “They had a hard time, got a wake-up call and responded to it way faster than most jurisdictions around the world.”"}],[{"start":221.64999999999998,"text":"Despite the crackdown, Singapore’s crypto industry has continued to flourish, with assets growing by 55 per cent last year, according to Chainalysis."}],[{"start":231.24999999999997,"text":"Other regulators have mixed stances on perps. The UK’s Financial Conduct Authority has warned investors it does not regulate Hyperliquid, while the US gave the green light this year for retail investors to trade perps."}],[{"start":244.74999999999997,"text":"President Donald Trump said in August the Commodity Futures Trading Commission was “working to bring Hyperliquid into the United States in a fully compliant and legal fashion”."}],[{"start":255.89999999999998,"text":"Hyperliquid Labs is not the only Singapore-based company that offers perps. SGX, the local bourse, is on track to become the first traditional exchange to offer perps to US institutions, having launched products in Singapore last year."}],[{"start":270.15,"text":"MAS said SGX and Hyperliquid “differ fundamentally in their regulatory position” and that SGX’s products were designed for institutional investors."}],[{"start":280.45,"text":"“Cryptocurrency trading is highly risky and not suitable for the general public,” it said. “MAS has put in measures to discourage cryptocurrency speculation by retail investors.”"}],[{"start":297.84999999999997,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1791339119_2400.mp3"}