In a plot twist, Singapore’s newly-elected president, Tharman Shanmugaratnam, may bring an unexpected influence to the nation’s financial future. Given his significant financial experience as the previous chairman of Singapore’s central bank and its finance minister, the shaping of policies related to fintech could be subtly impacted despite the ceremonial nature of his role.
Bringing forth a unique, yet arguably skeptical perspective, Shanmugaratnam has previously described cryptocurrency as verging on the extremes of speculative and “slightly crazy”. His influence could lead to a delicate balancing act as the country evolves from an early crypto adopter to a jurisdiction grappling with the right regulatory mix.
This chapter of Singapore’s financial history is marked by the collapse of formerly thriving crypto establishments, Terraform Labs and Three Arrows Capital. These events unfolded around the same period when Shanmugaratnam led the Monetary Authority of Singapore (MAS), from 2011 to 2023, adding more layers to the intricate dynamics of the situation.
Delving into the archives, however, we unearth some remarkable insights that reflect Shanmugaratnam’s multifaceted perspective. As far back as 2018, he claimed that crypto trading activities did not pose any threat to Singapore’s financial ecosystem, swaying against the necessity of its prohibition. This viewpoint seemed unchanged in 2023 when he proposed that the cryptocurrency market be left unregulated, albeit with “ultra clarity” on its associated risks.
But every story has two sides, and Shanmugaratnam’s is no different. His slightly controversial stance on cryptocurrencies appeared to soften in 2021 when he ventured that crypto could assume a significant role in future finance that “extends beyond pure speculation and illicit finance”. Moreover, he envisioned a future where “regulated stablecoins will have a useful role in a traditional payment system”.
For banks and stablecoins, the plot thickens. In 2022, Shanmugaratnam stated that Singaporean banks are mandated to hold $125 capital against $100 exposure to cryptocurrencies like BTC or ETH. Despite declaring the banks’ exposure level to crypto as insignificant, those kinds of crypto assets are subject to stringent risk management regulations set by international standard-setters.
Moreover, the MAS, under Shanmugaratnam’s purview, was actively reviewing its regulatory stance on stablecoins as of August 2022, hinting at the possible institution of reserve requirements for stablecoin issuers. With the recent release of a regulatory framework for stablecoins by the MAS, it’s clear that the intrigue surrounding Singapore’s cryptocurrency regulation efforts remains high under its new leadership.
Source: Coindesk
