Brief Outlines of Singapore’s Policy Development in DLT and Blockchain Space

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Singapore Monetary Authority Service

This brief outlines Singapore’s policy development on Distributed Ledger Technology (DLT) /Blockchain. The Monetary Authority of Singapore (MAS) had adopted very pragmatic approach to the regulation of the technology and in the process made Singapore on the leading centre for the projects based on this technology. It is clearly discernible from these briefs, MAS intention of not only protecting and incentivizing investors and guiding the financial integrity of Singapore but has taken a pro-active approach in facilitating the development of the technologies application through cooperative ventures with private entities.

These briefs are intended to provide a quick reference point for those who wish to have a general idea of the thinking and rationale that feeds to policy directives coming from MAS. The brief will be updated as more policy pronouncements and or legislative enactments are announced by the regulator.

24 May 2018

MAS warns Digital Token Exchanges and ICO Issuer

MAS issued a warning to eight digital token exchanges in Singapore not to facilitate trading in digital tokens that are securities or future contracts without MAS’ authorization. MAS also directed an ICO issuer to stop for contravention of SFA as their token which offered elements of ownership was deemed a security under SFA.

21 May 2018

Do more to warn public of risks of initial coin offerings

Jerome Lee, MAS Director of Communication, in response to calls to improve consumer awareness of the risks associated with investment in ICOs, assured that MoneySENSE, the national financial education programme, has included in its outreach efforts (through TV programmes and online videos), advice on digital tokens. MoneySENSE will continue to enhance its financial education initiatives to ensure that the general public, especially those who are more vulnerable, are aware of the risks.

5 February 2018

Reply to Parliamentary Question on banning the trading of Bitcoin currency or cryptocurrency

In response to MPs questions regarding the government’s plans on cryptocurrencies following their ban in China and South Korea, Mr Tharman Shanmugarathan, Deputy Prime Minister and Minister in Charge of MAS, said that cryptocurrencies were experimentations whose impact are yet to be established and thus there was no strong case to ban them. He confirmed that MAS will subject them to AML and issuing warnings to Singaporean on the risks involved. He also mentioned involvement of MAS in experimentation with Blockchain and DLT application in facilitating payments and trade settlements.

MAS cautions against investments in cryptocurrencies

19 December 2017

MAS issued a warning reminding the public that cryptocurrencies are not legal tender; their prices are driven by speculation; there was no regulatory safeguards for investment in cryptocurrencies; most exchange platforms were outside Singapore and hence difficult to verify their credibility and authenticity; their anonymity makes them vulnerable to unlawful and criminal use

14TH November 2017

Source-codes of successful distributed ledger prototypes publicly released to encourage innovation in inter-bank payments

MAS and industry consortium released report titled “Re-Imagining Interbank Real-Time Gross Settlement Systems Using Distributed Ledger Technology” and the source-codes on distributed ledger prototype for the inter-bank payments developed in project Ubin Phase 2. The codes were released for public access to facilitate further independent research and development by interested actors in the space.

14th November 2017

MAS and MIT Media Lab to collaborate on research to unlock advanced technologies for financial industry

MAS announced new collaboration with Massachusetts Institute of Technology (MIT) Media Lab to help strengthen Singapore’s talent pool in the FinTech industry. The collaboration was said to signal the growing role that cryptocurrencies and blockchain technology are beginning to play in the financial industry. Neha Narula, Director of Digital Currency Initiative in MIT Media Lab said “Cryptocurrencies and blockchain technology pose a dramatic change to the existing regulatory landscape; they have the potential to reform the global financial system around peer-to-peer transactions, without traditional financial intermediation. We are excited to work with an organization like  MAS which shares our thinking around the impact of open-source, layered architectures and permissionless systems.”

9th October 2017

“Economic Possibilities of Blockchain Technology” – Keynote Address by Mr Ravi Menon, Managing Director, Monetary Authority of Singapore, at Global Blockchain Business Conference on 9 October 2017

Mr Ravi Menon, MD of MAS noted the key breakthrough of the Blockchain technology as its ability to establish trust in decentralized system hence eliminating third party central entities as a “golden source of truth”. He outlined several areas applications including KYC process and cross-border transactions (linking of National Trade Platforms). He also outlined the efforts made by MAS in developing Singapore’s ecosystem.

16 November 2016

Project Ubin SGD on Distributed Ledger

The Monetary Authority of Singapore (MAS) issued a report titled “Project Ubin: SGD on Distributed Ledger”. The project which included the development of a prototype UBIN developed for interbank payment using DLT demonstrated the commitment of MAS and the industry to co-create concrete use-cases for technologies such as DLT. The project underpinned the belief that central banks can play a bigger role beyond just providing research funding: collaborative projects such as Project Ubin support the creation of open Intellectual Property and foster collaboration between industry players, creating a vibrant, collaborative, and innovative ecosystem of financial institutions and FinTech companies.

FinTech Regulatory Sandbox Guidelines 19Feb2018

November 2016

In order to meet its objective of growing a smart financial centre where innovation is pervasive and technology is used widely to enhance value, increase efficiency, manage risks better and create new opportunities for her citizens, Singapore issued an invitation to financial institutions (FIs) and any interested firms to apply to enter a regulatory sandbox to experiment with innovative financial services in the production environment but within a well – defined space and duration. The sandbox  included appropriate safeguards to contain the consequences of failure and maintain the overall safety and soundness of the financial system.

14 November 2017

Mr Ravi Menon, MD MAS outlined the rapid growth of FinTech in East Asia and Singapore’s FinTech journey. On regulations, Mr Menon stressed that getting regulation right was the most critical part of creating smart financial centre. To develop regulation conducive  to FinTech innovation, while still ensuring that the system remains stable, key players are sound, and consumer interests are safeguarded, keen understanding of emerging technologies, new business models and being alert

Ahmed Ali

Diacle