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Singapore will be “relentlessly brutal and violent” on bad behavior in the crypto industry, according to its fintech policy chief, marking a major shift in rhetoric after years of the city-state approaching the sector.
Sopnendu Mohanty, chief fintech officer at the Monetary Authority of Singapore, the country’s central bank, questioned the value of private cryptocurrencies and said he expects a state-backed alternative to be launched within three years.
“We have been called out by a lot of cryptocurrencies for being unfriendly,” he told the Financial Times in an interview. “My response was: friendly for what? Friendly to the real economy or friendly to the unreal economy?”
Mohanty added: “We have zero tolerance for bad market behavior. If someone has done something bad, we are brutal and relentless.”
The crypto crisis has hardened the attitude of officials in Singapore, where many crypto businesses are founded due to a perceived friendly regulatory environment and low taxes.
But crypto exchanges including Bybit and Binance have avoided city-states in recent months as MAS began rolling out increasingly strict rules.
Mohanty speaking as South Korean prosecutor narrowed down at Singapore-based Terraform Labsthe company behind the collapsing stablecoin terraUSD and its sister token luna.
In the aftermath of the write-off of the $40 billion luna, crypto hedge fund Three Arrows Capital, headquartered in Singapore, also plunged into crisis after failing to meet a margin call.
“I think the world in general is lost. . . in private currencies, which is causing all this market turmoil,” Mohanty said.
He said Singapore had put in place a “very slow” and “very draconian” due diligence process for licensing crypto businesses.
Singapore has approved several applications for licenses to operate crypto businesses.
Crypto.com, a cryptocurrency trading platform, on Wednesday received in-principle approval to operate. Crypto.com has also received a license in Dubai and plans to launch a cryptocurrency exchange service there.
But Mohanty’s comments suggest that some crypto businesses may face an uncertain future in Singapore.
This week, MAS jointly launched a city-state “center of excellence” to work on developing a central bank digital currency, a concept several countries are exploring to potentially wrest control of online payments from crypto businesses.
Led by software developer Mojaloop and backed by Singaporean state fund Temasek, the group hopes to implement the digital currency in a system that enables low-cost international payments.
Mohanty said his “best bet” was that the digital currency would be integrated into the platform in “a few years”, adding that it would not be exclusive to Singapore and would be available to other central banks.
“We continue to focus on future economic infrastructure, which can be based on digital assets,” he said.
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