Singapore regulator responds to Terra collapse; plans to involve public in stablecoin regulations
Monetary Authority of Singapore (MAS) response A congressional survey shared insights into how the Luna collapse affected the economy and made plans to involve the public in regulating stablecoins.
The minister in charge of MAS Tharman Shanmugaratnam in addressing the issues raised said the collapse of the Terra ecosystem has reinforced the high risks involved in investing in the cryptocurrency ecosystem.
Regarding the health of the mainstream economy, Shanmugaratnam noted that the overall impact on the economy would be minimal as Singapore’s banks have little exposure to cryptocurrencies. However, due to limited customer data, MAS was unable to quantify the number of Singaporeans affected by the collapse.
The minister also mentioned concerns about regulation of stablecoins. Currently, under the Payment Services Act, stablecoins are considered Digital Payment Tokens (DPT) alongside cryptocurrencies such as Bitcoin. However, regulators are working to treat stablecoins as a unique asset class, with a focus on regulating peg stability and reserve requirements. Shanmugaratnam said MAS is working with the public to regulate stablecoins.
Crypto Regulation Status in Singapore
Singapore’s Payment Services Act effective In January 2020, we will build a framework for payment systems and payment service providers to operate in Asian countries.
In January 2022, the MAS issued guidelines restricting crypto service providers from publicly promoting or marketing cryptocurrency investments. The regulation has also seen the closure of crypto ATMs in the country.
In early July, regulators announced their intention to set new rules to protect retail investors. The rules described impose restrictions on participating in retail and using leverage when trading in cryptocurrencies.
Following the collapse of Three Arrows Capital, the MAS accused the hedge fund of providing false information and overrunning its underperforming assets on June 30.
MAS today announced that Three Arrows Capital Pte. # Enforcement # Rules
Read full text: https://t.co/LXWKTCTyMO
— Mass (@MAS_sg) June 30, 2022
MAS is still encrypted
Despite calls for more crypto regulation in the region, the MAS is still open to crypto companies acting under the Payment Services Act. It is still possible to grant licenses to digital asset providers looking to operate in the region. So far, Singapore has granted 14 licenses and approvals in principle to companies such as Crypto.com, Gemini, Coinbase and Binance.
When asked if there is still Singapore push forward with the plan To become a cryptocurrency hub, Shanmugaratnam said:
“From a development perspective, MAS’ aim was and still is to enable the growth of an innovative and responsible digital asset ecosystem.”
