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Binance CEO Changpeng ‘CZ’ Zhao said Singapore turned conservative in its approach to cryptocurrencies after the collapse of the demise of FTX but remains crypto-friendly.
Binance founder and CEO Changpeng Zhao came out to say Singapore’s approach to cryptocurrencies has become more conservative following the collapse of FTX. He commented the island, however, remains crypto-friendly overall.
FTX and Its Implications
The exchange filed for Chapter 11 bankruptcy, and its founder and CEO, Sam Bankman-Fried, stepped down as CEO and appointed Johan J Ray III as its new chief executive. FTX collapsed into bankruptcy after liquidity dried up and customers demanded withdrawals, which the exchange, once valued at $32 billion, could not fulfil.
Conservative Yet Crypto-Friendly
Bloomberg reports CZ said via a video link at a conference in Singapore that the Hong Kong crypto regime, which recently took effect, only allows for a limited number of tokens for trading by retail investors.
According to Bloomberg, Zhao said stricter regulations “prompted many traditional financial institutions to hold back on offering cash to crypto services and vice versa.”
“But at the same, we are seeing new ones coming up.”
Singapore’s Cautious Approach to Crypto Regulation
Earlier in the year, the country announced it would issue new crypto client vetting guidelines for banks. In partnership with police forces, Singapore regulators said it developed uniform guidelines for banks to assist in screening potential crypto clients. At the time, the MAS said an industry report outlining best practices for due diligence and risk management will be released over the next few months.
The MAS recently announced it would require crypto platforms to store client money in a trust. In addition to its new storage requirements, the regulators further said it supports a proposal to ban lending and staking activities for retail investors, arguing these activities are unsuitable for the retail public.
In a statement, the MAS said:
“Regulations alone cannot protect consumers from all losses, given the extremely high risk and speculative nature of digital payment token trading.”
Not long after it announced its intention to support the ban on staking and lending services, the central bank released a revised regulatory framework to ensure stability for single-currency stablecoins regulated in Singapore. According to reports, the framework outlines requirements that issuers need to be to be regarded as regulated by the MAS.
Penny Chai, VP of Business Developments for Sumsub in APAC, commented on the importance of comprehensive AML compliance procedures:
“Singapore’s aim to establish comprehensive regulations for stablecoins is a significant step towards fostering a secure and transparent digital currency environment – the move sets a noteworthy example for other jurisdictions. Stablecoins have surpassed $100 billion in market value, according to recent reports, therefore the need for regulatory clarity is paramount as the market continues to grow.
Failing to adhere to this regulation could potentially result in fraudulent activities due to the inability to identify suspicious users, leading to financial penalties and substantial reputational harm for cryptocurrency businesses operating in Singapore and broader markets, APAC and further beyond. Companies must prioritise establishing crypto transaction monitoring tools and comprehensive AML compliance and verification procedures, both during the onboarding process and beyond.”
Singapore’s President is Sceptical of Crypto
In line with the country’s already conservative crypto regulatory approach, Singapore recently elected a crypto sceptic as its new President. Tharman Shanmugaratnam, who takes office today, September 14, previously called crypto assets “highly volatile” and highly risky as investment products.”
The President previously served as the chair of the MAS and Singapore’s finance minister and obtained over 70% of the vote held on September 2.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.