Singapore Will Not Regulate Cryptocurrency
Singapore does not plan to regulate cryptocurrencies such as Bitcoin, but will remain alert to money laundering and other potential risks stemming from their use, the head of the country’s central bank said.
“As of now I see no basis for wanting to regulate cryptocurrencies,” Monetary Authority of Singapore Managing Director Ravi Menon said in an interview. Rather, the central bank’s focus is to “look at the activities surrounding the cryptocurrency and asking ourselves what kinds of risks they pose, which risks would require a regulatory response, and then proceed from there,” Mr. Menon added.
Bitcoin’s rally and the proliferation of other digital assets is attracting the wary eyes of regulators globally, though many central banks have still refrained from supervising cryptocurrencies.
China and SKorea have banned initial coin offerings, while Russian President Vladimir Putin has called for regulation of the sector.
“Very few jurisdictions regulate cryptocurrencies per se. Most have taken the approach that the currency itself does not pose the risk that warrants regulation,” Mr. Menon said. However, he said “it is a known fact that cryptocurrencies are quite often abused for illicit financing purposes. And so we do want to have anti money laundering controls, countering the financing of terrorism controls in place.”
“So those requirements apply to activity around cryptocurrency rather than the cryptocurrency itself,” Mr. Menon said.
Singapore requires virtual-currency intermediaries such as exchange operators to comply with requirements to combat money laundering and terrorism financing, Mr. Menon noted. “This will be formalized in the coming payment services regulation which we are working on,” he said.
If ICOs (initial coin offerings) include the promise of a dividend or other economic benefits, they can resemble regular securities offerings and would therefore be covered by Singapore’s Securities and Futures Act, Mr. Menon noted. Other business models “avoid these security-like features in their digital tokens,” he added.
“So we just have to look at them case by case to see which ones we will need to bring into the regulatory ambit, and which ones can stay outside,” he added.
Bitcoin prices broke $6,000 Vs USD (BTC/USD) for the 1st time last week, a rise of more than 500% YTD.
“Our attitude is let’s keep an open mind on it,” Mr. Menon said. “I think that’s one of the areas where there’s been excessive hype because people see it merely as an investment vehicle that’s going to rise in value and I think that’s a rather misguided approach towards the use of cryptocurrencies.”
Among companies that have conducted an ICO in Singapore is TenX, which raised $80-M in the City State in June. The Singapore-based startup is pitching its debit card as an instant converter of multiple digital currencies into fiat money including USDs, JPYs and EURs.