Singapore to Tighten Crypto Regulations in Wake of 3AC Bankruptcy
Singapore is looking to tighten regulations on crypto assets over the following few months, said Monetary Authority of Singapore’s (MAS) managing director Ravi Menon after publishing the central bank’s annual report. Menon also said that some of the struggling crypto firms that are reportedly based in Singapore had “little to do with crypto-related regulation” in the city-state.
More Regulations to Cover Exposed Areas
Singapore’s central bank and its financial watchdog plans to discuss the proposed steps to expand regulations on crypto assets. The move is aimed at addressing areas and activities that are not covered by the current regulatory framework in Singapore, said Menon.
The bank’s managing director also denied the claims that some of the troubled crypto firms reported as headquartered in Singapore were regulated in the city-state. More specifically, Menon mentioned TerraForm Labs, Luna Foundation Guard, as well as Three Arrows Capital, and crypto lender Vauld.
TerraForm Labs and Luna Foundation Guard are the two crypto outfits behind the algorithmic stablecoin TerraUSD (UST) and its sister token LUNA. The two tokens collapsed earlier this year, sending shockwaves through the crypto industry.
“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.”Mr Menon said.
Singapore’s largest bank, DBS, said in February it planned to expand cryptocurrency trading to retail investors by the end of this year. However, the bank abandoned those plans two months later, citing regulatory concerns.
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Will Singapore Remain a Crypto Haven?
Following Bitcoin’s and Ethereum’s massive price gains at the end of 2021, Coincub ranked Singapore as the most crypto-friendly location in the world. The crypto ranking service provider praised the city-state for its “robust economy, positive legislative environment, and high rate of cryptocurrency adoption.”
While Singapore already had an established regulatory framework in place – allowing just 14 crypto firms to offer digital-token payment services – the city-state now plans to broaden the scope of its regulations following the recent developments. Earlier this month, Singapore-based crypto hedge fund Three Arrows Capital (3AC) filed for bankruptcy due to a crypto market drawdown and a risky trading strategy.
The hedge fund was also previously reprimanded by MAS “for providing false information” and “exceeding the assets under management (AUM) threshold.” Menon said 3AC was not regulated in accordance with the Payment Services Act and had already stopped managing funds in Singapore before falling into liquidation.
Do you think Singapore’s financial watchdog is making the right move with the new crypto regulations? Let us know in the comments below.