Singapore Will Turn Conducive for Crypto-Related Services: MAS Chief

·3-min read

Key Insights:

  • Singapore wants to be a responsible crypto hub by implementing strict yet clear rules.

  • Mas chief raised concerns regarding the risks of investing in Bitcoin to retail investors.

  • 11 crypto service providers have received in-principle licenses in the last two years.

The Monetary Authority of Singapore (MAS) has tightened the licensing process for digital asset service providers to become a “responsible global crypto hub.”

Citing a slew of risks to retail investors and the potential to misuse cryptos for money laundering and terrorism financing, the Managing Director of MAS Ravi Menon, stressed making the crypto licensing process more “stringent.” 

Talking at the Financial Times Crypto and Digital Asset Summit Wednesday, he noted,

“The licensing process is stringent because we want to be a responsible global crypto hub, with innovative players but also with strong risk management capabilities. We only approve applicants with strong governance structures, fit and proper board and management, and we go through their track record.”

The development of regulation in Singapore for cryptocurrencies has been steadily occurring over the past few years. In early 2022, the legislative environment and the high rate of crypto adoption changed in the city-state after MAS issued a new circular curbing crypto ads and caused ATM operators to shut down.

MAS’s Criteria To Obtain Crypto License

MAS has been closely eyeing to ensure regulations are in place and risks are well managed. 

The regulator has so far approved only a small fraction of over 170 digital asset applicants. Over 100 businesses that applied for a crypto license in the country have failed to meet their licensing requirements, per Nikkei Asia report.

In early September 2021, the regulator booted one of the world’s largest crypto exchanges, Binance, enlisting the asset provider among its Investor Alert List. Binance later withdrew its application for reportedly failing to meet Monetary Authority of Singapore (MAS) KYC and AML requirements.

The central bank head added that many young players in the crypto ecosystem are “innovative, nimble, and think out of the box.” However, they lack experience of being regulated. “As such, we need to bridge the culture issue.”

MAS expects crypto service licensees to:

  • Perform risk assessment of new products and technologies that reviews their anonymity and usage for illicit purposes.

  • Conduct proper customer due diligence for all digital payment transactions.

  • Monitor customer relations and make sure that transactions are consistent.

  • Comply with the value transfer rule.

  • Comply with technology risk management and cyber hygiene requirements.

Menon detailed that the central bank has taken a “tough line” on retail crypto investing. He stated,

“[This is] because we’re not sure that’s a good idea for retail investors to be dabbling in cryptocurrencies. I think many global regulators share similar concerns about retail exposure to cryptocurrencies.”

MAS has so far granted crypto in-principle approvals to Coinhako, Hodlnaut, Paxos, Digital Treasures Center, and Revolut.

Luno, a retail-focused crypto platform, was the latest entity to add to the approval list. Sherry Goh, country manager for Luno Singapore, said,

“The requirements are, in our view, reasonable and consistent with our objective of providing a safe environment for cryptocurrency users in Singapore.”

CBDCs and Project Dunbar

Speaking about central bank digital currencies (CBDCs), Menon said that MAS expects to have a common settlement platform “where the central banks of the world can come together and issue wholesale CBDCs to effect seamless cross-border payments.”

Singapore joined the central banks of Malaysia, South Africa, Australia, and others in Project Dunbar, seeking to test the utility of a CBDC in international settlements in order to cut the time and costs of transactions.

Menon clearly said that MAS “does not have the intention to issue one,” however will be conscious of the risks if there is one. He said,

“We want to make sure we have the technology, governance, and policy structures to launch a retail CBDC, if necessary.”

This article was originally posted on FX Empire