As published on businesstimes.com.sg, Tuesday 19 July, 2022.
The Monetary Authority of Singapore (MAS) will consult on crypto regulations involving consumer protection around September or October this year, its managing director Ravi Menon said on Tuesday (July 19).
The focus of crypto regulation to-date in Singapore, as well as in most major jurisdictions, has thus far been on containing money laundering and terrorist financing risks, Menon said at a media conference in conjunction with the launch of the regulator’s annual report.
“The crypto industry globally is still evolving and regulation is still catching up with industry trends,” he said.
While most regulatory regimes today do not cover areas such as consumer protection, market conduct, and reserve backing for stablecoins, this is changing.
“Going forward, in line with international regulators, we’re also going to be broadening the scope of regulations to cover more activities. So players who are doing some of these activities but are currently not caught may well be caught. It’s hard to say,” Menon said.
He also noted that the republic will likely see an increase in the number of entities that require licensing.
Currently, some firms in the digital assets space are registered in Singapore but are neither regulated, nor have sought to be licensed, by MAS. Terraform Labs and Luna Foundation Guard, linked to the blow-up of stablecoin terraUSD last month, are 2 such examples.
Singapore’s Parliament in April passed new measures that will require domestically-registered entities offering digital token services outside of Singapore to be licensed, but these laws have yet to take effect.
On Tuesday, Menon reiterated the regulator’s refrain that cryptocurrencies investments are “highly risky”.
MAS’ repeated warnings against retail investments in cryptocurrencies and “ratcheting up of policies to restrain retail access” have “raised some questions” as to the regulator’s stance with respect to the digital asset ecosystem, he said.
The regulator will organise a seminar next month to explain its strategies for developing Singapore as a digital asset hub.
Menon spent two-thirds of his opening remarks addressing the surge in inflation - globally, and in Singapore’s domestic economy.
Core inflation in Singapore is expected to rise to a peak of 4 per cent to 4.5 per cent in Q3 this year, then slightly ease to around 3.5 per cent to 4 per cent toward the end of the year.
Inflation is expected to ease further in 2023 and will remain “well above” the 1.5 per cent average rate since 2000.
The effects of MAS’ 4 monetary policy tightening moves are still working their way through the economy and are expected to restrain core inflation by 1.2 percentage points each year over 2022 and 2023, Menon said.
Just last Thursday, the regulator announced its second out-of-cycle policy tightening move this year, as inflationary pressure in the citystate rises on the back of global supply chain disruptions.
As of now, MAS expects neither a recession nor a stagflation in Singapore next year, Menon said.
Stress tests by the authority suggest that most households here should be able to service their debts even in situations of sharp interest rate hikes and significant income losses.
The median total debt servicing ratio for new loans issued over the past year stood at 43 per cent, while median loan-to-value ratio for the outstanding stock of mortgages, as of Q1 this year, is less than 50 per cent. Non-performing mortgages remained low at less than 1 per cent.
Singapore’s financial sector grew at an annual average of 7.2 per cent over FY 2020/21, according to MAS estimates.
Growth has been broad-based, across banking, insurance, asset management, and payment services.
In 2021, value-added grew by 7.4 per cent, fintech investments hit a high of US$3.9 billion, and some 4,300 net jobs were created in financial services and fintech.
“The financial sector should continue to grow handsomely,” MAS chairman Tharman Shanmugaratnam said in his message in conjunction with the report launch.
Nevertheless, he acknowledged that the global environment has become more challenging this past year, even as countries are progressively emerging from the Covid-19 pandemic.
Russia’s invasion of Ukraine has had, and will continue to have, far-reaching effects on supply chains, inflation, and the outlook for growth, he said.