The Monetary Authority of Singapore (MAS) has started taking measures to prepare for new cryptocurrency regulations addressing the ongoing liquidity crisis and withdrawal issues.
Singapore’s central bank has sent detailed questionnaires to some applicants and holders of MAS’s digital payment token licenses, Bloomberg reported on Friday.
Questionnaires sent out last month reportedly sought “highly granular information” about business activity and holdings by the crypto firms investigated.
The checks focused on the financial stability and interconnection of the firms, with questions including top token ownership, top borrowing and borrowing counterparties, loan amount and top tokens through decentralized finance protocols.
Citing people familiar with the matter, the report said the firms were expected to respond immediately. MAS has so far issued 10 licenses to crypto firms in Singapore, including exchanges such as Crypto.com and DBS Vickers, the brokerage arm of DBS Bank. This is a fairly small fraction of the approximately 200 reported firms that have applied for licences.
The latest regulatory action in Singapore is apparently aimed at intensifying scrutiny of crypto firms amid new regulations coming to the industry. In mid-July, MAS Managing Director Ravi Menon revealed that the financial watchdog was working on a regulatory framework to address “consumer protection, market conduct and reserve support for stablecoins” over the next few months.
MAS specifically noted blind spots in existing crypto regulations in Singapore, noting that digital payment token service providers are not subject to risk-based capital or liquidity requirements. They are not currently required to protect customer funds or digital tokens from insolvency risks. Instead, the regulations focus mostly on money laundering and terrorism financing, as well as technology risks.
MAS did not immediately respond to Cointelegraph’s request for comment. This article will be updated pending new information.
related: Singapore’s financial watchdog to consult public on stablecoin regulation
Singapore’s upcoming new regulatory framework for crypto comes in response to the ongoing liquidity crisis and related withdrawal issues amid the bear market. Three Arrows Capital (3AC), a Singapore-based crypto hedge fund, went bankrupt during this crypto winter after failing to meet a margin call in mid-June.
In an affidavit in mid-August, 3AC co-founder Su Zhu said the company transferred its registration to the British Virgin Islands in September 2021 after previously operating out of Singapore. He also allegedly accused the liquidators of misleading the authorities about the structure of 3AC.
