SINGAPORE - The race is on among financial centres around the world to become the pre-eminent hub for cryptocurrencies, but the Singapore authorities have vowed to "chart their own path" and not "react to what other countries are doing".
Mr Alvinder Singh, team lead of the fintech ecosystem office at the Monetary Authority of Singapore (MAS), said on Friday (May 27) that Singapore is a small nation so the impact of any adverse outcome in the digital asset space will have wide ramifications.
"To think that we want to be a crypto hub like some countries that have oil and all that, overnight, no. That is not our objective at all. It is a medium-term objective, doing it responsibly, feeling our way around the sand," added Mr Singh, who was speaking on the second and final day of the IDEG Institutional Digital Assets Summit.
His response followed a pointed question by Mr Daniel Lee, former head of business and listing at DBS Digital Exchange, who said that Singapore is losing out to other competitors who have made it easier for crypto firms to operate.
"You've now lost Binance and FTX to Dubai. We've lost 80 per cent of global market share of the total market that's gone over to the Middle East, and these people are being courted by France, Germany, and so on," said Mr Lee, who described anti-money laundering rules as good practice.
Mr Singh said setting rules around the area of money-laundering allows the MAS to establish a level-playing field and safeguards so that people can operate knowing there are consequences.
While the MAS sees crypto as the future of financial services, Mr Singh stressed that it is not for retail investors.
"We know that a majority of our population here are not sophisticated enough to be able to synthesise all this information and make a correct, informed judgment."
He added that many traditional asset classes in Singapore are also not for such investors.
But Mr Lee countered that retail investors can get access to these traditional asset classes through a fund manager that offers products via collective investment schemes.
Not allowing such an avenue here for cryptocurrency could be dangerous for retail investors, he said, adding: "I would also think that... if retail investors cannot get into this space, they'll become susceptible to scams. By cutting them off all those proper centralised exchanges... it becomes a lot more problematic."
Mr Lee also argued that the MAS needs to have not just a digital payment token (DPT) licence but take a more granular approach.
"It's like I'm round but I'm forced into a square peg; I'm a market maker but I'm being forced into being a DPT provider. There are things that we can do a lot better, that there can be clearer rules to govern these kinds of things," said Mr Lee.
Other suggestions that arose during the discussions included calls for regulators to set rules on specific areas in the crypto space, including insider trading, false market manipulation and dissemination of false information.
The debate at the summit exposed the underlying tensions between crypto players and regulators, not just locally but also around the world.
Calls for regulation in the crypto market have grown louder following the collapse of stablecoin TerraUSD earlier this month that sent prices of cryptocurrencies plunging, wiping out billions of dollars in market value.
The price of crypto darling Bitcoin has more than halved since November.
Crypto players were told in Davos this week to clean up their act before gaining complete acceptance from the World Economic Forum's old guard.
Separately, the United States Federal Reserve vice-chair Lael Brainard said growth in new digital assets and the recent pressure some of them have been under indicates the need for better regulatory guardrails around these instruments.