The head of Singapore’s central bank defended what he called a “stringent” crypto licensing regime, citing risks to retail investors and the potential for digital assets to be used for money laundering and terrorism financing.
Monetary Authority of Singapore Managing Director Ravi Menon, speaking at the Financial Times Crypto and Digital Asset Summit on Wednesday, also acknowledged that regulators need to provide clarity to the industry.
“The licensing process is stringent,” Menon said. “And it needs to be because we want to be a responsible global crypto hub with innovative players, but also with strong risk management capabilities.”
Like many regulators around the world, the MAS is trying to strike a balance between nurturing the fast-growing industry while taming its wilder impulses. But its crypto licensing process has seen just a small fraction of the roughly 170 applicants approved, and a recent directive not to market crypto products to the public caught some companies off guard.
The MAS has taken a “tough line” on retail investing in crypto “because we’re not sure that’s a good idea for retail investors to be dabbling in cryptocurrencies,” Menon said. “I think many global regulators share similar concerns about retail exposure to cryptocurrencies.”
Menon said the MAS looks at whether applicants have strong corporate governance structures in place, as well as their track record, adding that “they need to be familiar with money laundering, terrorist financing risks.”
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Crypto assets don’t currently pose a threat to the financial system, Menon said, instead pointing to money laundering and terrorism financing as the prime risks. That view diverges from those of peers in countries like India, where the central bank has repeatedly cited crypto as a threat to financial stability.
