SINGAPORE: Singapore strengthens crypto regulations, fosters blockchain adoption

As published on: uk.investing.com, Friday 3 November, 2023.

Singapore is reinforcing its position as a digital asset hub by implementing stricter cryptocurrency regulations and promoting institutional use of blockchain technology. This comes in the wake of a $2 trillion market crash in 2022, triggered by the collapse of Terraform Labs Pte's digital coins and the subsequent downfall of Three Arrows Capital hedge fund.

The Monetary Authority of Singapore (MAS) has taken steps to discourage speculative trading by retail investors while fostering the growth of blockchain projects. In 2022, Singapore managed S$4.9 trillion ($3.65 trillion) of assets, largely sourced from abroad.

A key initiative in this regulatory tightening was the curtailment of digital asset ads featuring celebrities like Matt Damon before the 2022 crypto rout. The country later prohibited the public lending of tokens for interest, imposed stringent suitability assessments, and considered banning the purchase of tokens with borrowed money.

Following the market crash, Bahamas-based FTX exchange was unable to repay customers due to a multi-billion dollar shortfall. As a result, Singapore's state-owned Temasek Holdings Pte had to write down its $275 million investment in FTX. Some FTX executives pleaded guilty to fraud charges while co-founder Sam Bankman-Fried is awaiting a jury verdict in New York.

Despite these setbacks, Singapore continues to promote blockchain projects aimed at enhancing the financial industry. One such pilot involved HSBC Holdings Plc (LON:HSBA), United Overseas Bank (OTC:UOVEY) Ltd., and Marketnode issuing structured products via digital ledgers.

In a move that underscores Singapore's commitment to establishing itself as a digital-asset hub, Coinbase (NASDAQ:COIN) and Crypto.com exchanges, Sygnum Bank AG's Singapore arm, Circle Internet Financial Ltd., and Ripple Labs Inc. were recently granted licenses for digital payment token services. Gemini Trust Co., which is planning to expand its Singapore team, is among the companies being sued by the US Securities and Exchange Commission as part of the US crackdown.

A study by MAS and the Federal Reserve Bank of New York suggested that blockchains can enhance cross-border multi-currency payments and settlements. This comes as rivals like Hong Kong, the European Union, Dubai, and the US are also altering their approach towards cryptocurrencies.

In a testament to Singapore's growing influence in the cryptocurrency space, Yoann Turpin, co-founder of crypto market maker Wintermute Trading Ltd., has outlined plans to relocate to Singapore with some staff. According to MAS' managing director Ravi Menon, traditional financial institutions are undertaking "impactful" blockchain experiments.



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