Singapore

The feedback was given in response to a proposed ban by the Monetary Authority of Singapore published back in October.

A crypto lobbying group based in Singapore has voiced its opposition to the proposal from the central bank to prohibit crypto firms from lending crypto tokens. 

On Oct. 26, Singapore’s central bank issued consultation papers and proposed to ban digital payment token service providers from offering “any credit facility” to consumers. This includes either lending fiat or cryptocurrencies. However, the Blockchain Association of Singapore (BAS) believes that this may be overly restrictive.

In a feedback document sent to the Monetary Authority of Singapore (MAS), BAS reportedly argued that a blanket ban could push crypto users to pursue lending their tokens to offshore firms that are unregulated. BAS also highlighted that one of the main things that attract users to lending is the interest that they earn, which the association argues to be one of the reasons people hold crypto.

In a statement to the mainstream media outlet Bloomberg, BAS board chairman Chia Hock Lai said that instead of a blanket ban, they are proposing an approach that is more measured and targeted. This includes focusing on the education of consumers when it comes to the risks of using entities that are unregulated. The chairman explained:

“The proposed measures, while well-intended, might have unintended consequences if implemented in its entirety, including leading consumers to move towards unregulated service providers.”

In addition, BAS also argued that a complete ban on companies providing incentives to retail customers is “too draconian” and suggested a different way of allowing gifts not connected to financial purchases.

The consultation paper issued by MAS in October last year came in the midst of a series of crypto debacles in the country including the Three Arrows Capital (3AC) hedge fund and crypto platforms Vauld and crypto lender Hodlnaut.

Related: Su Zhu gets called out by the community as he fires off accusations against DCG

In other news, 3AC founders Zhu Su and Kyle Davies were recently subpoenaed via Twitter. The duo was ordered to provide documents in their possession, whether the information is with them or with a third-party.

Su Zhu and Kyle Davies, founders of the now-defunct crypto hedge fund Three Arrows Capital (3AC), have made a comeback

The Monetary Authority of Singapore (MAS), the regulator overseeing the crypto sector, has defended the action it took against crypto exchange Binance and not the collapsed crypto platform FTX. The central bank also warned that cryptocurrencies are “highly volatile and many of them have lost all value.” Singapore’s Central Bank Clarifies Its Stance on Binance […]

FTX has an estimated $8 billion hole in its balance sheet. Investors desperate to get their money back are being targeted by phishing scams.

The Singapore Police Force has warned investors to be weary of fake websites claiming they can help them recover funds from the now-bankrupt cryptocurrency exchange FTX. 

On Nov. 19, the police issued a warning about a website claiming to be hosted by the United States Department of Justice that prompts FTX users to log in with their account credentials, local news agency Channel News Asia reported. The website, which was not identified, targets local investors affected by the FTX collapse, claiming that customers “would be able to withdraw their funds after paying legal fees.”

The police said the website was a phishing scam designed to fool unsuspecting users into giving away their private information.

Local authorities have also warned against fake online articles that promote cryptocurrency auto trading programs in the country, which appear to have proliferated recently. These articles often feature prominent Singaporean politicians, such as parliament speaker Tan Chuan-jin.

Related: HK and Singapore’s mega-rich are eyeing crypto investments: KPMG

Although this isn’t the first time Singapore’s police have issued public warnings against crypto scams, recent developments in the industry have made investors more vulnerable to attacks. An estimated 1 million investors and creditors have been affected by FTX’s bankruptcy. Collectively, they face billions in losses.

Despite promoting itself as a hub for cryptocurrency and Web3 innovation, Singapore has pursued stricter regulations around retail trading and self-hosted wallets. The city-state has repeatedly warned investors that digital assets are highly speculative and has even banned crypto advertising on social media.

Nevertheless, several crypto firms have applied for licensing in the city-state, with stablecoin issuers Circle Internet Financial and Paxos recently gaining approvals from the Monetary Authority of Singapore.

The Monetary Authority of Singapore will trial a retail central bank digital currency in various contexts at a fintech event, despite the electronic payment options already available.

The Monetary Authority of Singapore (MAS) has wrapped up the first stage of its Project Orchid examination of a retail central bank digital currency (CBDC). According to the white paper released on Oct. 31, there is no “urgent case” for a retail CBDC in Singapore, but the study envisioned the infrastructure required in case a need arose. It also conceptualized a new model for digital currency — purpose-bound money — and pulled large Singaporean banks and government agencies into the research with a series of trials.

Singaporean consumers do not need a retail digital dollar at present because of the high quality of services already available, the authors wrote. They indicated, however, that the most foreseeable use case may be for the benefit of the MAS rather than users:

“Electronic payments in Singapore are pervasive, and households and firms in Singapore are already able to transact digitally in a fast, secure and seamless manner today. […] The case for a retail CBDC in Singapore could strengthen over time, especially if innovative uses emerge or there are signs that digital currencies not denominated in SGD are gaining traction as a medium of exchange locally.”

The MAS uses the concepts of programmable payment (“the automatic execution of payments once a pre-defined set of conditions are met”) and programmable money (“embedding rules within the medium of exchange itself that defines or constraints its usage”) to devise its purpose-bound money (PBM), which “specifies the conditions upon which an underlying digital currency can be used.”

This highly constrained, nonintermediated form of CBDC would serve well for vouchers, the authors of the white paper said. Four trials will be conducted at the Singapore FinTech Festival from Nov. 2 to 4.

The Monetary Authority of Singapore (@MAS_sg) has marked the successful completion of Phase 1 of Project Orchid w/ a report detailing potential uses of a purpose-bound digital Singapore dollar and the supporting infrastructure required #CBDC #digitalmoney https://t.co/3QwH5cPFoz

— Central Bank Payments News (@cbpaymentsnews) October 31, 2022

DBS Bank said it would issue digital Singapore dollars with smart contract capabilities enabled by the Open Government Products office in a pilot program that would make instant settlement possible, saving merchants one or two days of processing time. One thousand consumers and six merchants are participating in that trial. The bank, which is Singapore’s largest, said that PBM would be applicable in the Community Development Council scheme that provides households with vouchers to counteract inflation and the high cost of living.

Related: Singapore’s MAS proposes banning cryptocurrency credits

Other financial institutions will issue commercial vouchers that can be used at the festival, disburse government funds to people without bank accounts and disburse grant money to financial training providers.

Singapore has been researching a wholesale CBDC since 2016, but this white paper was the first step in the MAS’ expansion into a retail CBDC, which began last year.

Crypto service providers should not provide any credit facility or accept payments from credit cards from their customers, the MAS suggested.

The Monetary Authority of Singapore (MAS) is introducing proposals to better regulate the cryptocurrency industry in the aftermath of the bankruptcy of the Singaporean crypto hedge fund Three Arrows Capital (3AC).

The central bank of Singapore has issued two consultation papers on proposals for regulating the operations of digital payment token service providers (DPTSP)​​ and stablecoin issuers under the Payment Services Act.

Published on Oct. 26, both consultation papers aim to reduce risks to consumers from crypto trading and improve standards of stablecoin-related transactions.

The first document includes proposals for digital payment token (DPT) services or services related to major cryptocurrencies like Bitcoin (BTC), Ether (ETH) or XRP (XRP).

According to the authority, “any form of credit or leverage in the trading of DPTs” would result in the “magnification of losses,” potentially leading to bigger losses than a customer’s investment.

In section 3.20, MAS proposed to ban DPTSPs from providing retail customers with “any credit facility,” whether in the form of fiat currencies or crypto. According to the regulator, crypto service providers should also not be allowed to accept any deposits made using credit cards in exchange for crypto services.

“MAS proposes that DPTSPs should ensure that customers’ assets are segregated from the DPTSPs’ own assets, and held for the benefit of the customer,” the central bank noted, referring to the recent failure of several firms in the crypto industry, including 3AC’s insolvency in June.

Other than that, the MAS also suggested that DPTSPs should consider adopting consumer tests to assess retail customers’ knowledge of risks associated with crypto.

The second consultation paper provides proposals for a regulatory approach for stablecoins in Singapore, providing a set of business and operational requirements for stablecoin issuers.

In the section 4.21 of the document, MAS proposed to restrict stablecoin issuers from lending or staking single-currency pegged stablecoins (SCS), as well as from lending or trading other cryptocurrencies.

“This is to ring fence and mitigate risks to the SCS issuer in lieu of a comprehensive risk-based capital regime. Such activities can still be conducted from other related entities,” the consultation paper reads.

The regulator also proposed to introduce a minimum base capital of $1 million or 50% of annual operating expenses of the SCS issuer. The capital should be held at all times and include liquid assets, MAS added.

Related: HK and Singapore’s mega-rich are eyeing crypto investments: KPMG

The regulator invited interested parties to submit their comments on the proposals by Dec. 21, 2022.

As previously reported, the crypto winter of 2022 has become particularly harmful for cryptocurrency lenders as many such firms became unable to pay out their obligations due to a massive market drop. Some Bitcoin analysts are confident that crypto lending can still survive this bear market but they need to solve issues related to short-term assets and short-term liabilities.

Blockchain.com becomes the second crypto exchange in two days to receive preliminary approval to provide crypto services within the growing crypto hub.

Crypto exchange Blockchain.com has become the latest crypto company to secure preliminary approval from Singapore’s central bank to provide Digital Payment Token services in the city-state.

Blockchain.com’s regulatory approval follows hot on the heels of Coinbase, which revealed it had received the same “in-principle” approval from the Monetary Authority of Singapore (MAS) on Oct. 11.

If officially approved, Blockchain.com would join the likes of companies already licensed for digital Payment Token services including crypto exchanges DBS Vickers and Independent Reserve, digital payment solution provider FOMO Pay, and crypto-friendly payments app Revolut, among others.

Blockchain.com CEO and co-founder Peter Smith commended the country’s regulators for creating a “transparent regulatory process” to foster innovation, stating:

“Blockchain.com commends the Monetary Authority of Singapore on its transparent regulatory process that prioritizes crypto industry oversight while allowing innovation to thrive.”

It is not the first company to make a positive reference to the straightforward regulatory environment in Singapore for crypto companies.

Recently, digital asset platform Anchorage Digital co-founder and president Diogo Mónica pointed to Singapore’s strong regulatory environment and the emergence of a crypto hub as its motivation to choose the city-state as a “jump point” into the Asian markets.

Mónica also highlighted in contrast the lack of regulatory clarity in the United States as a major issue, suggesting that even if a company understands what rules govern an asset it can be difficult to determine which of the 15 regulators they need to engage with.

Related: Why Singapore is one of the most crypto-friendly countries

In August 2021, crypto exchange Independent Reserve was one of the first of 170 global competitors to receive preliminary approval for the DPT license.

CEO Adrian Przelozny also made a positive reference to the transparency of Singapore’s regulatory environment, noting at the time:

“A well-regulated environment will benefit both investors and crypto industry stakeholders. With tailormade rules for the crypto industry, Singapore currently has the clearest and most detailed licencing requirements of any jurisdiction in Asia”

Przelozny suggested the license grants “will continue to put Singapore in pole position as the leading financial hub in Asia.”