Deputy Prime Minister, Minister of Finance and Chairman Monetary Authority of Singapore (MAS) Lawrence Wong addressed the regulatory fallout from the collapse of Terraform Labs in Parliament yesterday (8 May 2024).
Terraform Labs, the company behind the Terra stablecoin, is a startup registered in Singapore and is not involved in any activities that require a license from the Monetary Authority of Singapore (MAS). I had not received it.
Mr. Wong is The collapse of TerraUSDThe stablecoin developed by Terraform Labs was included in the cryptocurrency sector with minimal impact on Singapore’s mainstream financial system and economy. He emphasized that local financial institutions have minimal exposure to cryptocurrencies.
Although the ripple effects were limited, the incident highlighted the speculative and dangerous nature of cryptocurrencies. MAS has been warning the public about these risks since 2017, and in January 2022 it restricted crypto advertising in public places.
In response to evolving global standards, MAS imposed stricter regulationsprimarily aimed at protecting retail consumers.
New measures coming into force this year include requiring risk perception assessments for customers, banning trading incentives, and restricting the provision of credit for virtual currency transactions.
These regulations also apply to business conduct, requiring platforms to maintain appropriate asset segregation, conflict of interest assessments, and risk management processes.
Last November, MAS also approved The stablecoin issuance will be done in line with the proposed regulatory framework. StraitsX SGD Issuance and StraitsX USD Issuance have received approval for stablecoins XSGD and XUSD, which are pegged 1:1 to the Singapore dollar and the US dollar, respectively.
Additionally, Paxos Digital Singapore has been authorized to issue a new USD-backed stablecoin. After the legal amendment, these will be recognized as “MAS-regulated stablecoins”.
Lawrence Wong
Wong concluded:
“We also remind those who trade virtual currencies that MAS rules and regulations cannot prevent financial losses arising from such activities.
Consumers need to be aware of the risks of doing so and understand that cryptocurrencies are highly volatile and have no intrinsic value. ”
