No ban on cryptocurrencies: Singapore actually encourages blockchain experiments

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Singapore remains open to the future of cryptocurrencies despite China’s crackdown.

Tharman Shanmugaratnam, the Deputy Prime Minister and chairman of the Monetary Authority of Singapore (MAS) has reiterated that while they are assessing the risks associated with cryptocurrencies, there is no plan to ban cryptocurrency trading as of now.

In a notice paper on the MAS website, Shanmugaratnam addressed several questions regarding cryptocurrencies aroused by recent news of China’s ban on trading digital tokens.

“Cryptocurrencies are an experiment. The number and different forms of cryptocurrencies is growing internationally. It is too early to say if they will succeed. If some do succeed, their full implications will also not be known for some time,” Shanmugaratnam wrote.

“ As of now, there is no strong case to ban cryptocurrency trading here. But we will be subjecting those involved as intermediaries to our anti-money laundering regulations. And we will keep highlighting to Singaporeans that they could lose their shirts when they invest money in cryptocurrencies.”

But while cryptocurrencies and trading activities are safe for now in Singapore, that doesn’t mean that the government is taking a lax attitude towards risks of money laundering, as well as terrorist financing.

“Cryptocurrency transactions are anonymous. Given also the decentralized systems behind cryptocurrency payments, and the speed at which they can be performed, they can be used to conceal the illicit movement of funds.”

“MAS will be imposing anti-money laundering and countering the financing of terrorism (AML/CFT) requirements on the intermediaries that buy, sell or exchange virtual currencies. We set out this AML/CFT regulatory framework for virtual currency intermediaries last year as part of our public consultation on the proposed Payment Services Bill.” Shanmugaratnam says that law enforcers are actively watching out for other illegal activities, and he reminds people that they are legally obliged to report suspicious transactions.

In addition to AML/CFT risks, MAS also aims to educate the public on the risks of investing in cryptocurrencies—which are extremely volatile and can wipe out a holder’s funds as fast as it can shoot up profits.

Shanmugaratnam also says that Singapore’s financial system remains secure and unthreatened by the new technology as of now, and that they are, in fact, encouraging further developments using the technology for its potential benefits.

“We will continue to encourage experiments in the blockchain space that may involve the use of cryptocurrencies, because some of these innovations could turn out to be economically or socially useful. But equally, we will stay alert to new risks,” he wrote.