The Singapore Central Bank has mentioned that it aims at creating stronger safeguards in order to protect retail customers. MAS has also been consulting the public for stablecoin regulation.
Citing people who are familiar with the matter, MAS has mentioned that the firms are supposed to respond to the given questionnaire as soon as possible.
It has at the moment issued close to 10 licenses to firms in Singapore. The list of exchanges includes Crypto.com, DBS Bank’s brokerage arm DBS Vickers. This is just a small number compared to 200 reported firms that have applied for the license.
This change in regulatory action in Singapore is mostly targeted towards intensifying the scrutiny on the digital asset firms in the middle of up new regulations in the industry.
The managing director of MAS has previously mentioned that the financial watchdog has been working on a regulatory framework.
This framework shall help address consumer protection, market conduct, and reserve backing for stablecoins over the next couple of months.
Areas That Need New Regulations
There are certain areas that require specific amendments within the existing crypto regulations in Singapore according to the central bank.
Crypto payment service providers undergo risk-based capital and liquidity requirements.
This translates to the fact that they are often required to protect the customer funds or these digital asset tokens from going insolvent too.
At the current moment, however, most of these regulations are concerned with anti-money laundering policies and terrorism financing. While these areas receive ample attention, customer protection needs more attention.
This new regulatory framework for crypto comes after ongoing liquidity crisis and also the associated withdrawal issues in the middle of a crypto downturn.
Recently, Three Arrows Capital (3AC) which is a Singapore-based hedge fund was declared bankrupt after it failed to meet its margin calls in the middle of June, this year.