According to Bloomberg report, Singapore is tightening up its surveillance of cryptocurrency-related businesses. The country is adopting these measures in light of the upcoming legislative reforms.
According to the anonymous source, the Monetary Authority of Singapore (MAS) has sent a questionnaire to select applicants and holders of its digital-payments licenses.
The regulatory body wishes to obtain detailed information about various cryptocurrency organizations, company activities, and their holdings.
The questionnaires, reportedly distributed in July, aimed at evaluating the firms’ financial stability.
So, what is questionnaire about?
As per sources and a spreadsheet that was supplied to the companies, the regulator has requested information on various fronts. These include the top tokens owned, the top lending and borrowing counterparties, the amount lent, and the top tokens staked using decentralized-finance protocols.
The MAS is resorting to such measures to introduce changes to cryptocurrency regulations. Furthermore, officials are also making an attempt to balance encouraging innovation. All this while containing the consequences of collapsing businesses being burned by market volatility.
In response to questions from Bloomberg News detailing the inquiries made to the cryptocurrency firms, a MAS representative stated,
“Licensees and applicants are expected to notify MAS of any events that materially impede or impair the operations of the entity, including any matter which may affect its solvency or ability to meet its financial, statutory, contractual or other obligations.”
Caution: Changes ahead!
Crypto scams coupled with failing businesses have led to regulatory organizations focusing on crypto firms.
In particular, the interrelated failures of businesses like Three Arrows Capital, Zipmex, Hodlnaut, and Vauld have brought attention to the dearth of comprehensive risk management guidelines for businesses dealing with digital assets.
Unlike most jurisdictions, the Payment Services Act does not impose risk-based capital or liquidity requirements on digital payment token service providers licensed by MAS.
They are also not required to protect customer funds or digital tokens from insolvency risk. According to the MAS, regulations concentrate on dangers related to technology as well as money laundering and terrorism financing.
While the specifications of any planned reforms are yet unknown, some businesses have begun to voice concerns that MAS would retaliate harshly.
This could result in onerous and expensive compliance requirements that will make it difficult to conduct business in the nation.