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I see no basis for wanting to regulate cryptocurrencies: MAS Chief

The Monetary Authority of Singapore (MAS) doesn’t plan to regulate digital currencies such as bitcoin, the head of the central bank said recently.

In an interview reported by Bloomberg, MAS Managing Director Ravi Menon said:

As of now I see no basis for wanting to regulate cryptocurrencies.” Rather, the central bank’s focus is to “look at the activities surrounding the cryptocurrency and asking ourselves what kinds of risks they pose, which risks would require a regulatory response, and then proceed from there.”

The comments follow Deputy Prime Minister and Minister in charge of MAS Tharman Shanmugaratnam’s response to a parliamentary question earlier this month, which read:

“Virtual currencies, due to the anonymous nature of the transactions, can be exploited for money laundering and terrorism financing risks. MAS is working on a new payment services regulatory framework that will address these risks.”

Menon noted that very few countries regulate this emerging new sector, adding that most believe that “the currency itself does not pose the risk that warrants regulation.” However, he emphasized:

“It is a known fact that cryptocurrencies are quite often abused for illicit financing purposes. And so we do want to have anti money laundering controls, countering the financing of terrorism controls in place. So those requirements apply to activity around cryptocurrency rather than the cryptocurrency itself.”

To that end, Menon pointed out that cryptocurrency exchanges operating in the country are already required to comply with AML/CTF requirements.

“This will be formalized in the coming payment services regulation which we are working on,” he added.

Earlier in August, the MAS clarified that it will regulate the offer or issue of digital tokens if they constitute products regulated under the Securities and Futures Act (SFA). Menon noted that Initial Coin Offerings (ICOs) can resemble securities offering if they involve a promise of dividend or other economic benefits, and therefore, they would be covered by SFA.

Other business models “avoid these security-like features in their digital tokens,” he added. “So we just have to look at them case by case to see which ones we will need to bring into the regulatory ambit, and which ones can stay outside.”

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