The Monetary Authority of Singapore (MAS) has started taking measures to prepare for new cryptocurrency regulations addressing the ongoing liquidity crisis and withdrawal issues.
Singapore’s central bank has sent detailed questionnaires to some applicants and holders of the MAS’ Digital Payment Token licenses, Bloomberg reported on Friday.
Sent over the last month, the questionnaires were reportedly seeking “highly granular information” about business activity and holdings by examined crypto firms.
The checks were focused on firms’ financial stability and interconnection, with questions including top tokens owned, top lending and borrowing counterparties, the amount loaned and top tokens staked via decentralized finance protocols.
Citing people familiar with the matter, the report notes that firms were expected to respond promptly. The MAS has issued 10 licenses to crypto firms in Singapore so far, including exchanges like Crypto.com and DBS Bank’s brokerage arm DBS Vickers. That is quite a small fraction out of nearly 200 reported firms that have applied for the license.
The latest regulatory action in Singapore apparently aims to intensify the scrutiny on crypto firms amid upcoming new regulations for the industry. In mid-July, MAS managing director Ravi Menon disclosed that the financial watchdog was working on a regulatory framework to address “consumer protection, market conduct, and reserve backing for stablecoins” in the next few months.
The MAS specifically pointed at blind spots in the existing crypto regulations in Singapore, noting that digital payment token service providers are not subject to risk-based capital or liquidity requirements. They also are not currently required to safeguard customer funds or digital tokens from insolvency risks. Instead, regulations mostly focus on money laundering and terrorism financing fisks as well as technology risks.
The MAS did not immediately respond to Cointelegraph’s request for comment. This article will be updated pending new information.
Related: Singaporean financial watchdog to consult public on stablecoin regulation
Singapore’s upcoming new regulatory framework for crypto comes in response to the ongoing liquidity crisis and the associated withdrawal issues amid a bear market. Three Arrows Capital (3AC), the troubled Singapore-based crypto hedge fund, went bankrupt during this crypto winter, failing to meet margin calls in mid-June.
In an affidavit in mid-August, 3AC co-founder Su Zhu said that the company shifted its registration to the British Virgin Islands in September 2021 after having previously operated out of Singapore. He also reportedly accused the liquidators of misleading authorities about 3AC’s structure.