BY Risen Jayaseelan - October 10, 2018
Singapore reiterates pro-crypto stance
Singapore’s top regulator official has reiterated the island nation’s stand on being a pro-crypto nation.
Ravi Menon, who heads the Monetary Authority of Singapore (MAS) said there are limits to areas of the economy that MAS should supervise.
Speaking to Bloomberg, the article quoted him saying this: “You and I can invest in lots of very silly and dubious things. You can’t expect the government or the regulator to regulate all manner of items in which people put their money.”
MAS is renowned in Southeast Asia for coming up with its guidelines for crypto that it published it November.
In it, MAS stated that there utility tokens which do not come under their regulation.
That in turn is likely to have caused project owners to race to Singapore looking to raise funds via token sales, by deeming their tokens as utility tokens.
Thailand and the Philippines had followed soon by issuing their own guidelines, thus making Southeast Asia potentially a hotbed for crypto activity.
Edmund Yong of Celebrus Advisory said this in a recent article: “This region has always been a hive of crypto activity, now it is a serious hotbed as well.”
Singapore though makes for a more attractive location considering it capital market hub status and sound legal system.
So how does a project fall within the definition of a utility token under Singapore rules?
MAS guidelines attempt to define that by saying it is for tokens that are used to access certain networks such as a shared computing resource and that they carry not other rights.
However, it is unclear if MAS will continue to not regulate tokens if they begin trading on the secondary market.
In the US, where there is the well known case law referred to as the Howey Test, regulators have said that whenever there is a secondary market for the tokens, they are likely to be securities.
To quote from a speech by William Hinman, a director of the SEC in the US, he said that crypto resembles securities in this way: “Funds are raised with the expectation that the promoters will build their system and investors can earn a return on the instrument – usually by selling their tokens in the secondary market once the promoters create something of value with the proceeds and the value of the digital enterprise increases.”
Meanwhile a Bloomberg interview also quoted MAS’s Menon as saying that MAS is willing to lend a hand to cryptocurrency firms which have problems setting up local bank accounts, although it does not plan to loosen its rules to lure more crypto startups to the country.
“We should not be trying to create an extremely lax regulatory environment in order to attract that kind of business,” he said adding, “What we are trying to do is to bring the banks and cryptocurrency fintech startups together to see if there is some understanding they can reach.”
However, Menon warned that many aspects of the crypto industry remain obscure and dangerous for investors, and so it’s right for local financial firms to exercise caution. “Some of these activities are indeed quite opaque. I would not blame the banks for not opening the bank accounts,” he told Bloomberg.