'Brutal and merciless': Singapore regulator cracks down on cryptocurrencies

Singapore's financial watchdog and central bank have pledged to take "ruthless" action against any "bad behavior" in the cryptocurrency industry.

The above remarks come from Sopnendu Mohanty, chief fintech officer at the Monetary Authority of Singapore (MAS). He explained in an interview: "If someone does something bad, we will be ruthless and take drastic measures."

At the same time, he hit back at participants who criticized regulators for not being friendly enough to cryptocurrencies, and questioned the legitimacy of the crypto market, saying:

“A lot of cryptocurrencies say we are not friendly, my answer is: friendly for what? Is it friendly to the real economy, or is it friendly to some kind of fake economy?”

The fintech CEO believes the world is "lost in private currencies" as the reason behind broader market turmoil. Mohanty added that in response to the regulator’s conservative stance on cryptocurrencies, the city-state instituted an “extremely stringent” and “painfully slow” due diligence process for authorized crypto businesses.

Singapore introduced a licensing system for crypto companies in January 2020, with strict rules on which companies can be licensed. Cointelegraph reported in December 2021 that the MAS rejected licenses from more than 100 applicant companies.

In January, cryptocurrency providers were banned from advertising their services in public areas such as public transport, which extends to public websites as well as print, broadcast and social media.

MAS has also expanded its mandate to regulate crypto businesses, and in April, the regulator passed new requirements requiring companies to obtain a license and comply with anti-money laundering and countering terrorist financing requirements if they want to provide services abroad.

Many crypto businesses are setting up in Singapore due to its low tax rates and perception that the city-state is one of the more crypto-friendly countries, but the tightening of regulations shows that as the country focuses on its central bank digital currency (CBDC), this is not the case. This situation is changing.

On June 21, the payment system provider Mojaloop Foundation opened a CBDC Center of Excellence (COE) in Singapore, with MAS serving as a member of its working group and Mohanty serving as a board advisor.

With the COE opening, Mohanty believes that state-backed alternative cryptocurrencies could be launched within three years.

COE aims to reduce the cost and increase efficiency of payment platforms and cross-border payments. Mohanty said he welcomed the move, seeing it as "a step towards the future of financial services".