In order to combat money laundering, terrorist financing and other technical risks, the Authority of Singapore (MAS) is gradually strengthening the scrutiny of companies engaged in cryptocurrency-related businesses in the country, and plans to restrict retail investors’ investment in cryptocurrencies and further expand the scope of supervision.
Singapore strengthens regulation of cryptocurrencies, retail investors may be restricted
According to people familiar with the matter, the Monetary Authority of Singapore (MAS) is strengthening its scrutiny of relevant domestic companies, and has successively issued questionnaires to applicants and holders of digital payment licenses, requesting detailed information such as business activities and positions. In order to assess the financial stability of these companies and their interconnectedness.
On the other hand, the new measures will also regulate retail investors who “irrationally ignore investment risks”, including introducing customer suitability tests and restricting the use of leverage and credit tools for cryptocurrency transactions.
Singapore tightens regulation on cryptocurrencies multiple times
The MAS issued guidelines in January 2022, stating that it would impose restrictions on the marketing activities of crypto service providers, including only allowing the promotion of related services on their company websites, social media and apps, while expressly prohibiting the establishment of crypto services in the country. Currency ATMs to prevent people from making transactions on impulse.
In the past, Singapore has a friendly regulatory environment and low taxes, which has always been a safe haven for cryptocurrency companies, attracting many large exchanges. However, with the global monetary tightening, some cryptocurrency companies linked to Singapore have declared bankruptcy, including Three Arrows Capital (3AC), which provided false information and exceeded the limit of assets under management, causing many investors to suffer serious losses. The slump in the currency was the trigger that triggered Singapore’s tightening of controls.
So far, 10 cryptocurrency companies in Singapore have successfully obtained licenses issued by the HKMA, and nearly 200 more entities have applied for licenses.
Balancing I&T development and risk management will be a new topic
Although Singapore’s original intention is to protect consumers’ money and digital tokens from bankruptcy risks, there are also concerns that such measures will slow down the development of fintech.
The HKMA responded that “financial supervision must keep pace with innovation.” If the risks brought about by new technologies are becoming more and more unpredictable, regulations and supervision should be adopted in a timely manner. At the same time, the HKMA also pointed out that the reason why it does not directly supervise virtual currency, but focuses on controlling business and investment activities related to virtual currency, is to strike a balance between innovation and risk management.