Amid heightened volatility in the cryptocurrency market, the Monetary Authority of Singapore (MAS) said it will tighten laws for crypto players in the country in the coming months and take firm enforcement action if any entity is found to be conducting illegal activities.
Releasing the central bank's annual report on Tuesday, MAS Managing Director Ravi Menon said some crypto players that have come under strain had been reported by the media as being “Singapore-based,” but in reality, these crypto firms have little to do with crypto-related regulation in Singapore.
Singapore Distances Itself From Crypto Collapse: Citing examples of beleaguered crypto firms, he said TerraForm Labs and Luna Foundation Guard are not licensed or regulated by MAS, nor have they applied for any license or sought exemption from holding any license.
He said Three Arrows Capital was not regulated under the Payment Services Act, adding that it operated under the registered fund management regime to carry out limited fund management business, but had ceased to manage funds in Singapore prior to the problems leading to its insolvency.
Vauld is not licensed by MAS nor has it sought an exemption from holding a license under the Payment Services Act, Menon said, adding that it has submitted a license application that is pending review.
“MAS and relevant government agencies will take firm enforcement action if any entity is found to be conducting illegal activities or performing regulated activities without a license,” the Managing Director said.
Singapore Zeroes In On Consumer Protection: While Singapore is often seen as being at the forefront, with a clear licensing and regulatory framework, the focus of crypto regulation to date in Singapore, as well as in most major jurisdictions, has been on containing money laundering and terrorist financing risks, Menon said.
Most regulators do not cover consumer protection, market conduct and reserve backing for stablecoins, Menon said.
"This is changing. Reviews and public consultations are underway, among international standard-setting bodies and regulators, to strengthen regulation in these areas. MAS is targeting to consult on proposed measures in the next few months,” he said.
Cryptos Remain A Risky Investment: He reiterated that investing in cryptocurrencies is highly risky and that repeated warnings by MAS against retail investments in cryptocurrencies and ratcheting up policies to restrain retail access have raised some questions about where MAS stands with respect to the digital asset ecosystem.
The financial regulator will organize a dedicated seminar to share its strategies to develop Singapore as a digital asset hub next month.
"We will explain our position on cryptocurrencies, stablecoins, blockchains, tokenization, smart contracts and digital assets — their risks and opportunities; shortcomings and potential," said Menon.
