Singapore’s financial authorities are taking steps to tighten oversight of the crypto space, with the city-state’s central bank reportedly asking companies to provide additional information about their activities and assets. Before a possible expansion of the applicable rules, authorities are trying to get a clear idea of their financial status, knowledgeable sources said.
Singapore regulators send questionnaires to crypto firms, expect quick response
The Singapore Monetary Authority (MAS) is trying to get more information from cryptocurrency companies operating under its license, as well as some of the applicants, Bloomberg revealed. It cited people familiar with the matter who chose to remain anonymous. The central bank sent a “detailed questionnaire” last month and is awaiting a prompt response.
According to the report, regulators are asking firms to provide data on crypto assets held, primary lending and borrowing partners, loan amounts, and top tokens staked via decentralized financial protocols. The regulators also want to know how crypto exchanges prepared for launch after receiving regulatory approval in order to better understand the risks involved.
The survey comes ahead of expected regulatory changes governing the operation of these platforms; in early July, MAS stated that imposing additional restrictions on cryptocurrency transactions was one of the measures under consideration. The bank’s Managing Director Ravi Menon has already indicated that the scope of the regulation will be expanded to cover more activities.
Only about 10 crypto operators out of about 200 applicants have so far received licenses to offer digital payment token services in Singapore. Currently, these operators are not subject to capital or liquidity requirements, nor are they obligated to protect customer funds, including crypto assets, from bankruptcy risk. This may change in the near future, a MAS spokesperson told Bloomberg.
Licensees and applicants are expected to notify MAS of any events that substantially impede or impair the operation of the entity, including matters that may affect its solvency or ability to meet its financial, statutory, contractual or other obligations.
“Given the various insolvencies and counterparty defaults that have plagued the crypto industry recently, it appears that the MAS is assessing the need for additional regulatory action to mitigate the risks that have led to these dire scenarios,” Reed Smith LLP partner Hagen Rooke commented. The central bank may also consider requiring retail investors to pass a test before being allowed to trade cryptocurrencies, added Chris Holland, a partner at Singapore-based advisory firm Holland &Marie
The main purpose of the upcoming amendments seems to be to limit the negative impact of bankruptcies in this sector and to protect retail investors from market volatility. Industry members warn, however, that this could undermine innovation.
“While I appreciate the need for MAS to consider regulating the crypto space more thoroughly, I am concerned that we are now overreacting and making decisions that could potentially stifle innovation and the ability of the country to be a leader in Web3.” Daniel Liebau, Chief Investment Advisor of the Modular Blockchain Fund, stated.
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