After $275M FTX Loss, Temasek to Avoid Crypto Citing Regulatory Uncertainty
Image courtesy of 123rf.

After $275M FTX Loss, Temasek to Avoid Crypto Citing Regulatory Uncertainty

Temasek says it would be "very difficult" to make another crypto investment.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Due to growing regulatory uncertainty and market conditions, Singapore’s state-owned conglomerate Temasek will steer clear of the crypto market. The fund’s remarks come as US regulators continue to crack down and take legal measures against crypto firms. Temasek was an investor in the now-bankrupt crypto exchange FTX and had to write down its $275 million stake to zero last year.

Temasek Wrote Down $275M Stake in FTX Last Year

Temasek Holdings, a sovereign investment fund of Singapore, said it has no plans to invest in the crypto market, citing the ongoing regulatory headwinds in the sector. In particular, Temasek’s chief investment officer Rohit Sipahimalani believes it would be tough “to make another investment and exchange in the middle of all this regulatory uncertainty.”

“If you have the right regulatory framework, and we are comfortable with it, and you have the right investment opportunity, there’s no reason for us to not to look at it. But as I said, at this point in time, we would not be comfortable investing in exchanges given the way things are right now.”

– Sipahimalani said.

The executive also said that Temasek never planned on investing in cryptocurrencies, despite its unsuccessful bet on the collapsed FTX. Sipahimalani claimed that the plan with FTX was to capitalize from a fee-based revenue without considering any trading risks.

In November 2022, the sovereign wealth fund announced it would write down its $275 million investment in FTX to zero. The crypto exchange, once led by Sam Bankman-Fried, filed for bankruptcy the same month, reporting between $10 billion and $50 billion in liabilities.

Join our Telegram group and never miss a breaking digital asset story.

The SEC Leading the Anti-Crypto Campaign

Regarding the regulatory environment, Temasek’s decision to steer clear of crypto should not be a surprise, given that the sector is undergoing intense regulatory scrutiny in the US, led by the US Securities and Exchange Commission (SEC).

The securities regulator filed two consecutive lawsuits against Binance and Coinbase in June, the two largest crypto exchanges in the world. In particular, the SEC charged Binance and its CEO with multiple wrongdoings, including offering unregistered securities, comingling of investor funds, and unsuccessfully preventing its US-based customers from trading on Binance’s international platform.

In a separate suit, the commission accused Coinbase of operating as an unregistered securities exchange. In addition, it also charged it for failing to register its staking service program, which allows users to earn rewards for holding certain crypto assets.

Finance is changing.
Learn how, with Five Minute Finance.
A weekly newsletter that covers the big trends in FinTech and Decentralized Finance.

The regulatory heat has made the US a less favorable environment for crypto firms, prompting many of them to consider other markets.