Singapore vows to be ‘unrelentingly hard’ on bad behavior in digital assets market

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The Monetary Authority of Singapore (MAS), Singapore’s central bank and financial regulator, has reiterated that it will leave no room for bad behavior in the digital assets market. 

In an interview with Financial Times, MAS Chief Fintech Officer Sopnendu Mohanty stated that the regulator would be “unrelentingly hard” on any misbehavior among digital currency firms. 

“We have no tolerance for any market bad behavior. If somebody has done a bad thing, we are brutal and unrelentingly hard,” Mohanty said. 

His comment is coming amidst the market turbulence several Singapore-based digital currency firms are causing. Terra, whose algorithmic stablecoin coin UST and its native token LUNA crashed spectacularly in May, is based in the country. 

The crash of Terra has also affected Three Arrows Capital (3AC) which is also registered in Singapore. The digital assets manager suffered losses from its LUNA investment and is now facing liquidity problems. 

In the interview, Mohanty also said that the MAS would enforce a “painfully slow” and “extremely draconian due diligence process” for digital assets firms to gain licenses to operate in Singapore. 

Singapore’s stance on the digital assets industry is becoming stricter 

The direction of the MAS’s policies for digital assets has shifted significantly in the past few months. From being more open and inviting to the industry last year, the MAS is now becoming more stringent. 

Under new powers, the regulator received through the passage into law of the Financial Services and Markets Bill 2022. It is now the oversight body for digital currencies, exchanges, and firms that offer financial advice on selling digital assets and tokens. 

With the powers, the MAS already requires virtual assets service providers (VASPs) to meet stringent new licensing requirements. It has so far granted 14 firm licenses under this regime, including in-principle approval for Crypto.com, Genesis, and Sparrow just this week. 

Previous regulations it introduced for the market include a ban on the advertisement of digital currencies in public spaces and a ban on digital currency ATMs. 

The regulator said advertising digital currency investments in public places trivializes the risks associated with the investment. It cited a similar reason for the ban on digital currency ATMs, stating that they pose a risk to consumers who may buy assets on impulse without due research. 

The tightening regulations have seen several digital assets firms exit the country for friendlier jurisdictions like Dubai.

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