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Cryptocurrency remains unregulated in Singapore

25 October 2017
Singapore’s central bank announced it will remain vigilant and review the risks of cryptocurrencies before imposing regulation, says Managing Director Ravi Menon (left)

Singapore doesn’t plan to regulate cryptocurrencies such as bitcoin, but will remain alert to money laundering and other potential risks stemming from their use, the head of the country’s central bank said.

“As of now I see no basis for wanting to regulate cryptocurrencies,” Monetary Authority of Singapore Managing Director Ravi Menon has said. Rather, the central bank’s focus is to “look at the activities surrounding the cryptocurrency and asking ourselves what kinds of risks they pose, which risks would require a regulatory response, and then proceed from there,” Menon added.

Bitcoin’s rally and the proliferation of other digital assets is attracting the attention of regulators globally, though many central banks have still refrained from supervising cryptocurrencies.

“Very few jurisdictions regulate cryptocurrencies per se. Most have taken the approach that the currency itself does not pose the risk that warrants regulation," Menon said. However, “it is a known fact that cryptocurrencies are quite often abused for illicit financing purposes. And so we do want to have anti money laundering controls, countering the financing of terrorism controls in place”.

“So those requirements apply to activity around cryptocurrency rather than the cryptocurrency itself,” Menon said.

Bitcoin scandals

The digital-coin world has its share of scandal. Tokyo-based Mt. Gox, once the world’s largest virtual currency exchange, filed for bankruptcy in 2014 after having lost 850,000 bitcoins worth about $500 million at the time. Last month, the U.S. Commodity Futures Trading Commission said a New York man and his company lured at least 80 people into a Ponzi scheme by promising to invest their money in bitcoin.

Singapore already requires virtual-currency intermediaries such as exchange operators to comply with requirements to combat money laundering and terrorism financing, Menon noted. “This will be formalized in the coming payment services regulation which we are working on,” Menon said.

If ICOs include the promise of a dividend or other economic benefits, they can resemble regular securities offerings and would therefore be covered by Singapore’s Securities and Futures Act, Menon noted. Other business models “avoid these security-like features in their digital tokens”, he added.

“So we just have to look at them case by case to see which ones we will need to bring into the regulatory ambit, and which ones can stay outside,” Menon said.

Price surge

Bitcoin prices breached $6,000 for the first time last week, a rise of more than 500% since the start of the year. The rally continued even after recent criticism from central bankers and other top financial executives – including JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, who described bitcoin as a “great product” for criminals.

“Our attitude is let’s keep an open mind on it,” Menon said. “I think that’s one of the areas where there’s been excessive hype because people see it merely as an investment vehicle that’s going to rise in value and I think that’s a rather misguided approach towards the use of cryptocurrencies.”

Among companies that have conducted an ICO in Singapore is TenX, which raised $80 million in the city state in June. The Singapore-based startup is pitching its debit card as an instant converter of multiple digital currencies into fiat money including dollars, yen and euros.


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