The Monetary Authority of Singapore (MAS), the country’s central bank and the regulator of the crypto sector, says that its licensing process for digital asset service providers needs to be stringent. “It needs to be because we want to be a responsible global crypto hub with innovative players, but also with strong risk management capabilities,” said the central bank chief.
Monetary Authority of Singapore (MAS) Managing Director Ravi Menon talked about cryptocurrency regulation at the Financial Times Crypto and Digital Asset Summit Wednesday.
The central bank chief raised concerns regarding the risks of investing in crypto assets to retail investors, Bloomberg reported. Noting that crypto could be used for money laundering and terrorism financing, Menon emphasized:
The licensing process is stringent. And it needs to be because we want to be a responsible global crypto hub with innovative players, but also with strong risk management capabilities.
The Singaporean central bank has approved only a small fraction of about 170 digital asset applicants. More than 100 companies that applied for a license to operate a crypto business have already failed to meet the licensing requirements.
The MAS managing director explained that the central bank has taken a “tough line” on retail crypto investing “because we’re not sure that’s a good idea for retail investors to be dabbling in cryptocurrencies.” He was quoted as saying:
I think many global regulators share similar concerns about retail exposure to cryptocurrencies.
Menon detailed that the MAS looks at the applicants’ track record and whether they have strong corporate governance structures in place. In addition, “they need to be familiar with money laundering, terrorist financing risks,” he said.
The central bank boss further stated that while crypto assets do not currently pose a threat to the financial system, there are money laundering and terrorism financing risks.
The MAS issued “Guidelines to Discourage Cryptocurrency Trading by General Public” in January stating that “the trading of cryptocurrencies is highly risky and not suitable for the general public.” The central bank also noted that crypto service providers had been actively promoting their services through ATMs in public areas, stressing that it could encourage the public to trade “on impulse, without fully understanding the attendant risks.”