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Singapore distances itself from local crypto companies

The Monetary Authority of Singapore (MAS) said on Tuesday that its cryptocurrency regulations will add measures to protect consumers, in addition to ongoing work to contain money laundering and terrorist funding.

“Most regulatory regimes today do not cover areas such as consumer protection, market conduct, and reserve backing for stablecoins. This is changing,” said MAS managing director Ravi Menon at a media conference.

Menon detailed that reviews and public consultations on the matter have commenced among international standard-setting bodies, and that MAS aims to consult on proposed measures in the next few months. Menon also reminded the audience of Singapore’s attitude toward crypto for consumers: just don’t take the risk.

Singapore has repeatedly warned retail investors to avoid cryptocurrency as it increased regulations on operators through licensing requirements and restrictions on advertising.

Singapore’s anti-crypto rhetoric has increased in recent weeks, after Terraform Labs’ “UST” stablecoin collapsed and helped to spark market uncertainty that has sent the price of many crypto assets tumbling.

Terraform Labs is incorporated in Singapore. Other recently fallen crypto businesses, Vauld and Three Arrows Capital, are headquartered in the city-state.

Apropos of events to come, MAS board member Alvin Tan warned in parliament in April that although Singapore has long benefitted from its reputation as offering a famously friction-free business environment, crypto players that call the island nation home create “reputational risks” around the world.

In his speech, Menon distanced MAS from the fallen companies. “Some crypto players that have come under strain have been reported by the media as being ‘Singapore-based,'” said Menon. “In reality, these so-called ‘Singapore-based’ crypto firms have little to do with crypto-related regulation in Singapore.”

The MAS representative cited Terraform Labs and associated reserve-holding nonprofit Luna Foundation Guard as not being regulated by the body, having never applied nor sought exemption for a license from MAS.

Menon also clarified that Three Arrows Capital was not regulated under the Payment Services Act. Instead, it had operated under the registered fund management regime to carry out limited fund management business, but ceased to manage funds in Singapore before its insolvency.

Crypto-lending company Vauld also did not have a crypto dealing license in Singapore, but did have an application currently under review by MAS.

But despite being anti retail crypto, the regulatory body representative reiterated that Singapore was striving toward becoming an “innovative and responsible digital asset hub,” and was organizing seminars next month to explain its position on cryptocurrency, stablecoins, blockchains, tokenization, smart contracts and digital assets.

Menon also revealed that fintech investments hit an all time high of $3.9 billion in 2021 and a total of 4300 net jobs were created in financial services and fintech.

However, that growth has slowed thanks to global inflation in H12022.

“The external-oriented sectors such as manufacturing and financial services are facing some headwinds in light of weaker growth prospects in the global economy,” cautioned Menon. ®