Reply to Parliamentary Question on Virtual Currencies
QUESTION NO 779
NOTICE PAPER 62 OF 2014
FOR WRITTEN ANSWER
Date: For Parliament Sitting on 21 February 2014
Name and Constituency of Member of Parliament
Ms Mary Liew, NMP
To ask the Prime Minister (a) if he will be regulating the use of virtual currencies like Bitcoins traded by Singapore-based businesses and Singaporean consumers; and (b) whether there are plans to educate Singaporeans on the risk of trading or investing in virtual currencies.
Answer by Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of MAS:
1 Bitcoin is an example of a virtual currency1 that is distributed, open-source, peer-to-peer, and is protected by cryptography.
2 MAS currently does not regulate Bitcoins. They are not legal tender like the notes and coins issued by MAS. They are also not considered securities under the Securities and Futures Act.
3 But Bitcoins are not without risk. MAS has published a consumer alert2 to warn Singaporeans about these risks. Unlike legal tender such as the Singapore Dollar, which is issued and backed by the Government, there is no legal obligation for individuals or businesses to accept virtual currencies. Virtual currencies like Bitcoin are typically not backed by an identifiable organisation. As a result, should the virtual currency cease to be accepted or the scheme cease to operate, users may not be able obtain a refund of their monies.
4 The value of virtual currencies can also fluctuate greatly within a short period of time. For example, the price of one Bitcoin peaked above USD1,100 in December 2013 and has since dropped to around USD700 in early February 2014.
5 MAS has therefore been advising individuals and businesses to think twice and be cautious about accepting or dealing in virtual currencies. Many countries have likewise warned of the risks of accepting or trading in virtual currencies. However, there is currently no international consensus on the regulatory treatment of virtual currencies. MAS will closely monitor how widely virtual currencies are used in Singapore, the risks they pose, and international developments, and will consider the need to introduce regulations where appropriate.
1 A virtual currency is a digital representation of value that can be traded on the internet and functions as a medium of exchange.