The Singaporean financial authorities are looking to increase their oversight in the crypto market and are taking steps accordingly.
The central bank of the city state has reportedly asked crypto companies to share additional information regarding their assets and activities.
According to sources, the financial authority wants to have a clear idea before it comes up with regulations for the crypto space.
The details
The Monetary Authority of Singapore (MAS) has demanded that crypto companies provide detailed information that have obtained a license to operate in Singapore, along with some applicants.
Last month, a ‘granular questionnaire’ was sent by the central bank and it is waiting for a quick response.
The report said that regulator had asked the crypto firms to disclose details regarding the crypto assets in their possession, their main borrowing and lending participants, the top tokens that are staked via decentralized finance (DeFi) protocols and the amount that has been loaned.
The authority is also interested in knowing how crypto exchanges initiate their operations after they have obtained approval, as this gives a better understanding of the associated risks.
This inquiry comes ahead of changes that are expected to be made to the existing regulations that are applicable to these platforms and companies in Singapore.
The expectations
The MAS had stated in early July that one of the measures that the authority was considering was imposing additional restrictions on trading of cryptocurrencies.
Ravi Menon, the Managing Director of the central bank, had already asserted that they would expand the scope of regulations in order to bring more activities under their oversight.
Almost 200 businesses have submitted applications for obtaining a license, but only a dozen of them have managed to get one for offering digital payment token services.
Currently, they are not under obligation to safeguard client funds, such as crypto assets, from the risk of insolvency, and do not have to fulfill any liquidity or capital requirements in Singapore.
However, this could actually change in the future. An MAS spokesperson stated that applicants and licensees need to inform the authority about any material events that can impair or impede their operations.
This refers to any matter that may have an impact on its solvency and its ability of fulfilling its contractual, statutory and financial obligations.
Additional measures
It is likely that the MAS may look into introducing additional regulatory measures for the crypto industry because it has been plagued with various counterparty defaults and insolvencies of late.
Therefore, the authority may want to mitigate the risks associated with such scenarios. It is also possible that retail investors may be expected to pass a test before they are permitted to trade cryptocurrencies.
It appears that the primary reason for introducing the new amendments is to restrict the negative impact of bankruptcies in the crypto space and for protecting retail investors from volatility.
However, industry members have warned that this could be damaging for innovation. It may potentially stifle Singapore’s ability of becoming a leader in the crypto and Web3 space.
