Tharman Shanmugaratnam, the former Singaporean finance minister and central bank chairman, known for his candid characterisation of cryptocurrencies as "purely speculative" and "slightly unconventional," clinched the presidency of Singapore on a momentous Friday, securing a commanding 70.4% of the vote. This electoral triumph marked the transition from the tenure of Halimah Yacob, who made history as Singapore's inaugural female head of state.

The race witnessed Tharman's resounding victory over presidential contenders Ng Kok Song and Tan Kin Lian, solidifying his status as the next leader of Singapore. With the inauguration slated for 14 September, a mere fortnight following the election, anticipation runs high regarding the potential implications of his presidency, despite its primarily ceremonial nature.

His remarkable career trajectory suggests that his tenure may wield influence over policies dictating the future of finance, with a particular focus on cryptocurrencies and central bank digital currencies (CBDCs), among other financial matters.

This assumption bears merit given Singapore's notable evolution, transitioning from an early enthusiast of cryptocurrencies to a jurisdiction grappling to strike the delicate balance between innovation and regulatory prudence.

This transformation was underscored by the tumultuous demise of homegrown crypto ventures Terraform Labs and Three Arrows Capital during Tharman's stewardship of Singapore's central bank, the Monetary Authority of Singapore (MAS).

What Was Tharman's Take on Crypto?

In 2018, Tharman asserted that cryptocurrencies and associated trading activities posed no imminent threat to Singapore's financial system, making a case against their prohibition. Fast-forward to 2021, his perspective evolved as he acknowledged the potential for cryptocurrencies to play a meaningful role in the future of finance, extending beyond mere speculation and illicit transactions. He envisaged a landscape where regulated stablecoins could find utility within the traditional payment ecosystem.

By August 2022, a pivotal shift occurred, with Shanmugaratnam revealing that the MAS was actively reassessing its approach to the regulation of stablecoins. This re-evaluation was spurred, in part, by the collapse of terraUSD (UST), a stablecoin that had previously lost its peg to the United States (US) dollar in May of that year. The MAS responded by releasing a comprehensive regulatory framework for stablecoins, signaling the authorities' proactive stance on fostering a secure financial environment.

Last November, Tharman addressed concerns regarding Singaporean banks' exposure to cryptocurrencies, stating that these institutions were mandated to maintain capital reserves of $125 against an exposure of $100 to assets like Bitcoin (BTC) or Ethereum (ETH).

Despite characterising the banks' crypto exposure as 'insignificant' in the broader context, he emphasised that international standards required the most stringent risk management protocols for such crypto assets. Notably, he clarified that the prudential treatment for less volatile crypto assets, such as tokenised corporate bonds, mirrored that of their non-tokenised counterparts.

Then at the World Economic Forum this year, Tharman returned to his earlier stance in 2018, reiterating that he viewed cryptocurrencies as inherently speculative and, in fact, somewhat unconventional. He maintained his belief that this sector should remain unregulated, but with a caveat: authorities should offer a profound level of transparency regarding the inherent risks associated with cryptocurrencies.

He cautioned against the perils of a perpetual game of regulating various products, likening it to a never-ending endeavour, drawing parallels with an 'ostrich eggs' reference.

“I think whether it's crypto or traditional finance, you have to regulate for things like money laundering — that's very clear. But beyond that, if we're thinking about regulating crypto the same way we regulate banks or insurance companies, I think we have to take a step back and ask a basic philosophical question: does that legitimise something that is inherently, purely speculative, and in fact slightly crazy?”