Singapore scales digital currency regulations as MAS gets additional power

Singapore scales digital currency regulations as MAS gets additional power

Singapore is stepping up its efforts to regulate the domestic digital currency industry, this time targeting firms that are based in the country but offering their services outside the city-state.

Last week, lawmakers in Singapore approved the Financial Services and Markets Bill 2022, which further expanded the jurisdiction of the Monetary Authority of Singapore (MAS), the country’s de facto central bank and digital currency regulator. The law covers virtual asset service providers (VASPs) who in digital currencies, exchanges, and firms that offer financial advice on the sale of such currencies and tokens.

Under the previous regulatory regime, the MAS only had authority over VASPs, which were based in the country and offered their services locally. This led to some regulatory loopholes in which a firm could claim to be regulated by the MAS, which is a reputable watchdog globally, but not be directly supervised by the regulator.

Alvin Tan, a board member of the MAS who spoke on behalf of Senior Minister Tharman Shanmugaratnam, said that the regulator was worried about the reputational risk that the loophole presented.

“Digital token service providers could easily structure their businesses to evade regulation in any one jurisdiction, as they operate mainly online. We could be exposed to reputational risks brought by DT service providers created in Singapore, and which provide services relating to virtual assets such as Bitcoin outside Singapore,” Tan said.

The new law was well received by some who believe that it will make the industry more reputable and further increase protections for investors. Legitimate firms operating within the confines of the law have nothing to fear, the law’s supporters say.

One of them is Anndy Lian, the chairman of Dutch exchange BigONE, who deems the new regulations reasonable.

“If you walk the ground hard enough, you will see many bad actors and dubious crypto companies using Singapore as a base of their operations. We need to properly regulate things so that the bad actors won’t affect this industry’s image,” Lian said, speaking to Nikkei Asia.

There are others who don’t support the new law, which they claim is just another burden being piled on by regulators on a nascent industry that could prove fatal to its growth.

“Sad, disappointed—we went 10 steps backwards. So MAS is making the assumption that the license is like gold—that everyone will want to get it?” One member of a digital currency group in the city-state stated.

There are also concerns related to the MAS’ processing of licensing applications. As CoinGeek reported in December, the MAS received about 180 applications for licenses by VASPs. Of these, 103 were either rejected or the applicants had withdrawn them after realizing they had not met the standards. At the time, only three firms had been granted operating licenses, with 70 applications being in consideration.

This long queue of applications was just with local firms that target the Singaporean market. VASPS will take longer to get licensed in the city-state with the new law. This will require some firms to move out of Singapore or dig deeper into their pockets to get through the scrutiny.

“For companies that are unable to fulfill the AML/CFT requirement, they will need to move out to other countries. But with more governments regulating cryptocurrency in different jurisdictions, these companies will soon find it hard to operate,” Desmond Yong, the chief strategy officer at Digital Treasures Center, commented.

This new MAS crackdown piles onto others, such as a ban on digital currency ads in public places, which kicked off in January, and the shutdown of digital currency ATMs.

 

Original Source: https://coingeek.com/singapore-scales-digital-currency-regulations-as-mas-gets-additional-power/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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RBI should hold debates, discussions before any crypto decision: Experts + Anndy Lian’s additional comments

RBI should hold debates, discussions before any crypto decision: Experts + Anndy Lian’s additional comments

Additional comments that I have given to the editors: 

In a big country like India there are many conflicts of interest. Banning cryptocurrencies is not the way forward. It could be an easy way out for now. I would encourage them to need to find a way to embrace it and build a different and hopefully better future with this form of currency.

If they understand cryptocurrencies well enough, they will know that regulating a basket of crypto that can be almost 100 percent traceable is not difficult. In fact, it allows you to reduce and avoid macroeconomic instability from their legacy systems.

Education and awareness is the key to moving forward. Investors, in general, must know what they are investing in and be cautioned at all stages when dealing with cryptocurrencies.

 

– Anndy Lian

 

RBI should hold debates, discussions before any crypto decision: Experts

Reserve Bank of India (RBI) has been a stringent critic of crypto assets, reiterating its tough stand on the new age asset class.

Deputy governor T Rabi Sankar called for an outright ban on private cryptocurrencies at the IBA Banking Technology Awards. He claimed the notorious early 20th century Ponzi schemes were better than investing cryptos.

Prior to this, RBI governor Shaktikanta Das said that private cryptos are a serious threat to macroeconomic and financial stability, and investors should keep risks in mind as such assets have no underlying value whatsoever, ‘not even a tulip’.

The harsh remarks from the central bank has vexed the crypto industry. They suggested the RBI hold debates and discussions at various forums before making a final conclusion.

Rahat Beri, Founder and CEO, Acryptoverse, a crypto advisory firm said that cryptos are a budding technology and an asset class that should have the freedom to be explored with guardrails. “Otherwise we risk being left behind.”

“Stablecoins are backed by currency, assets or other projects. We have seen success right in our own backyards,” she added. Cryptos come with multiple challenges and these must be addressed, experts said. Authorities should move in the direction of debate, assessment and deliberation over such assets.

RBI has always been an active critic of crypto assets and vocal advocate to put a blanket ban on the private crypto assets. Proliferation of such currencies will undermine the rupee, they said.

Repulsing from RBI’s opinion, market experts said that banning cryptocurrencies is not the right way forward, rather the easiest way out for now.

In a country like India, there are many conflicts of interest, said Anndy Lian, Chairman, BigONE Exchange. “The central bank should find a way to embrace it and build a different and hopefully better future with this form of currency,” he added.

Change is never accepted easily, said Beri. “A decade ago, no one gave online payments much of a chance and today the common man uses it. A nascent technology comes with inherent challenges.”

In the union budget 2022, Finance Minister Nirmala Sitharama announced that the gains arising from the transactions in the private crypto assets will be taxed at a flat rate of 30 per cent, with no exemption or deduction.

The loss arising from the sale of any virtual assets cannot be set off against any other income. TDS at the rate of 1 per cent would be levied on payments made on transfer of digital assets.

The move was welcomed by the crypto players, particularly the exchanges. Reading between the lines, they expected a positive regulatory framework to the new age asset class. However, after RBI comments, the dreams appear to be shattered.

The crypto companies may also hold back on their expansion plans just because there are no clear instructions from the government, said the crypto experts.

Jay Hao, CEO of OKX said that it’s important for the regulators of a country to be on the same page to form the crypto policy framework. He believes that India needs clear guidelines for the continued growth of the crypto ecosystem.

“Multiple statements from officials may create confusion in the minds of investors which could be harmful for the users,” Hao added.

“The lack of clarity on regulations also discourages foreign institutional investors from investing in the sector.”

 

Original Source: https://economictimes.indiatimes.com/markets/cryptocurrency/rbi-should-hold-debates-discussions-before-any-crypto-decision-experts/articleshow/89616737.cms

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Additional Comments by Anndy Lian on Singapore’s approach to regulation of crypto and digital asset activities

Additional Comments by Anndy Lian on Singapore’s approach to regulation of crypto and digital asset activities

The initial article was published at Nikkei Asia and was republished on sites such as DealStreet and K. I hope to add more context to my comments.

Q1/ Singapore is warning investors about investing in cryptocurrencies while selectively giving licenses for crypto/digital asset platforms to operate. How contradictory is this approach and what are authorities exactly trying to achieve here?

Singapore’s approach is essentially one guided by the traditional finance structure, applying existing legal frameworks where possible, to protect the investing public. As a result, the regulators are proactive about warning individual investors about the risks in investing in cryptocurrencies, which is what you would expect.

But I do think Singapore’s approach is also very contradictory. I do not agree with the practice of selectively granting licences to different crypto entities. The whole process of selecting who to give the licence to is not very transparent in my opinion.

If you look at the licences that have been given out so far, to the brokerage arm of Southeast Asia’s largest lender DBS Bank, and Australian cryptocurrency exchange Independent Reserve, it gives the impression that the government is favouring big players and foreign exchanges.

Right now, a lot of crypto exchanges and startups who regard Singapore still as a crypto hub, are doing their very best to stay in Singapore and be licensed. But the truth of the matter is that most of them are effectively in regulatory limbo. They have no idea what exactly is going to happen next, whether or not their application will be approved.

What I would like to see is for the regulator, the Monetary Authority of Singapore (MAS), to take a more systematic and open-handed approach to licensing, so that every crypto business will have an equal opportunity to comply with its requirements.

 

Q2. What are the positive aspects and drawbacks of the way Singapore is approaching the regulation of crypto and digital asset activities?

The positive aspect is that Singapore is trying to build its own crypto ecosystem by embracing crypto exchanges and startups, and I think that is positive.

 The drawback in the current approach, and one that I really do not want to see, is for all intent and purposes an elitist model where only businesses that appear to be in favour with the regulator are able to get a licence in a reasonable time span.

 Singapore is obviously trying to both embrace crypto, and at the same time also trying to regulate the crypto sector to protect investors and the public at large. But it’s a difficult balance to strike, and without an impartial and transparent approach to licensing, they risk defeating the purpose of making cryptocurrencies available to all.

 Between crypto and traditional assets there are key differences, not least of which is their decentralized nature. As a result, whatever applied in the past to traditional assets might not work so well for cryptocurrency, because of the way it works and how people use it.

It comes down to the fact that Singapore needs to find new ways to regulate this dynamic new sector, without trying to rely on existing models that are no longer fit for purpose, if it’s to be a leading hub for cryptocurrencies in Southeast Asia and globally.

 

Q3. Which countries in Southeast Asia and the rest of Asian can perhaps best be able to emulate Singapore’s regulatory approach and why?

I believe South Korea and Hong Kong, with similar financial systems, can best emulate the whole regulatory approach, and by learning the lessons so far do it a lot better than Singapore. That said, the recent announcement by China banning crypto activities leaves the fight for the top spot for crypto in Southeast Asia up for grabs. As well as South Korea and Hong Kong, I also see Japan as a big threat to Singapore in the fight to be Asia’s crypto

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Crypto entrepreneurs find Singapore is not so hospitable after all

Cryptocurrency entrepreneurs lured to Singapore by its apparent openness to the burgeoning industry are discovering just how difficult it is to legally operate in the city-state.

More than 100 of the around 170 businesses that applied for licenses to offer “digital payment token services” have now been turned down or withdrawn their applications, according to the latest figures from regulators.

And scores more face an uncertain future, operating under exemptions but amid a darkening mood over the approval process.

In early September, the Monetary Authority of Singapore (MAS) ordered Binance, one of the world’s largest crypto exchanges, to stop providing services to residents in the city-state, and last week Binance’s Singapore-only affiliate announced it also was shutting down its trading platform for the city-state. Dozens are confronting a similar fate.

Dubai-based crypto exchange Bitxmi is one of 103 companies that appear on the latest MAS list of entities whose exemptions allowing them to operate have been removed. Having set up in Singapore in late 2018, it was unsuccessful in securing a license, chief executive officer Sanjay Jain told Nikkei Asia.

“We can’t operate in Singapore,” he said. “We have an office there, but it’s just more or less—there’s one person for our accounting and legal issues.”

Jain declined to speak about why his outfit did not manage to secure a license from regulators. “That, you need to ask them,” he said.

The introduction of the licensing regime in January was cast as the next step in building a thriving crypto sector and set up a contrast with Singapore’s rival Asian financial hub, Hong Kong, which had taken a more skeptical approach to crypto businesses.

Graph by Nikkei Asia.

A spokesperson for MAS told Nikkei that it is supportive of innovation in the use of blockchain technology, which underpins cryptocurrencies, while also recognizing the risks.

“Cryptocurrencies could be abused for money laundering, terrorism financing, or proliferation financing due to the speed and cross-border nature of the transactions,” the spokesperson said. “Digital payment token service providers in Singapore … have to comply with requirements to mitigate such risks, including the need to carry out proper customer due diligence, conduct regular account reviews, and monitor and report suspicious transactions.”

Rahul Advani, Asia-Pacific policy director at blockchain company Ripple, said Singapore’s stance on digital assets has resulted in the city-state being one of the most advanced and mature nations in the field, helping foster development and innovation in the emerging industry.

“It’s very clear where digital assets and related activities lie on the risk spectrum, so you mitigate the potential of developing and investing in technology that is unregulated,” he told Nikkei.

Crypto players that raced to set up in Singapore run the spectrum from exchange platforms for trading bitcoin, Ethereum, and other tokens, through investment managers and financial advisers looking after digital asset portfolios for the wealthy, to business-to-business outfits helping corporate clients accept cryptocurrency payments.

Outfits that were operating in the country prior to the introduction of the licensing regime were granted exemptions until the outcome of their license application is known. Senior Minister Tharman Shanmugaratnam told parliament in July that there were 90 companies operating under such exemptions.

The MAS website showed that the group had shrunk to about 70 as of December 14.

So far, only three players—DBS Vickers Securities, a unit of Singapore and Southeast Asia’s largest bank, DBS Group Holdings; digital payments startup FOMO Pay; and Australia’s Independent Reserve, which offers crypto exchange services—have been listed on the MAS website as licensed entities.

Two others—Coinhako, which operates a crypto exchange platform, and TripleA, a payments company—have put out announcements themselves saying they have acquired the necessary approvals to operate.

Anndy Lian, chairman of Netherlands-registered crypto trading platform BigONE Exchange, told Nikkei that his outfit does not intend to apply for a license in Singapore presently.

“The whole process of selecting who to give the license to is not very transparent,” he said. “It gives the impression that the government is favoring big players and foreign exchanges.”

MAS has not publicly disclosed why specific crypto players were unable to obtain a permit.

But Nikkei understands that some of them did not have the capacity or infrastructure to meet the high compliance standards set out by the financial regulator to deter money laundering and financing of terrorism.

“Cryptocurrencies are currently being used to channel the earnings of everything from ransomware proceeds, the sale of narcotics to some of the most horrific crimes, including human trafficking,” said Rachel Woolley, head of financial crime at client management solutions provider Fenergo.

“Regulators have now entered this space in an effort to protect the financial services industry from illicit activity in much the same way that activity involving fiat currency must be monitored.”

MAS pointed to comments from its managing director, Ravi Menon, who has said that Singapore does not need 160 players in the crypto sector and it may be better to have “half of them” operating at very high standards.

TripleA told Nikkei that in securing its permit, it had to ensure that its operating procedures for risk assessment, customer due diligence, record-keeping, suspicious transaction reporting, auditing, and training were up to snuff.

But its CEO, Eric Barbier, said TripleA gained little insight into what exactly made the difference between success and failure.

“MAS never talks. MAS asks questions and questions and questions,” he said. “You can ask questions but they will not answer, and most regulators are like this.”

Barbier reckoned that being a business serving other businesses may have helped secure a license. “Especially for consumer-to-consumer, like consumer exchanges and so on, the risk of money laundering is very high, so they need to demonstrate to MAS that they are able to mitigate all those risks accordingly,” he said.

Peiying Chua, financial regulation partner for Singapore at the law firm Linklaters, said it is unlikely MAS is specifically favoring big, incumbent financial players: “Likely reasons for unsuccessful applicants may include a lack of track record or key personnel without adequate experience, a lack of a sustainable business model or serious adverse records relating to directors and key individuals.”

“The regulatory approach by MAS may to some degree stifle innovation in smaller entrepreneurs and sift out smaller virtual asset service providers that may not be able to comply with the regulations,” said Quek Li Fei, partner at law firm CNPLaw.

But he added it “provides a more forward-thinking approach toward encouraging legitimate innovation and entrepreneurship in cryptocurrency and digital asset businesses, with a reasonable level of protection to investors.”

 

 

Source: https://www.dealstreetasia.com/stories/crypto-entrepreneurs-singapore-274592/

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j