Singapore has been moving toward reviving its digital asset ecosystem after falling down the pecking order in Southeast Asia. However, the attempts to rekindle the adoption of virtual assets are against their usage in speculating and trading, says a top executive at the Monetary Authority of Singapore (MAS).
Ravi Menon, managing director at MAS, spoke at the Singapore Fintech Festival, where he stated the central bank’s stance towards the asset class. He warned attendees of the dangers of speculating with highly volatile assets like virtual currencies.
Menon adds that despite the volatility of digital currencies, there is still a measure of good that can be gleaned from them. He revealed that deploying them in the area of blockchain technology in use cases that improve economic efficiency is the most viable option for the Singaporean government.
“Does Singapore want to be a crypto asset hub? If a crypto hub is about experimenting with programmable money, if it is about applying digital assets for use cases like atomic supplements, or if it is about tokenizing real, international assets to increase efficiencies and reduce risk in financial transactions, yes, we want to be a crypto hub,” said Menon.
“But if it is about trading and speculating in cryptocurrencies for its own sake, that is not the kind of crypto hub we want to be,” he added.
Singapore was once home to several digital asset service providers, but regulators’ increasingly stern stance toward the industry has forced them to move out of the city-state. After the Terra collapse in May, Singaporean regulators upped the ante and began a nationwide crackdown on the ecosystem.
In 2021, the country imposed a ban on the advertising of virtual currencies in public places because speculating with the tokens is “highly risky and not suitable for the general public.”
Blockchain is the only way for virtual currencies in Singapore
In line with Menon’s statement, MAS has been eyeing several blockchain projects to improve the country’s financial system. At the start of the month, the regulator announced the successful completion of Project Guardian, a pilot exploring the potential of carrying out transactions in tokenized foreign exchange.
MAS is already conducting another pilot to test the viability of native digital issuance of wealth management products in conjunction with HSCB and the United Overseas Bank (UOB).
“These projects strive to increase efficiency in the product value chains, lower efficient issuance and servicing costs, and improve transparency and accessibility,” said Menon. “We believe Project Guardian can help pave the way for the next evolution of financial markets in Singapore.”
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