Singapore wants to be a global hub for blockchain, but not be a center for trading and speculating on cryptocurrencies, Ravi Menon, the managing director of the Monetary Authority of Singapore (MAS), has said.
Addressing the opening ceremony at Singapore Fintech Festival 2022 on November 3, Menon affirmed that Singapore aims to be a crypto hub to experiment with programmable money, applying for particular cases or tokenising financial assets to increase efficiency and reduce financial risks.
“With crypto-based activities, it is basically an investment in a prospective future, the shape of which is not clear at this point,” said Menon, who has helmed the MAS for about a decade. “But not to get into this game, I think risks Singapore being left behind. Getting early into that game means we can have a head start, and better understand its potential benefits as well as its risks.”
The stakes are high for the small island nation, which has already earned a reputation as a global wealth hub. Singapore must raise its safeguards to counter risks including illicit flows, Menon said.
The city state is “interested in developing crypto technology, understanding blockchain, smart contracts and preparing ourselves for a Web 3.0 world,” he said, referring to the third generation of online services.
At the same time, the city-state has been cracking down on cryptocurrency after many retail investors lost their life savings to crypto trading, sending mixed signals to the industry.
It has repeatedly warned that cryptocurrency trading is “highly risky and not suitable for the general public” due to its volatility, even banning crypto advertising in public areas and on social media in January 2021 and proposing new measures to protect retail investors recently following the $60 billion collapse of Terra’s Luna.
State Approval Of Blockchain Technology
Still, Singapore has openly shown its approval for blockchain technology and has embarked on various projects. Those include Project Ubin, which successfully completed its experiment using blockchain for the clearing and settlement of payments and securities.
Another is Project Guardian, which recently completed its first industry pilot that involved DBS Bank, JPMorgan and SBI Digital Assets Holdings conducting transactions in tokenized foreign exchange and government bonds.
“Project Guardian’s first pilot has demonstrated the potential for reducing risks in executing trades,” said Menon.
“These projects strive to increase efficiency in the product value chains, lower efficient issuance and servicing costs and improve transparency and accessibility. We believe Project Guardian can help pave the way for the next evolution of financial markets in Singapore,” he said.
Singapore isn’t the only place with cryptocurrency ambitions. Locations as diverse as Dubai, Miami, El Salvador, Malta and Zug, Switzerland, are also making efforts. It can be a fine line to tread, given the crypto industry grew up with few regulations, so many players balk at government officials’ attempts to impose guardrails.