Financial authorities in Singapore are taking steps toward increased oversight in the crypto space with the city-state’s central bank reportedly asking companies to provide additional information about their activities and assets. Sources say that the authority seeks to gain a better understanding of financial status in advance of any possible expansion of applicable rules.
Singapore’s Crypto Firms Survey, Expect prompt Response
Bloomberg has revealed that the Monetary Authority of Singapore, (MAS), sought detailed information about cryptocurrency companies operating under it license, as well as some applicants. Bloomberg cited people with knowledge of the matter, who chose to remain anonymous. The central bank sent a “granular questionnaire” last month, awaiting quick answers.
According to the report, the regulator has asked the companies to provide data regarding the crypto assets they hold, their main lending and borrowing counterparties, the amount loaned and top tokens staked via decentralized-finance protocols. To better understand the risks associated with crypto exchanges, the authority wants to see how they were prepared to launch once approval has been received.
In advance of any changes expected to regulations that govern the operation of these platforms, the inquiry was made. In July, the MAS indicated that it was considering imposing further restrictions on cryptocurrency trading. The bank’s Managing Director Ravi Menon has already indicated that the scope of regulations will be expanded to cover more activities.
From nearly 200 applicants, just a few crypto companies have been granted a license in Singapore to offer digital payment token services. They are currently not required to meet capital and liquidity requirements, nor to protect customer funds from any insolvency risk. However, it is possible that this will change. Bloomberg received this statement from a spokesperson for MAS
Applicants and licensees are required to inform MAS about any circumstances that could materially impede the operations or affect the ability of the entity to fulfill its legal, contractual or financial obligations.
“In light of the various insolvencies and counterparty defaults which have plagued the crypto industry recently, the MAS is likely to be assessing the need for additional regulatory measures to mitigate the risks that led to these distressed scenarios,” commented Hagen Rooke, a partner at the Reed Smith law firm. The central bank may also consider requiring retail investors to pass a test before being allowed to trade cryptocurrencies, added Chris Holland, partner at Singapore advisory firm Holland & Marie.
It seems that the main purpose of the upcoming amendments is to limit the negative effects of bankruptcies in the sector and protect retail investors from the market’s volatility. However, industry members are warning that it could harm innovation.
“While I appreciate the need for MAS to consider regulating the crypto space more thoroughly, I am concerned about an overreaction now, and taking decisions that potentially could stifle innovation and the country’s ability to be a leader in Web3,” said Daniel Liebau, a chief investment officer of the Modular Blockchain Fund.
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