The Monetary Authority of Singapore (MAS) has concluded that cryptocurrency is not the monster other states have sought to quell, and has acknowledged cryptocurrency use and trading as an emergent phenomenon.
Wait-and-see in citizens best interest
Tharman Shanmugaratnam, the Deputy Prime Minister of Singapore, acknowledged that there is an internationally-growing number of cryptocurrencies in the market, with many having new structures and forms. Painting virtual currency as an emerging asset class, he addressed parliamentary colleagues on February 5 after the country had spent some time evaluating cryptocurrency’s potential impact.
Singapore’s voice has always applauded the blockchain, with a distinct separation between cryptocurrencies and their underlying technology. As a senior authority, Shanmugaratnam’s sentiments can be considered as an official stance, both now and for the immediate future.
Moreover, while China and others make it increasingly difficult to trade, Singapore is experiencing a growing volume of trade by its citizens as well as others who make it their home base. With bitcoin taking the most flak around Southeast Asia, pressure has been mounting on Singapore’s regime to issue a formal stance on cryptocurrencies. The currencies themselves, alongside trading citizens, are keeping a wide eye on regulators’ appetite for cryptocurrencies.
Not jumping the gun
Saying “cryptocurrencies are an experiment, it is too early to say if they will succeed,” Shanmugaratnam fielded lawmakers’ questions on a possible ban or stringent regulation. Asia is also unusual as domestic virtual currencies are often more popular than big names, like bitcoin and ethereum.
In addition, Singapore is expressing a different sentiment to many nations’ regulators that are typically reacting with alarm to cryptocurrencies’ appeal to the masses. “If some do succeed,” he said in a written response to fellow MPs, “their full implications will not be known for some time.”
Confident in the MAS’s research, he allayed fears of knee-jerk reactions by pointing to the central bank’s findings. “As of now, there is no strong case to ban cryptocurrency trading here,” Shanmugaratnam noted in his written answer to MPs.
Regulators had asked him about government intentions, following clampdowns in South Korea and China. There was some trepidation in anticipation of his verdict, as in January 2018 he had noted that investigations were continuing and that the government was decidedly aware of the need to issue a standpoint.
At the time, he had said that the authorities would not distinguish fiat currencies from cryptocurrencies, although it was widely feared that a harsh line might emerge on virtual currencies.
The head of MAS has also confirmed that to prevent money laundering and the financing of organized crime, the central bank would impose the same existing legal obligations on cryptocurrency traders and intermediaries alike.
Financial system won’t fall on the back of currencies’ fortunes
“There are two main uses of cryptocurrencies today. The first is as a means of payment,” Shanmugaratnam said. “The second, which has become far more prominent, is where cryptocurrencies are assets in their own right.”
Reiterating Singapore’s enchantment with blockchain technology, the Deputy Prime Minister said, “In both these uses, the underlying technologies, in the form of blockchains or distributed ledgers, may prove to have potentially useful applications in facilitating payments and trade settlements.”
MAS is a delegate to an international regulatory discussion. “That said,” he continued, “the cryptocurrency space is rapidly changing, and regulatory thinking is still evolving, including in the US, UK, and Europe.”
Shanmugaratnam echoed moderate sentiment from various quarters while keeping blockchain potential unsullied with his words. Noting that Singapore’s cryptocurrency trading was comparatively small in comparison to other nations like South Korea and Japan, he added:
“For now, the nature and scale of cryptocurrency trading in Singapore does not pose risks to the safety and integrity of our financial system.”
“We will continue to encourage experiments in the blockchain space that may involve the use of cryptocurrencies. Some of these innovations could turn out to be economically or socially useful. But equally, we will stay alert to new risks,” Shanmugaratnam promised.