The Monetary Authority of Singapore (MAS) can receive expanded powers if parliament passes the Financial Institutions (Miscellaneous Amendments) Bill 2024. This legislative change is set to considerably impact cryptocurrency firms, particularly those holding Capital Markets Services Licences (CMSL).

Enhanced powers for Singapore MAS over unregulated business activities

The bill specifically targets CMSL holders who engage in unregulated business activities. Under the new legislation, MAS can issue directives regarding the standards and safeguards for these activities. This is a notable development given that CMSL holders are often involved in offering products such as Bitcoin futures and other payment token derivatives, which are currently unregulated and traded on overseas exchanges. The potential risks these products pose to their regulated activities have been a concern, prompting this legislative response.

The MAS has previously guided mitigating risks when dealing with retail investors in unregulated businesses. The proposed bill, however, takes a step further by enabling MAS to enforce minimum standards through written directives. This change underscores the authority’s commitment to maintaining a robust regulatory framework, particularly in the dynamic and evolving landscape of cryptocurrency exchanges and Major Payment Institution (MPI) licensees.

Recent regulatory developments and international cooperation

This move comes in the wake of various measures by the MAS aimed at curbing speculative investments in cryptocurrencies. In November, the MAS introduced a series of steps to discourage such speculation. Furthermore, the MAS revised its regulatory framework for stablecoins in August, leading to Circle and Ripple receiving MPI licenses. Paxos also received approval to issue a U.S. dollar stablecoin in November. These developments reflect the MAS’s proactive approach to managing the risks associated with digital currencies.

The bill also proposes to empower the MAS in its investigative capabilities. The authority can compel individuals to provide information, appear for interviews, and enter premises without a warrant.

Additionally, the MAS will be authorized to enforce court orders for seizing evidence and approve agents appointed by foreign regulators to inspect Singaporean financial institutions. This aspect of the bill highlights an emphasis on comprehensive oversight and international cooperation in financial regulation.

Implications for the cryptocurrency sector

The proposed legislative changes are expected to have far-reaching implications for the cryptocurrency sector in Singapore. By expanding the MAS’s powers, the bill aims to ensure that the activities of CMSL holders and MPI licensees are conducted within a framework that prioritizes financial stability and consumer protection. This move will likely influence cryptocurrency exchanges’ and related entities’ operational strategies, compelling them to adhere to stricter standards and practices.

The bill’s focus on unregulated business activities addresses a key area of concern in the crypto market, which has often been criticized for its lack of transparency and regulatory oversight. The MAS aims to foster a more secure and reliable environment for investors and market participants by setting minimum standards and safeguards.