The Monetary Authority of Singapore (MAS) will consider more targeted legislation of both cryptocurrencies and token sales as activity in the sector matures in the city-state.
In an announcement on 3 October, Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of MAS, elaborated: “MAS has been monitoring the use of such virtual currencies. Their use is not prevalent in Singapore – about 20 Singapore retailers like restaurants and online shops currently accept Bitcoins. This is unlike places like Japan, where the use is more popular.”
“Likewise, in the Singapore financial industry, use of virtual currencies as a mode of payment is not significant. Trading is generally for speculative investment purposes, and the volume is low compared to other countries such as US, Japan and Hong Kong. Similar to most jurisdictions, MAS does not regulate such virtual currencies per se. However, we regulate the activities that surround them if those activities fall within our more general ambit as a financial regulator.”
Shanmugaratnam noted that at this time, the MAS was working on new payment services regulatory framework to address the risks of laundering and terrorism financing that virtual currencies posed.
The city-state has developed into a leading destination for ICO activity in Asia, with the MAS already clarifying in an August announcement that only if a token is structured in the form of securities must it then comply with existing securities laws to safeguard investors’ interest.
Shanmugaratnam noted: “MAS has not issued new legislation specifically for ICOs. We will continue to monitor the developments of such offers, and consider more targeted legislation if necessary.”
In an interaction with this portal, Dr Finian Tan of Singapore-based Vickers Ventures Partners, which recently closed its fifth fund at $230 million, noted that ICOs had emerged as a new tool for entrepreneurial finance but that due to its relative youth, there were significant risks and intense speculation accompanying it.
He opines: “In an ICO, you’re making two bets. One bet is on the company and another bet on the cryptocurrency going up, making it two bets at once. Secondly, the guy who is raising money only knows about his business and is clueless about where Bitcoin is going. So, he is helping you [investors] make two bets but they can only control one. The value of the cryptocurrency he’s issued is out of his hands. So what should he do? So logically, what he should do is convert all the digital currency he’s raised into US dollars to mitigate the risk.”
Referring to it as a “fictitious way of raising money”, Tan noted that regulations had not caught up and that despite the loopholes they presented, in the case of ICOs, it was necessary for caveat emptor to prevail, with the onus on the ICO issuer to provide information.