Although it calls cryptocurrency investments “highly hazardous,” the Monetary Authority of Singapore (MAS) has said it is not at risk from recent collapses in the industry.
Hodlnaut on Monday (Aug. 8) said it was withdrawing its application for a major payment institution license in Singapore at the same time it was halting withdrawals.
“MAS has been continually reminding the general public that dealing in cryptocurrency is highly hazardous,” the regulator’s spokesperson told Bloomberg. “Not only are the values of cryptocurrencies extremely volatile, customers’ monies are not protected under the law.”
The report noted that companies that have at some point been affiliated with Singapore have been at the center of the recent cryptocurrency meltdown.
Crypto exchange Zipmex entered bankruptcy last month, while lender Babel announced in June that it was freezing withdrawals. Another lender, BlockFi, avoided bankruptcy after getting funding from FTX CEO Sam Bankman-Fried. It could also end up being acquired by FTX.
Most of the failed lenders were tied to Three Arrows Capital, a crypto hedge fund that managed to borrow hundreds of millions of dollars with no collateral and reportedly little insight into how it was using them. However, the disruption in the sector hasn’t had a wider impact on the city-state, the MAS said.
“The turmoil in the cryptocurrency market has not posed financial stability risks in Singapore,” the MAS spokesperson said. “Spillover to the domestic financial system has been very limited as our key financial institutions do not have significant exposures to either distressed cryptocurrency firms or cryptocurrencies.”
Last week, the MAS said it was weighing the benefits of a regulatory system based on the risks and merits of stablecoins due to the turmoil in the industry.
“The recent chain of high-profile failures in the cryptocurrency markets, starting from the collapse of the TerraUSD and Luna tokens, illustrates the high risks involved in investments in cryptocurrencies that MAS has warned the public about repeatedly,” said bank minister Tharman Shanmugaratnam.
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