A Singapore Regulator Pledges to be "Unceasingly Tough" on Cryptocurrency

Published on: 23 June 2022
by KnowESG
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According to its fintech policy chief, Singapore will likely be very hard on bad behaviour in the cryptocurrency market, signalling a significant shift in tone after years of courting the sector.

Sopnendu Mohanty, top fintech officer at the Monetary Authority of Singapore, the country's central bank, questioned the value of individual cryptocurrencies and said he expected a government-backed alternative to be introduced within three years.

“We have been called out by many cryptocurrencies for not being friendly,” he advised the Financial Times in an interview. “My response has been: friendly for what? Friendly for a real economy or friendly for some unreal economy?”

Mohanty added: “We have no tolerance for any bad market behaviour. If somebody has done a bad thing, we are brutal and unrelentingly hard.”

The crypto meltdown has hardened the stance of authorities in Singapore, where several crypto businesses were established due to the perceived favourable regulatory environment and low taxes.

But crypto exchanges, together with Bybit and Binance, have shunned the city-state in recent months because the MAS began rolling out more and more restrictive guidelines.

Mohanty was speaking as South Korean prosecutors focused on Terraform Labs, a company based in Singapore that was responsible for the defunct stablecoin terraUSD and its twin token luna.

After Luna's $40 billion loss, Singapore-based cryptocurrency hedge fund Three Arrows Capital was also immediately thrown into a disaster for not meeting margin calls.

“I think the world at large is lost . . . in private currency, which is causing all this market turmoil,” mentioned Mohanty.

He said that Singapore's licencing requirements for cryptocurrency startups are "painfully slow" and "very rigid."

Singapore has approved only a small number of roles for a licence to run cryptocurrency business.

A platform for buying and trading cryptocurrencies, called Crypto.com, received in-principle authorization to operate on Wednesday. Additionally, Crypto.com has obtained a licence in Dubai and intends to introduce a bitcoin exchange service there.

However, Mohanty's comments hinted that certain cryptocurrency enterprises would experience an uncertain future in Singapore.

This week, the MAS co-launched a "centre of excellence" in the city-state to work on the creation of a central bank digital currency, an idea that other nations are investigating to potentially seize control of online payments from cryptocurrency companies.

The team, led by software company Mojaloop and supported by Singapore's Temasek state fund, aims to integrate virtual currency into a platform that enables inexpensive international transfers.

In "a few years," according to Mohanty, a digital currency will be integrated into the network. He said that it might not be exclusive to Singapore and might be available to other central banks.

He stated, "We are steadfastly focused on the foundation of the future economy, which may be based on a digital asset."

Source: Financial Times

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