During the World Economic ForumSingapore Chief Minister Tharman Shanmugaratnam clarified his views on cryptocurrency regulation, giving an overview of Singapore’s regulatory stance, which differs from other jurisdictions.
He said there is no doubt about the need to regulate crypto for money laundering, but beyond that his preference is to educate consumers so they understand that it is This is a risky and unregulated space. And if anyone wants to invest, he does so at his own risk and expense.
The minister, who is also the chairman of the Monetary Authority of Singapore (MAS), believes that if you start regulating crypto in the same way as banks or insurance companies, it may not be the right way. “I think we need to take a step back and ask the basic philosophical question: does this legitimize something that is inherently, purely speculative and, in fact, slightly crazy?” said Shanmugaratnam. “Or is it better to just provide super clear clarity on what an unregulated market is?”
He did two qualifications. One is where crypto or blockchain technology is used for the same activity as traditional finance. In this case, exactly the same rules will apply. But there is also a desire to regulate some specific crypto segments, stablecoins specifically.
On this point, a consultation on stablecoins opened by MAS last year also showed a departure from groupthink. For example, if a stablecoin is issued in multiple jurisdictions, including Singapore, MAS wants to have some assurance that the issue is complete, including in other jurisdictions. This is an important topic that others have overlooked.
Mr. Shanmugaratnam also spoke about the potential of blockchain to make global payment systems more efficient. “There may well be blockchain applications that can bring needed disruption and innovation out there,” he said. But at the same time, he thinks it is necessary to interconnect the traditional real-time national payment systems, the RTGS. He sees it as an alternative response to blockchain innovations.
Meanwhile, Singapore is very active in blockchain for cross-border payments. It was an early driver of central bank digital currency research (CBDC) through MAS’s Ubin project. One of the results is a private initiative for multi-currency payments, Partieurco-founded by JP Morgan, DBS Bank and Temasek.
MAS has also expanded its CBDC activities. He initiated Dunbar Project, a single platform for multiple CBDCs. And more recently, he launched Ubin+ project to cross-border CBDC research. This multi-pronged research program includes collaboration with the New York Federal Reserve as well as a separate alliance with the central banks of France and Switzerland to experiment with automated market makers (AMM), a DeFi Toolsfor currencies in cross-border payments.