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.
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”.
Given the unique attributes of Dogecoin, Toncoin, and Shiba Inu, each offers distinct investment opportunities.
However, due to the high volatility of the cryptocurrency market, investors are advised to diversify their portfolios and conduct thorough research before making any decision.
Cryptocurrency investors are constantly on the lookout for the next big opportunity. While Bitcoin and Ethereum often dominate the headlines, other digital assets have garnered significant attention and support. Among these are Dogecoin, Toncoin, and Shiba Inu. Each of these cryptocurrencies has unique attributes and backing that make them intriguing options for investors.
I will share the reasons why one might consider adding these three coins to their portfolio in the current market environment. Not financial advice, of course.
Dogecoin: The Power of Community and Celebrity Endorsement
Dogecoin, originally created as a joke, has evolved into a serious player in the cryptocurrency market. Launched in December 2013 by Billy Markus and Jackson Palmer, Dogecoin was inspired by the popular “Doge” meme featuring a Shiba Inu dog. Despite its humorous beginnings, Dogecoin has built a robust community and has seen substantial growth over the years.
One of the most compelling reasons to consider investing in Dogecoin is its strong community support. The Dogecoin community is known for its charitable efforts and positive spirit. For instance, in 2014, the community raised $50,000 to help send the Jamaican bobsled team to the Winter Olympics. This sense of community and goodwill has helped Dogecoin maintain a loyal following.
Another significant factor contributing to Dogecoin’s appeal is the endorsement of high-profile individuals, most notably Elon Musk. The CEO of Tesla and SpaceX has frequently tweeted about Dogecoin, often causing its price to surge. Musk’s influence cannot be understated; his tweets have the power to move markets, and his support for Dogecoin has brought it into the mainstream spotlight.
In May 2021, Musk referred to Dogecoin as “the people’s crypto,” further solidifying its status as a legitimate investment option.
From a financial perspective, Dogecoin has shown impressive growth. As of 6 June 2024, Dogecoin’s market capitalization stands at approximately $15.8 billion, making it one of the top 10 cryptocurrencies by market cap. While its price is highly volatile, the potential for significant returns is evident. For example, in early 2021, Dogecoin’s price surged by over 12,000%, reaching an all-time high of $0.73 in May of that year.
I am waiting for Elon Musk’s plan for $DOGE. And I know he will do something to it.
Toncoin: The Telegram Connection and Growing Ecosystem
Toncoin, the native cryptocurrency of the TON (Telegram Open Network) blockchain, is another digital asset worth considering. Originally developed by the team behind the popular messaging app Telegram, TON aims to provide a fast, secure, and scalable blockchain platform. Although Telegram officially withdrew from the project in 2020 due to regulatory issues, the TON community has continued to develop and expand the network.
One of the primary reasons to invest in Toncoin is its strong user base. Telegram boasts over 700 million monthly active users as of 2023, and the integration of TON into the messaging app has the potential to drive significant adoption. The seamless integration of cryptocurrency transactions within a widely used messaging platform could revolutionize the way people send and receive money, making Toncoin a valuable asset.
The TON ecosystem is rapidly growing, with numerous projects being built on the platform. One notable example is Hamster Kombat, a decentralized game that leverages the TON blockchain for in-game transactions and rewards. The success of such projects highlights the versatility and potential of the TON network.
Many new projects are building on TON. For example, in just three months, 239 million users subscribed to the Hamster Kombat app.
Pavel Durov, the founder of Telegram, pointed out that four to five million new users join the game daily, making it the fastest-growing digital service in the world. “It took Hamster only 73 days to reach 100 million monthly users. Each day, 4-5 million new users join Hamster Kombat, making it the fastest-growing digital service in the world.”
From a technical standpoint, TON offers several advantages over other blockchain platforms. It utilizes a unique consensus mechanism called “Byzantine Fault Tolerant” (BFT) proof-of-stake, which enhances security and scalability. Additionally, TON’s multi-chain architecture allows for parallel transaction processing, significantly increasing throughput. These technical innovations position TON as a formidable competitor in the blockchain space.
Financially, Toncoin has shown promising growth. As of the point of writing, Toncoin’s market capitalization is around $38.5 billion, reflecting its increasing adoption and potential for future growth. While it may not yet be as well-known as some other cryptocurrencies, its strong fundamentals and growing ecosystem make it a compelling investment option.
Shiba Inu: The Power of Community and Strategic Partnerships
Shiba Inu, often referred to as the “Dogecoin killer,” is another cryptocurrency that has captured the attention of investors. Launched in August 2020 by an anonymous developer known as “Ryoshi,” Shiba Inu was created as an experiment in decentralized community building. Despite its relatively short history, Shiba Inu has quickly gained a massive following and has become one of the most talked-about cryptocurrencies.
One of the key reasons to consider investing in Shiba Inu is its strong and passionate community. The Shiba Inu community, known as the “Shib Army,” is highly active on social media and has played a crucial role in promoting the coin. This grassroots support has helped Shiba Inu achieve significant milestones, such as being listed on major cryptocurrency exchanges like Binance and Coinbase.
Another factor contributing to Shiba Inu’s appeal is its strategic partnerships and endorsements. Notably, Ethereum co-founder Vitalik Buterin has been associated with Shiba Inu. In May 2021, Buterin donated 50 trillion SHIB tokens (worth approximately $1 billion at the time) to the India COVID-Crypto Relief Fund, bringing significant attention to the project.
Additionally, Shiba Inu has formed partnerships with various companies and platforms, further enhancing its credibility and adoption.
From a financial perspective, Shiba Inu has demonstrated remarkable growth. Its market capitalization is approximately $9.3 billion, making it one of the top 20 cryptocurrencies by market cap. The coin’s price has the potential for high returns. For instance, in 2021, Shiba Inu’s price surged by over 1,000% in just one month, reaching an all-time high.
Furthermore, Shiba Inu’s ecosystem is expanding with the development of various projects and initiatives. One notable example is ShibaSwap, a decentralized exchange (DEX) that allows users to trade, stake, and earn rewards with SHIB tokens. The success of ShibaSwap and other projects within the Shiba Inu ecosystem highlights the coin’s potential for long-term growth and utility.
More recently, I see Shytoshi Kusama making his first public appearance in Kyoto to meet the Shiba Inu community. This means they are working hard on the ground. I hope to see more price action soon.
Conclusion: A Diversified Approach to Cryptocurrency Investment
In conclusion, Dogecoin, Toncoin, and Shiba Inu each offer unique attributes and potential benefits for investors. Dogecoin’s strong community support and celebrity endorsements, Toncoin’s integration with Telegram and growing ecosystem, and Shiba Inu’s passionate community and strategic partnerships make them compelling options in the current market.
However, it is essential to approach cryptocurrency investment with caution. The market is highly volatile, and prices can fluctuate dramatically. Diversifying one’s portfolio and conducting thorough research are crucial steps to mitigate risks and maximize potential returns.
Ultimately, the decision to invest in Dogecoin, Toncoin, or Shiba Inu should be based on a careful assessment of one’s risk tolerance, investment goals, and market conditions. By staying informed and making strategic decisions, investors can navigate the dynamic world of cryptocurrency and potentially reap significant rewards.
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”.
It has become evident that the decentralized finance (DeFi) industry will not be going anywhere, with a continuous launch of new projects, innovative financial instruments, and expanding user adoption.
As of 2024, Triple-A estimated that there are around 560 million cryptocurrency users worldwide. The number could be higher, as tracking an exact estimate is challenging due to cryptocurrencies’ decentralized nature.
However, the more the crypto industry expands, the more it becomes susceptible to hack attacks and exploitation. According to data published by TRM on Friday, by June 24, 2024, the value of stolen crypto doubled within a year from $657 million to $1.38 billion.
Such a stark increase might push crypto investors to consider purchasing crypto insurance.
What is it, and how does crypto insurance work? Here are what experts are saying.
Key Takeaways
The ever-growing crypto industry faces increased risks, including hacking and theft of assets, which makes crypto insurance essential.
Cryptocurrency insurance coverage policies typically cover theft, hacking, regulatory breaches, and professional errors.
Insurers tend to work with regulators to ensure compliance and comprehensive coverage.
Increasing user adoption and higher asset values drive the demand for larger coverage limits and innovative insurance solutions.
What Is Crypto Insurance?
In essence, crypto insurance follows the same principles of effective risk management as traditional insurance, Joseph Ziolkowski, the CEO and co-founder of Relm Insurance, an insurance provider specializing in the digital assets and Web3 industries.
The main focus of crypto insurance companies is to protect cryptocurrency holders and businesses against risks such as theft, hacking, and technical failure. It provides financial coverage for losses incurred due to such incidents and offers a safety net.
However, due to DeFi’s volatile nature, crypto insurance coverage might side-pass volatile market swings or accidental mistakes by the user, Anndy Lian, an inter-governmental blockchain adviser, added.
Additionally, Lian brought up the idea of DeFi insurance explaining that it utilized blockchain technology to create a community-driven pool for coverage losses thus eliminating the need for a traditional insurance company.
Demand For Crypto Insurance Heating Up
With the increase of cyberattacks on crypto exchanges and wallets, the demand for crypto insurance is surely on the rise which also coincides with the overall growth and mainstream adoption of the cryptocurrency industry.
Relm Insurance’s Ziolkowski noted that the company has observed significant growth in the crypto insurance market, particularly following the emergence of new regulations and as the ecosystem continues to build innovative solutions.
He added:
“The demand for crypto insurance has remained consistently strong, demonstrating resilience even through bear markets. In fact, due to this strong demand, Relm released a Web3 suite of products, including tailored and comprehensive insurance coverage for clients exploring or utilizing Web3 technologies.
“Our five distinct products directly address the nuanced risks faced by cryptocurrency exchanges, asset managers, technology developers, miners, token issuers, institutional staking providers, and other businesses operating within the ecosystem.”
However, Ziolkowski noted that the rising number of insurance claims is also prompting insurers to reduce their willingness to cover such types of risks.
Protection Against the Wild West of Crypto Risks
Unlike traditional coverage, crypto insurance tends to focus on eliminating specific threats the crypto industry may be more susceptible to, such as theft and hacking, lost crypto and keys, as well as cyber and tech errors and omissions.
Lian called crypto insurance’s coverage the protection “against the wild west of cryptocurrency risks” and noted that some of the most popular solutions include the protection against hacking and theft, which covers and safeguards crypto assets that may have been stolen during a security breach as well as the accidental or tech glitch-induced loss of custodians.
Relm Insurance’s Ziolkowski added that some of the most prevalent types of crypto insurance include Directors and Officers (D&O), Cyber and Technology professional indemnity, and Investment Managers Insurance coverage.
D&O insurance protects crypto companies and their executives from lawsuits, typically arising from alleged mismanagement, and includes three layers of coverage:
The protection of individual directors if they are sued and the company cannot indemnify them.
The reimbursement of the company for identifying executives’ names in lawsuits.
The coverage of the company’s expenses when both the company and executives are sued.
Cyber and Technology professional covers technology-related liabilities stipulated in contracts.
Finally, the Investment Managers Insurance coverage provides specialized coverage for investment managers overseeing cryptocurrency assets.
It typically includes protection against claims arising from professional errors, mismanagement, breaches of fiduciary duty, and regulatory violations. It can cover legal defense costs, settlements, and damages, safeguarding both the managers and the investment firm from financial losses due to these risks.
Crypto Insurance Companies “in Cahoots” With Regulators
Relm Insurance’s Ziolkowski noted that Relm works together with regulators worldwide to navigate the insurance requirements embedded within their legislative frameworks.
“It is crucial to recognize the substantial variation in these requirements: some jurisdictions mandate a single type of insurance, while others stipulate the necessity of eight or more insurance types.”
Ziolkowski brought up Hong Kong as an example which mandates that 50% of all assets under custody must be insured, a requirement not uniformly applied across all regulations.
Such regional disparities underscore the evolving landscape of regulatory frameworks, where insurance mandates increasingly establish credibility and legitimacy within the crypto industry.
Lian added that regulatory frameworks can often influence the types of risks covered by crypto insurance, thus highlighting the importance of cooperation.
“For example, regulations addressing smart contract vulnerabilities could pave the way for insurance against bugs or exploits within these digital agreements. Conversely, a lack of regulations around specific crypto activities might leave them uncovered by insurance.”
Crypto Insurance: A Promising Concept?
While speaking to Techopedia, Lian highlighted that crypto insurance is “a promising concept, but it is still navigating uncharted territory.”
“Unlike traditional insurance built on decades of data, crypto’s new and ever-changing landscape makes it difficult for insurers to assess risks and price coverage fairly.”
Additionally, crypto’s decentralized nature further clashes with traditional insurance models, which could make insuring digital assets a little more challenging as they are often spread across a number of digital wallets.
Relm Insurance’s Ziolkowski highlighted that a prominent trend observed by Relm is the increasing demand for larger coverage limits in slashing insurance, which reflects heightened risk awareness and exposure.
“Additionally, there’s a notable surge in dynamic insurance offerings entering the market, driven by client innovation. Companies’ exposures are expanding at a pace far exceeding that of traditional finance.”
Thus, the insurance for cryptocurrency may see more growth moving forward.
The Bottom Line
Crypto insurance has emerged as a crucial component in the rapidly evolving digital assets and DeFi industries. As the number of users and the value of digital assets continue to rise, so does the potential for risks such as hacking, theft, and regulatory challenges, forcing more investors to look into what is available in terms of asset safety.
Despite the challenges of insuring digital assets in a decentralized and volatile environment, the demand for comprehensive coverage is growing. By collaborating with regulators and developing innovative products, the crypto insurance sector is poised to play a pivotal role in securing the future of digital finance.
As the industry matures, the protection provided by crypto insurance will be indispensable for fostering trust and stability in the crypto world.
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”.
