The central bank of Singapore is asking companies for more information about their assets and activities. This is in response to the move by financial authorities in Singapore. According to sources, the authority wants to gain a better understanding of their financial status in advance of any possible expansion of the rules.
The Monetary Authority of Singapore ( MAS) sought detailed information from crypto firms operating under its license, as well as some applicants. Bloomberg revealed. This was quoting people who are familiar with the matter but chose to remain anonymous. The central bank sent a “granular questionnaire” last month, awaiting quick answers.
According to the report, the regulator has asked the companies to provide data regarding the crypto assets they hold, their main lending and borrowing counterparties, the amount loaned and top tokens staked via decentralized-finance protocols. To better understand the risks associated with crypto exchanges, the authority wants to know how they were prepared for launch following approval from regulators.
This inquiry is coming ahead of anticipated changes to the regulations that govern the operation of these platforms. The MAS stated in July that additional restrictions are being considered for cryptocurrency trading. Ravi Menon, the bank’s managing director, has already stated that regulations will be extended to include more activities.
Out of nearly 200 applicants, only a handful of crypto businesses have received a license to offer digital payment token services. They are not required to meet capital and liquidity requirements, nor to protect customer funds from insolvency. This could change in the near-term. Bloomberg was told by a spokesperson for MAS:
Licensees and applicants must notify MAS of events that could materially impede or impair operations of the entity. This includes any matter that may affect its solvency, ability to meet its financial, statutory or other obligations.
Hagen Rooke, a Reed Smith partner, said that the MAS will be assessing whether additional regulatory measures are needed to reduce the risk of these distressed situations. Chris Holland, a partner at Singapore advisory firm Holland & Marie, said that the central bank might also require retail investors to pass a test in order to be allowed to trade cryptocurrencies.
The upcoming amendments are intended to reduce the impact of bankruptcy on the sector and protect retail investors against market volatility. Industry members warn that this could hinder innovation.
“While I understand the need for MAS regulation of crypto space more thoroughly,” stated Daniel Liebau, chief investment officer at the Modular Blockchain Fund.