Singapore polls companies as digital asset regulation seeks new twist

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Singapore is seeking input from digital asset entities in the country as part of the industry law review.

The digital asset industry continually intrigues governments around the world due to its nascent status, resulting in inadequate and ineffective regulatory efforts. Seeing this trend, Singapore wants to better understand the scene and make the necessary regulatory changes.

According to a Bloomberg report, the Monetary Authority of Singapore (MAS) has sent questionnaires to several entities in the country exposed to digital assets and people knowledgeable about the subject. The questionnaires aimed to better understand the finer details of these entities regarding their digital asset implications. Singapore’s central bank has specifically targeted businesses that have applied for or obtained its digital payment license. The central bank sent out these questionnaires in July and asked some companies for quick responses.

The central bank asked for details on financial stability and the interconnection of companies. This is especially important, given the fiasco trend that has plagued most digital asset entities and lenders. The majority of these failing and struggling entities, such as Terra, 3AC, Celsius, ZipMex and Hodlnaut, were massively interconnected.

It also demanded information on the extent of companies’ exposure to digital assets with respect to lending and borrowing, assets in possession and assets staked via DeFi protocols.

Furthermore, the report adds that the central bank requested details of the pre-launch operations of the local exchanges after obtaining the license. As the digital asset industry grows, the adoption rate increases and new risks surface. The Singaporean community expects legislative changes, and these demands will help MAS make the right choices.

Singapore seeks to expand scope of regulations

Singapore’s financial authorities aim to strike a balance between fostering innovation and mitigating risk in the space.

“Licensees and applicants are required to notify MAS of any events that materially impede or impede the operations of the entity,” a MAS spokesperson told Bloomberg, noting that such events could be the most serious issues. preventing them from fulfilling their obligations to their clients.

Following the debacle of Singapore-based Three Arrows Capital, Singapore has stepped up its efforts to regulate digital assets. Despite the unrest in space, the rate of adoption has remained at optimal levels, underscoring the urgent need for sufficient regulation.

To ensure adequate consumer protection, MAS has stepped up scrutiny of companies in the digital asset space. A total of 200 entities have so far applied for a digital payment license. Of this number, only slightly more than 10 of these companies have obtained licenses.

Currently, Singapore only regulates digital asset entities in the areas of terrorist financing and money laundering, neglecting consumer protection. Its recent survey underscores the country’s desire to expand its regulatory reach. The MAS will likely begin to screen companies for insolvency risks and protection of customer funds.

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