Singapore is open to innovation in digital assets, but not crypto speculation: DPM Wong

Deputy Prime Minister and Finance Minister Lawrence Wong with Bloomberg editor-in-chief and moderator John Micklethwait at the Bloomberg New Economy Forum on Thursday. ST PHOTO: LIM YAOHUI

SINGAPORE - Singapore is open to digital asset innovation, but it is not open to crypto speculation at all, Deputy Prime Minister and Finance Minister Lawrence Wong said on Thursday.

Recent developments have shown that the Republic is on the right track in taking a strong stance against such speculation, especially trading by retail investors, he said at the Bloomberg New Economy Forum.

“We were on the right track to go big on digital assets innovation, which is an important enabler and something that potentially can transform financial markets, cross-border payments, settlements, capital markets,” he said. “But, and we’ve said this for a long time, even when people criticised us for saying that... we need to take a strong stance against crypto speculation and trading, especially by retail investors.”

Bloomberg News editor-in-chief John Micklethwait, who moderated the discussion, had asked Mr Wong about Singapore’s openness to digital currencies in the wake of the collapse of cryptocurrency company FTX. Mr Micklethwait noted that Singapore is one of the biggest crypto centres in the world and FTX former chief executive Sam Bankman-Fried had attended the Singapore FinTech Festival (in 2021). Were developments in the past couple of weeks a cause for concern?

“Even before FTX happened, we had put out a consultation paper on tightening regulatory rules around this aspect – on crypto trading, on retail investors’ access to crypto,” said Mr Wong.

“We will review the rules as necessary. But we will continue to embrace innovation around digital assets which we think have tremendous potential.”

His remarks come after Singapore’s investment company Temasek said on Thursday that it will write off its US$275 million (S$377 million) investment in FTX, irrespective of the outcome of FTX’s bankruptcy protection filing, and that it had misplaced its belief in the leadership of Mr Bankman-Fried.

Asked if the collapse of FTX was a necessary shake-out for the crypto industry and part of the market’s maturing process, Mr Wong said: “Partly. But in the FTX case, there are very serious allegations that amount to potential fraud, even. So it’s not just about its governance, it’s a whole range of issues. We’ll have to see what happens with the investigations. But I think there was a bit of a bubble and now we’re starting to see some shaking out as well.”

In the interview, Mr Wong was also asked about US-China relations after Monday’s meeting between Chinese President Xi Jinping and US President Joe Biden, who expressed the desire for their countries to work together to manage tensions and avoid conflict.

Mr Wong noted that the leaders had an important and constructive meeting, but added that it was “just the beginning of a long and difficult journey”. He said: “We shouldn’t have any illusions that this one meeting will have changed things overnight because there have been such deep suspicions and distrust built up over so many years.”

While both sides have made clear they do not want conflict and want to manage differences, the fundamental differences have not changed, Mr Wong said. “America considers China its strategic rival, and it has stated very clearly that it wants to not just have a lead in technology, for one or two bounds, but an absolute lead, as far a lead as possible. And the more America takes action in that direction, the more China will feel, well, you are really just trying to keep me down permanently, to contain me, and that will elicit a reaction,” he said. “So the risk of us moving into a more bifurcated and Balkanised world still remains.”

Mr Wong also expressed hope that the two countries would deepen their interactions and develop guiding principles or guard rails so that both sides understand where the other’s red lines are.

Asked about the odds of China invading Taiwan, Mr Wong noted that Mr Biden made clear after his meeting with Mr Xi that he did not see any imminent threat of an invasion in the near term. “We think that’s the case because China and President Xi now have so many immediate domestic preoccupations,” Mr Wong said.

“But having said that, for China, Taiwan is a red line, and President Xi made it as clear as possible to President Biden. It’s in fact the reddest of red lines because, for China, Taiwan is about sovereignty, it’s about territorial integrity.”

Asked if he was worried about a world where it is harder to have “overlapping circles of friends”, a phrase Mr Micklethwait noted Foreign Minister Vivian Balakrishnan had used, Mr Wong agreed that he was worried.

He said that the lesson from the war in Ukraine is not to wait till conflict happens but to start thinking now about what can be done in Asia to develop a framework of cooperation that will maximise Singapore’s chances for continued stability and prosperity, with all the major powers having stakes and doing business in South-east Asia.

Mr Wong was also asked about concerns over inequalities of income and wealth. He said the Government is making sure Singaporeans have access to affordable housing and that growth is inclusive, as well as continuing to invest in Singaporeans so that they can do well in an open economy.

“The whole basis of the Singapore story is one of the triumph of openness, that’s why it’s so important, even existential, for us to keep ourselves open,” he said. “But we know that there are downsides to an open economy... We are clear-eyed about the challenges and we will deal with these downsides.”

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