Mr. Tharman Shanmugaratnam, Singapore’s Deputy Prime Minister, Coordinating Minister for Economic and Social Policies, and Chairman of Singapore’s financial watchdog, the Monetary Authority of Singapore (MAS), has responded to a question pertaining to MAS’s assessments and regulatory intentions regarding cryptocurrencies and initial coin offerings (ICOs). Mr. Shanmugaratnam replied by stating that the Singaporean regulator did not recognize bitcoin as legal tender, and that the MAS will likely seek to regulate companies providing bitcoin payment services, rather than the cryptocurrency itself.
The MAS Does Not Intend to Develop a Distinct Regulatory Apparatus for Cryptocurrency
In response to a parliamentary questionregarding the MAS’s regulatory conclusions and assessments pertaining to cryptocurrency, Mr. Shanmugaratnam stated that the MAS has determined cryptocurrency and ICOs to fall outside of its current financial legislation.
The question to which the MAS chairman responded asked “whether the Government is keeping track of the use/investment of cryptocurrencies such as bitcoin in Singapore; (b) how do cryptocurrencies affect our finance industry; (c) whether studies are being conducted to assess the problems and risks of using/investing in cryptocurrencies; and (d) whether regulatory frameworks are necessary in the future.”
“MAS has been monitoring the use of… virtual currencies.” – Mr. Shanmugaratnam, Chairman of MAS
The MAS chairman responded with a number of points, first stating that Singapore’s central bank has concluded that cryptocurrency is not legal tender. The deputy prime minister defined legal tender as “the medium of exchange is recognized by law to be valid for meeting a financial obligation.”
Mr. Shanmugaratnam states that the “MAS has been monitoring the use of… virtual currencies.” The deputy prime minister states that the financial regulator has determined that virtual currency “use is not prevalent in Singapore” estimating that “about 20 Singapore retailers like restaurants and online shops currently accept bitcoins”, adding that “in the Singapore[an] financial industry, use of virtual currencies as a mode of payment is not significant.” The MAS is concluding that cryptocurrency “trading is generally for speculative investment purposes,” noting however that Singapore’s trading volume is significantly lower than that which is produced by the dominant markets of the U.S., Japan, and Hong Kong.
Singapore’s Financial Regulator Recently Issued a Statement Pertaining to ICOs
Regarding regulations, Mr. Shanmugaratnam stated that “MAS does not regulate… virtual currencies… However… regulates the activities that surround them if those activities fall within our more general ambit as financial regulator.” Mr. Shanmugaratnam also revealed that the MAS is currently developing new regulations for payment services designed to address the money laundering and terrorist financing risks associated with “the anonymous nature of [cryptocurrency] transactions.”
The deputy prime minister indicated that a similar regulatory approach would likely be applied to ICOs, stating that the “MAS has not issued new legislation specifically for ICOs”. Mr. Shanmugaratnam iterated that digital tokens through ICOs that are determined to comprise securities will be subject to the regulatory requirements of securities – including having to register a prospectus, obtain intermediary or exchange operator licenses, and mandatory compliance with anti-money laundering and anti-terror financing laws. Mr. Shanmugaratnam stipulated that the monetary authority of Singapore “will continue to monitor the developments of [the ICO industry], and consider more targeted legislation if necessary.”
In recent weeks, reports have detailed that numerous bitcoin-based startups domiciled in Singapore have experienced bank account closures due to uncertainty pertaining to the legal status of cryptocurrency. The statement comes approximately two months after the MAS first sought to clarify its regulatory position regarding ICOs, asserting that token deemed to comprise securities would fall under the purview of existing regulations.