What Singapore should do for Token Regulation: My Suggestions for Proposed DTSPs Framework

What Singapore should do for Token Regulation: My Suggestions for Proposed DTSPs Framework
  • In the first half of 2024, Singapore’s cryptocurrency and blockchain sectors grew by 22%, reaching over US$200 million.
  • The MAS proposed a risk-based regulatory approach to enhance anti-money laundering and counter-financing of terrorism.

Singapore has consistently positioned itself as a forward-thinking jurisdiction, balancing innovation with robust regulatory oversight. As a fellow Singaporean, I am very proud of its future planning.

The Monetary Authority of Singapore (MAS) is seeking submissions for the Consultation Paper on the proposed regulatory approach for Digital Token Service Providers (DTSPs) under the Financial Services and Markets Act 2022.

Instead of replying to the submission directly, I will try to share my point of view openly here, offering insights, potential plans, and timelines for implementation. Before I start, I am sharing this in my personal capacity: I do not represent any self-claimed digital assets expert groups, associations, or schools.

License Application and Fee Structures

In the first half of 2024, Singapore’s fintech market saw its cryptocurrency and blockchain sectors achieve US$211.90 million across 72 deals, marking a 22% increase from US$166.30 million over 38 deals in the second half of 2023.

Singapore has been actively working on strengthening risk management frameworks for digital asset tokenization and has recently launched an initiative to expand asset tokenization within financial services.

The proposed license application processes and fee structures are crucial elements that will shape the DTSP landscape in Singapore. From my perspective, MAS should consider implementing a tiered approach to both timelines and fees, reflecting the diversity of DTSPs in terms of size, complexity, and risk profile.

For timelines, I propose a three-tier system:

Fast-track (60 days): For small, low-risk DTSPs with straightforward business models.

Standard (90 days): For medium-sized DTSPs or those with moderately complex operations.

Extended (120+ days): For large, complex DTSPs or those proposing novel business models.

This tiered approach would allow MAS to allocate resources efficiently while ensuring thorough vetting of more complex applications. The fee structures can follow a similar tiered system based on the DTSP’s annual revenue or transaction volume could be implemented.

Minimum Financial Requirements

The proposed minimum financial requirements are a critical safeguard against potential market disruptions and consumer losses. Based on my analysis, I believe a risk-based approach to setting these requirements is more feasible. This could involve:

Base Capital Requirement: A minimum base capital for all DTSPs, regardless of size or services offered.

Risk-Weighted Capital Requirement: Additional capital requirements based on the DTSP’s types of services offered, transaction volumes, and risk profile.

Liquidity Requirement: A minimum liquidity ratio to ensure DTSPs can meet short-term obligations.

Specifically, providers with capital ratios above 15% were 30% less likely to face operational disruptions during periods of extreme market stress. I propose that MAS consider setting the base capital requirement at SGD 250,000, with additional risk-weighted requirements that could increase this amount up to SGD 5 million for the largest and most complex DTSPs.

Audit Requirements

The proposed duties of CEOs, directors, and partners, along with audit requirements, are fundamental to ensuring good governance and accountability in the DTSP sector. The following enhancement is recommended for consideration:

Mandatory Training: Annual training programs for CEOs and directors on regulatory compliance, risk management, and emerging trends in digital assets.

Risk Committee: DTSPs above a certain size must establish a dedicated risk committee at the board level.

Independent Directors: Mandating a minimum number of independent directors based on the DTSP’s size and complexity.

Audit Frequency: Annual external audits for all DTSPs, with additional quarterly internal audits for larger providers.

Regulators are increasingly leveraging technological solutions to enhance their supervisory functions and manage vast amounts of data. Consequently, firms must engage more frequently with regulators regarding fintech and regtech developments.

Fintech companies that implement robust governance structures and conduct regular audits are indeed less likely to experience compliance breaches.

AML/CFT Measures

The measures proposed in parts 5–8 of the consultation paper, particularly those related to Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT), are crucial for maintaining the integrity of Singapore’s financial system. I propose the following enhancements:

Risk-Based Approach: Implement a tiered KYC/AML approach based on transaction volumes and risk profiles.

Technology Integration: Encourage the use of AI and machine learning for transaction monitoring and suspicious activity detection.

Regulatory Technology (RegTech) Sandbox: Establish a sandbox environment for DTSPs to test innovative compliance solutions.

For existing customers onboarded prior to licensing, I suggest a phased approach:

Phase 1 (0–6 months): Risk assessment of existing customer base

Phase 2 (6–12 months): Enhanced due diligence for high-risk customers

Phase 3 (12–18 months): Full compliance with new requirements for all customers

Correspondent Account Services

The proposed requirements for Correspondent Account Services and information sharing for law enforcement purposes are essential components of a comprehensive regulatory framework. Perhaps the following would help:

Standardized Data Format: Develop a standardized data format for information sharing across the industry.

Blockchain Analytics: Encourage the use of blockchain analytics tools to enhance transaction traceability.

Secure Information Sharing Platform: Establish a secure, centralized platform for information sharing between DTSPs and law enforcement agencies.

Blockchain analytics tools have been instrumental in recovering stolen or illicitly obtained digital assets worldwide. They allow law enforcement agencies to trace and identify suspicious cryptocurrency transactions on the blockchain, leading to asset recovery efforts.

Technology Risk Management

The draft notices FSM-N28 to FSM-N33 cover critical aspects of DTSP operations, including technology risk management, cyber hygiene, and conduct. Based on my observations, I propose the following:

Continuous Monitoring: Implement real-time monitoring systems for cyber threats and operational risks.

Incident Response Drills: Mandate regular incident response drills and simulations.

Third-Party Risk Management: Establish clear guidelines for managing risks associated with third-party service providers.

Consumer Education: Require DTSPs to allocate resources for ongoing consumer education initiatives.

Regarding operating hours, perhaps MAS can consider a flexible approach that allows for 24/7 operations while ensuring adequate risk management and customer support. This could involve:

Core operating hours (e.g., 9 AM to 5 PM SGT) with full support services

Extended hours with automated systems and on-call support

Scheduled maintenance windows during low-volume periods

Timeline for Implementation:

To ensure a smooth transition to the new regulatory framework, I propose the following timeline:

Month 0–3: Publication of final regulations and guidelines

Month 3–6: Industry consultation and feedback period

Month 6–9: Finalization of technical specifications and reporting formats

Month 9–12: DTSP preparation and system upgrades

Month 12–18: Phased implementation of new requirements

Month 18–24: Full compliance deadline for all DTSPs

This timeline allows for a gradual implementation, giving DTSPs sufficient time to adapt their systems and processes while ensuring that the regulatory framework is fully operational within two years.

With careful implementation and continuous refinement, this regulatory framework has the potential to cement Singapore’s position as a global leader in digital asset regulation, attracting innovative businesses while safeguarding the interests of consumers and the broader financial system.

 

Source: https://www.financemagnates.com/cryptocurrency/what-singapore-should-do-for-token-regulation-my-suggestions-for-proposed-dtsps-framework/

 

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- “NFT: From Zero to Hero” and “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

Crypto trends of 2024: My predictions and disruptions

Crypto trends of 2024: My predictions and disruptions

As we turn our gaze to the future of the cryptocurrency industry, it is vital to anticipate the trends and developments that will shape the landscape in 2024. Let’s delve deeper into each of the discussed predictions:

Artificial Intelligence: Transforming everyday life

AI is expected to have a significant impact across various sectors, seamlessly integrating into our daily lives. Its influence will be profound, reshaping industries and revolutionising how we interact and conduct business.

AI has the potential to optimise processes, enhance decision-making, and unlock new possibilities in areas like healthcare, finance, and transportation. As AI technology advances, it will transform our everyday experiences and pave the way for a more efficient and interconnected world.

CBDC: A game-changer for the crypto industry

Central Bank Digital Currency (CBDC) holds immense significance in tracking, tracing, and taxing financial transactions. The introduction of CBDCs has the potential to drive widespread adoption of digital assets and revolutionise the entire crypto industry.

CBDCs offer enhanced transparency and accountability, reshaping the way we perceive and engage with cryptocurrencies. With the support and endorsement of central banks, CBDCs can bridge the gap between traditional finance and the crypto ecosystem, fostering greater trust and regulatory clarity.

Crypto travel rule: Advancing traceability and taxation

The imminent advancement of the crypto travel rule is set to elevate traceability and taxation within the crypto space. By implementing stricter regulations, authorities can closely monitor transactions, creating a more secure and transparent ecosystem for all participants.

This increased oversight will enhance the industry’s integrity, reduce the risk of illicit activities, and foster greater trust among users. As the crypto market matures, regulatory measures like the travel rule will become crucial for its sustainable growth and widespread adoption.

Layer 2: The growing influence of Bitcoin and Ethereum

Bitcoin and Ethereum, as the leading cryptocurrencies, will continue their upward trajectory in 2024. The emergence of BRC20 tokens and the development of zero-knowledge proofs (ZK) will contribute to the expansion of Layer 2 solutions.

These advancements promise to enhance scalability, security, and efficiency within blockchain networks, addressing some of the limitations that hinder mass adoption. Layer 2 solutions will enable faster and more cost-effective transactions, making cryptocurrencies more viable for everyday use and driving their integration into various industries.

Next level NFT: Adoption and brand recognition

NFTs have gained significant adoption thanks to the support and endorsement of major brands. While sales volumes may not have seen exponential growth, the relevance and influence of NFTs continue to expand.

NFTs provide unique digital assets with inherent value, securely traded on blockchain platforms. This revolutionises the concept of ownership and collectibles, opening up new avenues for artists, creators, and collectors. In 2024, we can expect NFTs to permeate further various industries, including gaming, virtual real estate, and intellectual property rights management.

Web4: A decentralised and autonomous web

The emergence of Web4 signifies a shift toward a more decentralised and autonomous web. Internet natives actively participate in building decentralised narratives, fostering inclusivity, and empowering individuals in digital spaces.

This transition aims to ensure a democratic and accessible online environment free from centralised control. Web4 envisions a future where individuals have more control over their data, privacy, and online experiences. It promotes collaboration, transparency, and user-centricity as foundational principles, enabling a more equitable and empowering digital landscape.

Security tokens: Advancing crypto’s potential

Security tokens play a crucial role in unlocking the full potential of the crypto market. By tokenising traditional financial assets such as stocks and bonds, security tokens have the potential to revolutionise traditional markets.

This democratisation of access to financial assets reshapes the investment landscape, allowing a broader investor base to participate in the crypto space. Security tokens provide fractional ownership, increased liquidity, and programmable functionality, enhancing the efficiency and accessibility of traditional financial instruments.

Commodity trading with crypto: Expanding possibilities

The integration of cryptocurrencies into commodity trading markets introduces exciting new possibilities for investors. From oil to gold, crypto enables individuals to seamlessly trade popular commodities, providing greater flexibility and choice while reducing traditional barriers to entry.

By leveraging blockchain technology, commodity trading becomes more transparent, efficient, and accessible to a wider range of participants. This integration paves the way for a more inclusive and globalised commodity market, with cryptocurrencies acting as a bridge between traditional and digital assets.

Mainstream adoption: Defi and financial institutions

Decentralised finance (Defi) is gaining traction among mainstream financial companies. Banks, their clients, and family offices are increasingly allocating a significant portion of their assets to crypto. This mainstream acceptance solidifies the legitimacy and potential of Defi as an integral part of the financial ecosystem.

The integration of Defi into traditional finance offers opportunities for greater financial inclusivity, transparency, and efficiency. Collaboration between traditional financial institutions and Defi protocols will drive the development of innovative financial products and services, catering to the evolving needs of investors.

Final thoughts

In conclusion, embracing the disruptions brought about by artificial intelligence, CBDCs, decentralised governance, and other emerging trends will be essential for individuals and businesses to thrive in an ever-changing world.

By leveraging these transformative forces, we can unlock new opportunities, reshape traditional models, and shape a future that is both innovative and inclusive. The crypto industry is poised for continued growth and evolution, and those who adapt and embrace these trends will be at the forefront of this transformative journey.

The article highlights the insightful keynote speech I delivered at the Web3 Creator Summit, focusing on the crypto trends expected to shape the year 2024.

 

Source: https://e27.co/crypto-trends-of-2024-my-predictions-and-disruptions-20230706/

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- “NFT: From Zero to Hero” and “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

Thanks Koin Bülteni for taking my comments on short term Bitcoin trends “May See a Decrease in Price.”

Thanks Koin Bülteni for taking my comments on short term Bitcoin trends “May See a Decrease in Price.”

Thanks İlkyaz Taşdemir, editor of Koin Bülteni for taking in my comments on my observations for Bitcoin.

Quoted from the article:

“Anndy Lian , who works in the field of blockchain , is also one of those waiting for dump. Lian explained that Bitcoin whales are transferring money to various exchanges, so a dump scenario can be seen in the short term. However, he said that the BTC price could go down as well.”

 

Original article in Turkish:

Ki Young: Bitcoin Balinaları Harekete Geçti, Dump Gelebilir

CryptoQuant CEO’su, Bitcoin balinalarının harekete geçtiğini söyledi ve yakında dump gelebilme ihtimaline karşı yatırımcıları uyardı. CEO’ya göre dump, kısa vadede gerçekleşebilir.

CryptoQuant CEO’su Ki Young Ju, yeni Bitcoin yorumuyla yatırımcıları dump konusunda uyardı. Tavsiye dışı olarak analizlerini aktaran CEO, Bitcoin balinalarının borsalara yüklü miktarda para aktardığını gösterdi. Paylaştığı grafikteki kırmızı danger zone‘a dikkat çeken Ki Young, kısa vadede dump geleceğine inandığını belirtti.

“All Exchanges Inflow Mean (144-block MA / Tüm borsalara yapılan giriş akışının ortalaması) 2 BTC’yi geçti. Sanırım tehlikeli bir bölgedeyiz. Balinalar borsalarda aktif olduğunda fiyat muhtemelen yatay seyredecek veya düşecektir.”

26 Kasım tarihinde de All Exchanges Inflow Mean’i (144-block MA) paylaşarak düzeltme beklediğini söyleyen CEO, şunları söylemişti:

“Bitcoin’e daha fazla düzeltme gelebilir. All Exchanges Inflow Mean hala yüksek. BTC, Aralık ayına kadar 20 bin doları kıracaktır.”

Balinalar altcoin alıyor olabilir mi?
Bitcoin maksimalisti ve melek yatırımcı WhalePanda, Ki Young’un açıklamasına farklı bir bakış açısı getirdi. WhalePanda, balinalar için “Belki de altcoin alıyorlardır.” yorumunda bulundu.

John Cho isimli bir kullanıcı da WhalePanda gibi altcoin konusuna değinerek bir yorum getirdi. Cho, balinaların altcoinlere yönelmiş olabileceğini öne sürerek “Sanırım altcoinlerde satış yapmak istiyorlar.” dedi.

Blockchain alanında çalışmaları bulunan Anndy Lian da dump bekleyenlerden. Lian, Bitcoin balinalarının çeşitli borsalara para transfer ettiğini, bu nedenle kısa vadede bir dump senaryosu görülebileceğini açıkladı. Bununla birlikte, BTC fiyatının da düşüşe geçebileceğini söyledi.

 

 

Translated from Turkish into English:

Ki Young: Bitcoin Whales Take Action, Dump May Come

The CryptoQuant CEO said Bitcoin whales are on the move and warned investors of the possibility of a dump soon . According to the CEO, dump can happen in the short term.

CryptoQuant CEO Ki Young Ju has warned investors of dumping with his new Bitcoin comment . Transferring his analysis without advice, the CEO showed that Bitcoin whales are transferring large amounts of money to the stock markets. Drawing attention to the red danger zone in the graphic he shared , Ki Young stated that he believes dump will come in the short term.

“ All Exchanges Inflow Mean (144-block MA / Average of inflow to all exchanges) exceeded 2 BTC. I think we are in a dangerous area. When the whales are active on the stock market, the price will likely go sideways or drop.

Stating that he is waiting for a correction by sharing All Exchanges Inflow Mean (144-block MA) on November 26, the CEO said:

“More corrections may come to Bitcoin. All Exchanges Inflow Mean is still high. BTC will break $ 20,000 by December. ”

Could whales be buying altcoins?
Bitcoin maximalist and angel investor WhalePanda brought a different perspective to Ki Young’s statement. WhalePanda says for the whales, “ Maybe they are buying altcoins. He commented .

A user named John Cho also made a comment by mentioning the subject of altcoin like WhalePanda. “ I think they want to sell in altcoins, ” Cho said, suggesting that the whales may have turned to altcoins. ” He said .

Anndy Lian , who works in the field of blockchain , is also one of those waiting for dump. Lian explained that Bitcoin whales are transferring money to various exchanges, so a dump scenario can be seen in the short term. However, he said that the BTC price could go down as well.

 

Screen capture:

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- “NFT: From Zero to Hero” and “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