The Monetary Authority of Singapore has been studying cryptocurrency developments and there is no strong case to ban crypto trading, a high-ranking government official told lawmakers. The adoption of regulations in other countries in the region has increased pressure on authorities in the city-state to clarify their stance on bitcoin, as more crypto companies in Asia are seeking friendlier business environments.
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It Is Too Early To Say…
“The number and different forms of cryptocurrencies is growing internationally”, Deputy Prime Minister of Singapore Tharman Shanmugaratnam told deputies. “Cryptocurrencies are an experiment. It is too early to say if they will succeed”, he said answering questions from lawmakers about the possibility to ban the trading of bitcoin and its alternatives.
“If some do succeed, their full implications will not be known for some time”, Shanmugaratnam noted in his written answer to MPs, who asked him about government intentions after recent crackdowns in China and South Korea. He reminded them that the Monetary Authority of Singapore (MAS, the central bank) has been closely studying developments and potential risks. “As of now, there is no strong case to ban cryptocurrency trading here”, he insisted.
Last month Tharman Shanmugaratnam clarified the government’s position on cryptocurrencies, as news.Bitcoin.com reported. He stressed that financial authorities would not distinguish between cryptocurrencies and fiat currencies for the purpose of preventing money laundering and terrorism financing. The minister in charge of MAS also said that the central bank would be imposing the existing legal requirements on those involved in cryptocurrency trading as intermediaries.
This time Mr. Shanmugaratnam was asked if the government was considering any action to ban the trading of bitcoin and what measures would be taken to protect consumers against losses from investing in unregulated currency. Deputies wanted to know whether any assessments had been made on how a collapse of the crypto market could affect Singapore. The Deputy PM was questioned about plans to reconsider the setup of a regulatory framework.
No Risk to the Financial System
“There are two main uses of cryptocurrencies today. The first is as a means of payment. The second, which has become far more prominent, is where cryptocurrencies are assets in their own right”, the Deputy Prime Minister educated lawmakers. “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,” he said.
According to the Deputy Premier, MAS is participating in international regulatory discussions. “That said, the cryptocurrency space is rapidly changing and regulatory thinking is still evolving, including in the US, UK, and Europe”. Shanmugaratnam noted that the use of cryptocurrency for payments in Singapore is limited and trading volumes are much smaller than in countries like Japan and South Korea. He stated:
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”, the government official promised.
Regional Crypto Pressures
Regulations adopted by governments in neighboring countries have increased pressure on authorities in Singapore to clarify their attitude towards cryptos. At the same time, more and more crypto companies from the region are seeking a friendlier regulatory environment and are looking to Singapore.
Last year China banned initial coin offerings and its major cryptocurrency exchanges – Huobi, Okcoin, and BTCC – relocated to Hong Kong, with plans to move to South Korea and Japan. The biggest Chinese mining companies have been planning to migrate. It has been reported that Bitmain, the operator of some of the largest mining facilities, is setting up regional headquarters in Singapore.
South Korea, which is cooperating with China and Japan on cryptocurrency regulation, has taken steps to end anonymous crypto trading. Korean regulators have targeted leading commercial banks in an attempt to prevent the opening of virtual accounts to clients of the crypto exchanges.
The government of Vietnam has accelerated the adoption of cryptocurrency regulation. Thailand is taking further steps to regulate initial coin offerings. Indonesia’s central bank has issued strong warnings against trading cryptocurrencies. Businesses accepting bitcoin payments have been hit by a government crackdown.
All these developments have opened a window of opportunity for Singapore. The city-state can take advantage of it if its government keeps the promise “to encourage experiments” that “may involve cryptocurrencies”, when there is “no case for a ban”.
Do you think that Singapore’s stance on crypto trading will influence decisions in other countries in the region? Tell us in the comments sections below.
Images courtesy of Shutterstock.
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