Singapore enters the Bitcoin and Cryptocurrency World for Bulk Profits
January 24, 2018 6:43 am,
Mr. Tharman Shanmugaratnam, Singapore’s Deputy Prime Minister, Coordinating Minister for Economic and Social Policies, and Chairman of Singapore’s financial watchdog, the Monetary Authority of Singapore (MAS), has responded to a question pertaining to MAS’s assessments and regulatory intentions regarding cryptocurrencies and initial coin offerings (ICOs). Mr. Shanmugaratnam replied by stating that the Singaporean regulator did not recognize bitcoin as legal tender and that the MAS will likely seek to regulate companies providing bitcoin payment services, rather than the cryptocurrency itself.
He said We are familiar with money, i.e., notes and coins, as a medium of exchange – an intermediary instrument used to facilitate transactions. I make a TV, sell it for money, and then use it to buy a pair of shoes. Money becomes a medium of exchange because all of us put our trust in its reliability. The Central Bank issues these notes and coins and makes them legal tender. Legal tender means that the medium of exchange is recognized by law to be valid for meeting a financial obligation.
Similar to most jurisdictions, MAS does not regulate such virtual currencies. However, we regulate the activities that surround them if those activities fall within our more general ambit as a financial regulator. Let me give two examples.First, virtual currencies, due to the anonymous nature of the transactions, can be exploited for money laundering and terrorism financing risks. MAS is working on a new payment service regulatory framework that will address these risks.
A second example is fund-raising. Virtual currencies can go beyond being a means of payment, and evolve into “second generation” tokens representing benefits such as ownership in assets, like a share or bond certificate. The sale of such “second generation” tokens to raise funds is commonly known as an initial coin offering or ICO (“ICO”). A number of ICOs have been structured out of Singapore in recent months.
These are financial activities that falls under MAS’ regulatory ambit. Hence, on 1 August 2017, MAS clarified that if a token is structured in the form of securities, the ICO must comply with existing securities laws aimed at safeguarding investors’ interest. So the requirements of having to register a prospectus, obtain intermediary or exchange operator licenses, will apply. These intermediaries must also comply with existing rules on anti-money laundering and countering terrorism financing.
With advancement in technology, new virtual means of payment have emerged, such as cryptocurrency, which is a form of digital token secured by cryptography. They are not legal tender. But some people put their trust in them and use them as a means of payment. Hence, Bitcoin and Ether have been adopted by people in some communities to pay one another or to pay for goods and services.
Some consumers may be attracted to invest in virtual currencies and digital tokens due to their recent exponential rise in value. However, as a financial regulator, our focus is securitized interests in assets – such as shares in a company. MAS does not and cannot regulate all products that people put their money into thinking that they will appreciate in value. But recognizing that the risks of investing in virtual currencies are significant, MAS and the Commercial Affairs Department have published an advisory alerting consumers to these risks, and are working together to raise public awareness of potential scams.