Singapore wants to be a crypto hub, but not for crypto speculation

SINGAPORE – Singapore still wants to be a hub for digital assets, but not one for speculating in cryptocurrencies, said Ravi Menon, managing director of central bank Monetary of Singapore.

“If a crypto hub is about experimenting with programmable money, using digital assets for use cases or tokenizing financial assets to increase efficiency and reduce risk in financial transactions, then yes, we want to be a crypto hub,” Menon said in his opening speech at Singapore Fintech Festival 2022 on Thursday.

Tokenization of a financial asset involves converting the ownership rights into digital tokens.

DBS Bank is testing out Singapore’s first digital money live pilot for public vouchers, enabling merchants to program and self-perform their distribution and use.

“But if it’s all about cryptocurrency trading and speculation, that’s not the kind of crypto hub we want to be,” Menon said.

Singapore has ambitions to become a global crypto hub, but has hit the industry hard after many retail investors lost their savings to crypto trading. The city-state has repeatedly warned that cryptocurrency trading is “highly risky and not suitable for the general public” due to its volatile and speculative nature. It even banned crypto advertising in public areas and on social media in January 2021 and proposed new measures to protect retail investors recently after the $60 billion collapse of Terras Luna.

Nevertheless, Singapore has openly shown its approval for blockchain technology and has embarked on various projects. These include Project Ubin, which successfully completed its blockchain experiment for the clearing and settlement of payments and securities.

Another is Project Guardian, which recently completed its first industry pilot involving DBS Bank, JPMorgan and SBI Digital Assets Holdings conducting transactions in tokenized currencies and government bonds.

“Project Guardian’s first pilot has shown the potential to reduce risk in executing trades,” Menon said.

“These projects strive to increase efficiency in product value chains, reduce effective issuance and servicing costs, and improve transparency and accessibility. We believe Project Guardian can help pave the way for the next evolution of financial markets in Singapore,” Menon said.

MAS will follow up with two new industry pilots – one with Standard Chartered Bank leading an initiative to explore the issuance of tokens linked to trade finance assets and the other with HSBC and UOB working with Marketnode to enable digital issuance of wealth management products.

In his speech, Menon also announced that MAS will launch Project Ubin+, a global initiative for cross-border exchange and settlement of foreign currency transactions using central bank digital currencies.

Project Ubin was first started in 2016 and is the starting point for the development of Partior, a blockchain-based payment and settlement network by DBS Bank, JPMorgan and Temasek.