Singapore is seeking input from digital assets entities in the country as it looks to review legislation in the industry.
The digital asset sector continuously puzzles governments across the globe due to its nascent status, leading to inadequate and inefficient regulatory efforts. Noticing this trend, Singapore wants to understand the scene better and make necessary changes regarding regulation.
According to a Bloomberg report , the Monetary Authority of Singapore (MAS) dispatched questionnaires to several entities in the country with exposure to digital assets and individuals with knowledge of the matter. The questionnaires sought insight into even the smallest details on these entities regarding their digital asset involvements. Singapore’s central bank specifically targeted firms that have either applied for or procured its digital payments license. The central bank dispatched these questionnaires in July, and sought swift responses from some firms.
The central bank requested details relating to how financially stable and interconnected the firms are. This is especially important, considering the trend of fiasco that has plagued most digital asset entities and lenders. The majority of these failed, and troubled entities, such as Terra, 3AC, Celsius, ZipMex and Hodlnaut, were massively interconnected.
It also demanded information on the extent of the firms’ exposure to digital assets with regard to lending and borrowing, assets in possession, and staked assets through DeFi protocols.
Furthermore, the report added that the central bank requested details on pre-launch operations from local exchanges following license procurement. As the digital asset industry grows, the adoption rate surges, and fresh risks surface. The Singapore community is expecting legislation changes, and these inquiries will assist the MAS in making the right ones.
Singapore seeks to expand regulatory reach
The financial authorities in Singapore are aiming to strike a balance between fostering innovation and mitigating risks in the space.
“Licensees and applicants are expected to notify MAS of any events that materially impede or impair the operations of the entity,” a spokesperson for MAS told Bloomberg, noting that these events could be issues hindering them from fulfilling their obligations to their customers.
Following the Singapore-based Three Arrows Capital debacle, Singapore has ramped up its digital asset regulatory efforts. Despite the troubles in the space, the adoption rate has remained at peak levels, highlighting an urgent need for sufficient regulation.
To ensure proper consumer protection, the MAS has intensified scrutiny of firms in the digital asset space. A total of 200 entities have so far applied for a digital payments license. Out of this number, only a little over 10 of these firms have procured licenses.
Currently, Singapore only regulates digital asset entities in areas of terrorism funding and money laundering, neglecting consumer protection. Its recent inquiry underscores the country’s desire to expand its regulatory reach. The MAS will likely begin scrutinizing firms based on insolvency risks and customer funds protection.
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