The Monetary Authority of Singapore (MAS) has instructed several cryptocurrency companies to submit data related to their business activities.
The Central Bank will make certain amendments to its current crypto regulatory policies, following the collapse of crypto hedge fund Three Arrows Capital, Terraform Labs, and even Vauld.
This change in cryptocurrency regulation will mainly help solve the current liquidity crisis and also withdrawal issues.
The Monetary Authority of Singapore, the central bank of Singapore, has now sent detailed questionnaires to a number of applicants and holders of the MAS’s Digital Payment Token Licenses.
Business-related data includes the top tokens owned by the company, top lending, and borrowing partners, the amount lent and the top tokens placed over the DeFi protocol.
Assessing the financial stability and connectivity of a cryptocurrency company
The Central Bank of Singapore has mentioned that its aim is to create stronger safeguards to protect retail customers. MAS has also consulted the public on stablecoin regulation.
Currently, MAS has issued nearly 10 licenses to companies in Singapore. The list of exchanges includes Crypto.com, DBS Vickers brokerage branch of DBS Bank. This is only a small number compared to the 200 companies that have applied for licenses.
This change in regulatory activity in Singapore is primarily aimed at strengthening oversight of digital asset companies as new regulations in the industry emerge.
MAS CEO has previously mentioned that the financial watchdog has been working on a regulatory framework. This framework will help address consumer and market protection and support stablecoin reserves over the next few months.
Areas in need of new regulation
According to the central bank, there are several areas that require specific amendments in the current regulations on cryptocurrencies in Singapore.
Cryptocurrency payment service providers must meet capital and liquidity requirements. This means that they are required to protect customer funds.
However, at the present time, most of these regulations relating to anti-money laundering and terrorist financing policies. At a time when cryptocurrency sectors receive a lot of attention, customer protection needs to be focused.
This new regulatory framework for cryptocurrencies comes in the wake of the ongoing liquidity crisis and related withdrawal issues amid the crypto downturn.
Recently, Three Arrows Capital (3AC), a Singapore-based hedge fund, was declared bankrupt after failing to meet margin requirements in mid-June this year.