The Best Approach to Cryptocurrency is Not A Ban, But “Strong Regulation,” says MAS Head
To keep from being left behind, Singapore is getting a head start with its regulations so that they can be prepared “for the web 3.0 world” and be well-positioned for the “tokenized economy.”
Singapore is seeing a lot of promise in the crypto space and is becoming a key player for cryptocurrency businesses.
In an interview with Bloomberg, the Managing Director of Singapore’s Monetary Authority, Ravi Menon, talked about the best approach to crypto: strong regulation rather than bans.
“We think the best approach is not to clamp down or ban these things,” said the head of MAS, which regulates banks and financial firms.
Instead, the central bank is putting “strong regulation” in place so firms that meet the requirements and address the risks can operate.
“With crypto-based activities, it is basically an investment in a prospective future, the shape of which is not clear at this point.” “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.”
Preparing For The Web 3.0 World
“The phenomenon of crypto tokens is much broader, and we see quite a lot of promise there,” said Menon adding, “It's too far out” and very nascent, which means it could lead to nowhere or a lot of risk and turmoil or to a very good outcome for the economy and the society.
As such, MAS is preparing themselves for any of those outcomes as when the crypto economy takes off, it can help create jobs, create value-add, and factors other than the financial will also potentially gain, he said.
Menon is particularly interested in the decentralized element of crypto because it means lower cost, higher efficiency, and more market participation.
“So we are interested in developing crypto technology, understanding blockchain, smart contracts, and preparing ourselves for the web 3.0 world.” “If 2030 is going to be a tokenized economy… we want to make sure we're well-positioned.”
But the head of the central bank said this is not without risks, including money laundering and terrorist financing being the obvious ones.
He also pointed out his concerns about investors investing in cryptocurrencies as “it's not something for retail investors.”
Crypto Has Benefits Over Fiat, But It Isn’t Money
When asked about banks’ unwillingness to service crypto companies and if they are preoccupied with the risks, Menon said they are brokering conversations between the banks and crypto companies.
“What we do is to try to bring the two parties together” and explain to the crypto players that they have to behave more like a normal customer and follow the banks’ requirements of providing information and be transparent, he said.
“It is a willing buyer and willing seller kind of situation. And I think it's too early to say the situation has improved,” he added while agreeing that crypto companies are finding it hard to have a banking relationship.
As for MAS’s comfort level when it comes to acknowledging Bitcoin as legal tender, Menon said, the extent they are interested in crypto is being supportive of them to fuel or facilitate meaningful economic transactions.
“They have their benefits over fiat currencies in some regards.” “Whether to accept them as legal tender. That's a different proposition. Cryptocurrencies are not money. They don't have the status of money.”
But to treat crypto as an investment asset, one needs to know better what they’re doing as “It is not for the faint-hearted because of the volatility,” said Menon.