In reaction to the liquidity and withdrawal crisis that has befallen crypto firms, the Monetary Authority of Singapore (MAS) has set up numerous measures. The MAS has commenced operations to usher in a regulatory framework to address the issues. According to reports, the Singapore Central Bank sent questionnaires to applicants and possessors of MAS licenses for crypto services.
The apex financial body contacted these firms to gather data about their business activities. Though, the central bank didn’t put all firms offering crypto services in the country under check. Instead, the apex body handpicked the organizations under review. Reports indicated that attention was based on their financial stability. Further questions focus on top coins in their possession and relationships with prominent lending and borrowing organizations.
Furthermore, their attention also focuses on loan amounts and the value of staked tokens in decentralized finance (DeFi) protocols. The Central bank attached stern warnings to the organizations that it’s expecting their response as soon as possible. So far, there are ten firms in the country with the operational license of MAS. These companies include DBS Vickers and Crypto.com. This figure reflects how the MAS has been strict with giving out its license. Data reveals that about 200 organizations submitted applications for MAS licenses. With the regulatory body only deeming ten firms fit to obtain the permit.
Meanwhile, the latest development aims to strengthen the grip on cryptocurrency organizations in preparation for the proposed regulations. Last month, the managing director of MAS, Ravi Menon, revealed how a new regulatory framework would hit the industry. According to Menon, the regulations are intended to protect consumer and market activities and address stablecoins reserve. The director added that MAS is working tirelessly to ensure that the regulations become available soon.
Shortcomings In Existing Regulatory Framework
The MAS admitted that the current regulation for crypto isn’t tight enough. The regulator conceded that crypto firms don’t provide risk-based capital or liquidity assurances before commencing operation. Also, the current regulation doesn’t mandate that they provide guarantees on protecting customers’ assets against insolvency risks. The agency conceded that the existing regulatory framework only focuses on money laundering, technology risks, and financing terrorist activities.
The proposed regulations came in a reactive pattern to the ongoing crisis in the crypto space. Crypto firms are battling a liquidity crisis that has birthed the suspension of withdrawals. Three Arrows Capital (3AC) plunged into bankruptcy after failing to meet margin calls.
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