QUESTION NO 1963

NOTICE PAPER 1255 OF 2022

FOR WRITTEN ANSWER

Date: For Parliament Sitting on 1 August 2022

Name and Constituency of Member of Parliament

Mr Desmond Choo, MP, Tampines GRC

Question:

To ask the Prime Minister (a) how many payment service licences have been awarded to digital payment token (DPT) service providers; (b) of these DPT service providers, how many have suffered significant adverse business impact from the volatile cryptocurrency market; and (c) whether there are plans to continue promoting Singapore as a cryptocurrency hub.

Answer by Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:

1. Mr Desmond Choo asked about digital payment token (DPT) service providers and the cryptocurrency market. Mr Saktiandi Supaat has raised a related PQ for the next SittingWritten PQ from Mr Saktiandi Supaat for Parliament Sitting on or after 2 August 2022: Mr Saktiandi Supaat: To ask the Prime Minister (a) whether the recent spate of cryptocurrency firms entering insolvency proceedings presents a systemic risk to Singapore’s financial system; (b) whether it is time to enhance cryptocurrency regulation beyond money laundering and terrorism financing to prudential regulation and investor protection; and (c) how does the above fit into any broader strategy to develop a cryptocurrency hub or sector in Singapore.. This response will cover the questions raised by both Mr Desmond Choo and Mr Saktiandi Supaat.
 
2. Cryptocurrency markets have sold off sharply in recent months, with market capitalisation down by about two-thirds since its peak in November 2021. There have also been reports of the collapse of a number of crypto-related firms in the past few months. 

3. The turmoil in the cryptocurrency market has not posed financial stability risks in Singapore. Our key financial institutions do not have significant exposures to either distressed cryptocurrency firms or cryptocurrencies more broadly. Spillover to the domestic financial system has thus been very limited.

4. To date, the impact of the cryptocurrency market on the six DPT service providers licensed under the Payment Services Act has also been limited. MAS is evaluating the financial condition of the DPT service providers that had submitted licence applications. 

5. MAS, along with other international regulators and standard setting bodies, has been closely monitoring risks and developments in the crypto ecosystem. Thus far, the focus of crypto regulation in Singapore, as in most major jurisdictions, has been on countering money laundering and terrorism financing risks. In Singapore, MAS has also gone further to restrict promotion of DPT services to the general public. 

6. Given the cross-border nature of cryptocurrency services, there needs to be broad regulatory consistency globally on rules to preserve market integrity, investor protection and financial stability. MAS is involved in international regulatory discussions, which are seeing growing consensus on the need to step up oversight of the industry for this purpose. Domestically, MAS is also enhancing our regulatory framework, and will be consulting on the proposed measures in the next few months. 

7. From a developmental perspective, MAS’ aim has been and remains to enable growth of an innovative and responsible digital asset ecosystem. Our main focus has been on innovations in distributed ledger technologies that can enhance efficiencies in key wholesale market activities such as trade finance, cross-border payments, and the capital markets. MAS is working closely with the industry on these areas. 

8. MAS has been focused on this broader ecosystem aimed at real use cases, rather than cryptocurrencies, which form a small part of the digital asset ecosystem. We have been very selective in licensing cryptocurrency players as DPT service providers. We will also continue to actively discourage retail participation in cryptocurrency trading, which as MAS has repeatedly warned is plainly hazardous.

9. MAS will continue to adopt a risk-focused approach to regulating the digital asset ecosystem, with a view to facilitating innovation and anchoring high quality players with strong risk management and value propositions, while seeking to limit retail participation in the cryptocurrency market. 

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