Tag: project ubin

Singapore Consults China on Central Bank Digital Currency

The discussions on central bank digital currencies (CBDCs) are now becoming commonplace in today’s blockchain ecosystem. With growing interests among central banks around the world in developing their own digital currencies, the paradigm on the future of blockchain technology has shifted with notable promises. Singapore has joined its Asian counterparts, like Hong Kong, South Korea, Japan, and others in a central bank-backed digital currency project in conjunction with China. The Singaporean CBDC project is dubbed Project Ubin and it aims at deploying blockchain and Distributed Ledger Technology for the settlement of payments and financial securities.

Highpoints of the Probable Alliance

Meng Wenneng, the Director of the Monetary Authority of Singapore (MAS) made it known that the country’s project can benefit from China’s advancement on similar projects. Meng acknowledged that: 

“The Central Bank of China is very active in this area,” He added, “Singapore and the Central Bank of China have a lot of exchanges, and both sides are discussing the CBDC-related landing scenarios.”

China entered the testing phase for its digital Yuan in four cities including Shenzhen, Suzhou, Xiong’an, and Chengdu. The Chinese digital Yuan targeted at sparking the Chinese digital economy agenda will serve as a model for Singapore’s Project Ubin which is billed to improve cost-effectiveness for businesses.

Singapore’s Option Diversity

The MAS maintains a flexible stance on its choice of digital currencies. The sovereign financial authority of Singapore does not rule out the underlying potentials of Facebook Libra. This stems from Facebook Libra’s switch to fiat pegged stablecoin option to drive flexible universal inclusion. With Facebook Libra’s willingness to work with foreign regulators, the MAS may consider a partnership option with the project as it gradually worked on its digital currency that may span several years.

As the narrative is changing based on the need to develop alternative currencies as world economies evolve, it behooves on central bank drivers to tag along. This diversified position of the MAS is crucial in helping the country transition with ease.

MAS Proposes New Regulations to Tighten Crypto Business Activities

The Monetary Authority of Singapore (MAS) has published a consultation paper proposing a new set of regulations that may stiffen the emergence and activities of crypto industries in the country.

Despite the proactive strides of the MAS towards the development of the country’s central bank digital currency (CBDC), the apex bank is set to reinforce its regulations on digital currencies.

The new regulation which seeks to “Enhance Effectiveness” in Addressing Financial Sector-Wide Risks has four basic provisions. These provisions give MAS the power to prohibit unsuitable individuals from working in the financial industry. It will also expand the scope of anti-money laundering and countering the financing of terrorism (AML/CFT) requirements to persons in Singapore who provide digital token services overseas in line with the Financial Action Task Force (FATF) guidelines.

In addition, it will strengthen the framework for technology risk management, and enhance the effectiveness of dispute resolution.

How this will impact cryptocurrency businesses

The move by the MAS will go a long way in protecting Singaporeans from unsuitable entities who can increase the risk already associated with the crypto ecosystem. Over time, the government of Singapore has been proactive in calling out crypto-related scams to guard its citizens for scandalous investments.

With enhanced powers, the MAS will also have extensive oversight responsibilities on indigenous crypto firms who conduct businesses abroad. The consultation paper reads:

“Given the internet-based nature of such operations, there may be entities created in Singapore that do not perform such services in Singapore but offer such services outside of Singapore and that are not captured under current legislation. MAS intends to regulate such entities for ML/TF [money laundering/terrorist financing] risks.”

As evident in recent times, the Monetary Authority of Singapore is pacing faster in its CBDC Project Ubin development which successfully completed an International settlement earlier this month. While the new regulation appears strict, it will help legitimate crypto businesses thrive as the MAS has acknowledged the role of blockchain technology as the future of the financial sector.

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