We are in a… Crypto winter.
With billions of dollars lost, undoubtedly, there’re calls for regulations and greater transparency from the crypto industry.
Having attended the Singapore Blockchain Week 2022, we’ve gotten some sensing and learnings on what to expect in the near future.
Specifically, Singapore (or the Monetary Authority of Singapore), will work toward regulating this space.
Let’s see what the experts have shared!
Cryptocurrency or Blockchain Regulations Need To Be Updated, Harmonised and Consistent
The current cryptocurrency landscape is one that lacks consistency in regulations, and most panellists have echoed similar sentiments.
“One of the problem areas is there is no consistency in regulating crypto by regulators. In Singapore, it’s regulated as Digital Payment Tokens, in Indonesia it’s regulated as Commodities, and in Malaysia, it’s regulated as Securities, In three neighbouring countries, three vastly different approaches… there’ve been international standards in regulating certain asset classes, I think there is space for clarity at an international level the supranational have to get into it and lay out a framework for regulating of cryptos.”
~ Nizam Ismail, Founder & CEO, Ethikom Consultancy
Indeed, this is a brief look at how cryptocurrency is currently regulated in some countries:
One point that stood out during the panels was that it can be very difficult to harmonise or create a universal regulation governing cryptocurrencies.
Indeed, unlike other investment asset classes, cryptocurrency is much more diverse and each represents different assets or products.
Just to name a few, regulations on cryptocurrency can be in the forms of payment services, consumer protection, investor protection, market misconduct etc.
Before any decisions are made, the experts have shared that regulators would need to take a step in identifying past and future risks before coming to a consensus on what to regulate, and ensuring greater transparency of companies.
Stablecoin Regulations and What Can We Learn From Past Experiences?
Before we dive into regulations on stablecoins, you will need to understand why stablecoins have become so popular and why they could become increasingly important.
For a start, stablecoins have received immense popularity due to their functionality of being able to offer speedy processing, security and increased privacy that comes with cryptocurrencies, and the price stability of fiat currencies.
Another use case of stablecoins is that it allows investors to trade faster without having to rely on slow fiat transfers.
We can therefore understand why stablecoins have become so popular as it offers a good bridge between the fiat currency world and the cryptocurrency world.
But, with the recent sagas, are stablecoins really stable? Should they be regulated?
Kunaal Patel, the Head of Business Development at Partior shared during a panel that the “price (of stablecoins) needs to be closely controlled, and that leads to regulation”, and this was a similar sentiment shared across different panels.
For starters, there’re increasing efforts seen among major financial hubs in regulating the stablecoin space.
The United States and Japan have pushed out similar stablecoin regulations where holders of stablecoins are guaranteed their rights to redeem against the issuers, and issuers must retain proper reserves backing, and proper audit checks on attestation of the reserves.
Perhaps, these could be examples that regulators seek to emulate should a stablecoin be used?
- Can You Trust Tether and Its USDT Stablecoin?
- Could Singaporeans Be Using a New Form of Currency in the Future?
MAS Is Forthcoming on Cryptocurrency & Blockchain Regulations
While it takes time to develop policies and there’re concerns that by the time regulations are put in place, the industry has evolved, it’s quite clear over the last two years that the Monetary Authority of Singapore (MAS) has been working toward developing Singapore into a digital asset hub.
As of today, MAS has issued 14 licenses and in-principle approvals to crypto exchanges and digital payment token service providers, including Crypto.com, Genesis and Sparrow.
Alan Lim, Head of FinTech Infrastructure Office at MAS mentioned that MAS has been studying the space and “responses were mostly aligned” and “(how) the industry (should) come together for regular use cases”.
So, we can possibly expect more (smart) regulations moving forward.
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There’ve been conversations on whether the cryptocurrencies should be regulated or not, because, after all, the decentralised nature of digital currencies is a big draw to crypto enthusiasts, and regulations may thwart innovation.
Some have also echoed that this goes against the spirit of cryptocurrency, where decentralisation is at its core.
Personally, I’m open to forthcoming regulations that are able to strike a balance in encouraging innovation and providing stability.
To a certain extent as well, regulations legitimise service providers and consumers.
But whether or not this could be achieved, only time will tell.
What are your thoughts on crypto regulations? Share them with the Seedly community!