Singapore has no plans of regulating cryptocurrencies like bitcoin and the central bank will keep “an open mind”, the authority’s chief has revealed.
The Monetary Authority of Singapore (MAS), the country’s central bank and financial regulator, will not regulate cryptocurrencies but will “expect” intermediaries to implement anti-money laundering controls, according to MAS managing director Ravi Menon.
Speaking an interview with Bloomberg, the central banker was asked if cryptocurrencies like bitcoin require regulation if Singapore became hotbed for ICOs, a popular new form of fundraising enabled by cryptocurrencies.
In response, Menon said “very few jurisdictions regulate cryptocurrencies” before revealing the authority’s take on exerting control, if any.
We’ve taken the approach that the currency itself does not pose the risk that warrants regulation. Our approach is to look at the activity around the cryptocurrency and then make an assessment of what regulation would be suitable.
As an example, Menon pointed to the expectation upon an intermediary dealing with cryptocurrencies, like a bitcoin exchange or trading platform, to establish anti-money laundering controls.
Refreshingly, the central banker went against the usual narrative of an authority undermining cryptocurrencies, by stating:
[I]t is a known fact that cryptocurrencies are quite often abused for illicit financing purposes, so we do want to have AML/CFT controls in place. So those requirements apply to the activity around cryptocurrency, rather than the cryptocurrency itself.
Menon also expressed noteworthy comments for a central banker when he was asked to offer his views on the advent of cryptocurrencies into societies. Bitcoin has captured the mainstream’s attention this year, growing from $1,000 at the turn of 2017 to a recent all-time high near $6,200. The official pointed to the “hype” surrounding the value gains as a misguided approach to tapping into cryptocurrencies’ potential beyond a store of value.
People see it merely as an investment vehicle that’s going to rise in value. I think that’s a rather misguided approach to the use of cryptocurrencies. They can have potentially good applications in particular use cases…the cryptocurrency value isn’t important, it is the application in which they are used.
‘Can they make cross-border inter-banking payments cheaper, faster and more efficient for migrant workers to send money back to their villages?” Menon asked, raising the question for the wider application of cryptocurrencies.
He went on to add:
If it [cross-border remittance] was going through a blockchain using cryptocurrencies, it could yield benefits. That ought to be the question, rather than whether bitcoins or ether are going up in value or not.
One of the early adopters of blockchain technology among central banks globally, the MAS is heavily invested in testing and developing its own digital currency under the ‘Project Ubin’ banner – an initiative by the central bank to develop and deploy digitized Singaporean dollars on a blockchain. The MAS issued digital tokens of the Singaporean dollar over a private Ethereum blockchain in a trial earlier this year.
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