The Monetary Authority of Singapore (MAS) is requesting additional information from cryptocurrency firms as the central bank prepares for impending regulatory change.
Bloomberg has reported that Singapore’s central bank has started taking additional measures to prepare for new cryptocurrency regulations amid the ongoing liquidity crisis and withdrawal issues that have sent many companies into bankruptcy. According to the report, the MAS has sent out a detailed questionnaire to some applicants and holders of the MAS’ Digital Payment Token licenses. The questionnaires sent last month reportedly sought “highly granular information” about business activity and holdings by crypto companies. The checks focused on firms’ financial stability and interconnection, with the questions probing top tokens owned, top lending and borrowing counterpart, the amounts loaned, and top tokens staked through decentralised finance protocols.
The Singapore regulator is looking for information on steps taken by firms to give after receiving digital payment token service licenses. The inquiry is set to gain a better understanding of the risks around the industry. A MAS spokesperson told Bloomberg:
Licensees and applicants are expected to notify MAS of any events that materially impede or impair the operations of the entity, including any matter which may affect its solvency or ability to meet its financial, statutory, contractual, or other obligations.
People familiar with the matter say that firms are expected to respond promptly. The latest regulatory action in the country aims to improve the scrutiny on crypto firms ahead of new regulations for the industry. The central bank has specifically pointed at blind spots in existing regulations in the country, noting that digital payment token service providers are not subjected to risk-based capital or liquidity requirements. Companies are also not required to safeguard customer funds or tokens from insolvency risks. The new regulatory framework comes in response to the ongoing liquidity crisis and withdrawal issues amid the market downturn.
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Source: https://cryptodaily.co.uk/2022/08/singapores-mas-probes-crypto-firms-ahead-of-regulatory-overhaul