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Singapore strives to remain relevant amid regulatory tightening for retail investors

Singapore strives to remain relevant amid regulatory tightening for retail investors

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Singapore’s largest bank, DBS, has announced a new move to expand its crypto services, but is cautious about complying with financial authorities’ view that crypto assets are not suitable for retail investors in the country.

On Friday, the bank announced its decision to expand crypto trading services on its digital exchange (DDEx) to around 100,000 “wealth clients who are accredited investors”. To be considered accredited, investors must meet certain criteria of income, net worth, qualifications and understanding of financial markets.

Caroline Malcolm, Director of International Public Policy and Research at Chainalysis, stated:

“Singapore has long stated that it considers most cryptocurrencies to be volatile and, as a result, not well-suited for retail investors. However, at the same time, it continues to demonstrate its support for DLT-based innovation such as asset tokenization.

Previously, DDEx was only available to corporate and community investors, family offices and DBS Private Bank and Treasures Private Clients. DBS is also the trust anchor for Singapore’s pilot project Guardian, a blockchain-based liquidity pool of tokenized bonds and deposits for borrowing and lending.

The move comes after months of drama in the crypto sector of the country that was once ranked as the most crypto-friendly in the world due to its positive regulatory environment. In June, Monetary Authority of Singapore (MAS) fintech chief Sopnendu Mohanty said in an interview that “if someone has done bad [in the cryptocurrency industry]we are raw and unrelentingly hard.”

Another chapter in the regulatory tightening came weeks later, when the authority sent detailed questionnaires to some applicants and holders of MAS’s Digital Payment Token licenses, saying it was looking for “very detailed information” about the business. The questions covered the top tokens owned and staked through DeFi protocols and aimed to increase the spotlight on crypto companies amid upcoming regulations.

The new framework responds to the liquidity problems and withdrawal problems that have occurred in the country’s companies this year. During this crypto winter, Three Arrows Capital (3AC) went bankrupt after failing to meet margin calls in mid-June.

“After recent events from the Terra-Luna crash to 3AC and also the collapse of the Hodlnaut exchange, I expect we will see more such measures to further protect consumers in the cryptoasset market in the future.”

The updated regulatory approach does not seem to be enough to keep crypto companies out of the country. RRMine Global, a Filecoin service provider, recently announced that it has ceased operations in mainland China and will be moving its headquarters to Singapore amid China’s restrictions on Web3 companies.

Next week, Singapore hosts Token2049, an industry conference that was held in Hong Kong before the pandemic. According to the organization, more than 5,000 participants are expected for the event.