As we move towards the close of 2023, it has been reported that the Monetary Authority of Singapore (MAS) will enforce stricter regulations on cryptocurrency firms. These entities are to store their clients’ assets in a designated trust, marking a significant shift in the governance of Singapore’s flourishing crypto sphere.
Lessons Learnt from the FTX Meltdown
This development follows the catastrophic meltdown of FTX, a debacle that left many investors nursing substantial losses. Critics and victims point an accusing finger at the exchange, alleging misuse of user funds and widespread deceptive practices.
According to reports from Bloomberg, the regulatory body in Singapore aims to reinforce an obligation of extreme customer protection. Besides mandating crypto firms to store users’ assets in trusts, further restrictions could be placed on providing lending and staking services to retail investors.
This precautionary move mirrors steps taken by Thailand’s Securities and Exchange Commission (SEC), demonstrating a broader regional shift in digital asset management and regulation.
The MAS’s wheels were set in motion in October 2022, a critical juncture predating the infamous FTX collapse by just a month. This disaster sent shockwaves through the industry, underscoring the urgency for robust regulation in the crypto market.
Singapore: A Crypto Haven Amidst Regulatory Rigor
Despite the call for stricter regulations, Singapore remains an attractive hub for cryptocurrency enterprises. The nation’s balanced regulatory framework continues to draw numerous crypto firms. An evident example is Gemini, a cryptocurrency exchange that announced plans to expand its Singaporean workforce by over 100 last month.
Increasing security for participants in Singapore’s cryptocurrency market is a logical move. The region has seen a surge in locals participating in digital assets, with a report from Independent Reserve suggesting that 43% of residents hold some form of digital assets – a record high since the 2021 bull market.
The Changing Dynamics of Cryptocurrency Investment
An impressive 54% of these investors are diversifying their portfolios with digital assets, and half of these new investors are making their initial forays into the market due to advice from family and friends or through the influence of social media. Bitcoin remains the favorite among Singapore’s digital assets, with an 87% awareness rate. Ethereum trails behind in second place, with a 51% recognition rate.
Lasanka Perera, CEO of Independent Reserve Singapore, acknowledges the increasing popularity of altcoins, stating, “The surge in popularity of alternative coins indicates a growing awareness among Singaporeans about the various cryptocurrencies available besides Bitcoin. That is a promising sign for the industry, as more investors gain exposure to various blockchains and projects, which hold the potential for broader adoption in real-world applications and use cases.”
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