The New President of Singapore Is Not Sold on Crypto: Here’s Why

On Saturday, September 2, Singaporeans chose Tharman Shanmugaratnam as their next president. Many in the country hoped and believed he was destined to be the nation’s first non-Chinese prime minister. 

Yet some in the crypto industry will be happy that Shanmugaratnam has risen to what they see as a largely ceremonial role. His past attitudes to cryptocurrency and digital assets have been largely negative. 

Singapore’s New President Has Been Critical of Crypto

In the past, the new president-elect of Singapore has called cryptocurrency “slightly crazy” and “purely speculative.” 

The former finance minister, deputy prime minister, and central bank chairman was elected president on Saturday with 70.4% of the vote. He replaces Halimah Yacob, Singapore’s first female head of state.

Perhaps most notably, Shanmugaratnam was chairman of Singapore’s central bank, the Monetary Authority of Singapore (MAS), from 2011 to 2023. It was during his tenure as its head that two homegrown darlings of the crypto industry collapsed: Three Arrows Capital (3AC) and Terraform Labs. 

Two Singapore Giants Implode Under His Watch

The collapse of Terraform Labs, and its TerraUSD (UST) stablecoin, plunged the industry into a “crypto winter” in May 2022. A state from which the industry has yet to recover.

The implosion wiped out $500 billion in value in two weeks, destroying the portfolios of many retail investors.

The fall of TerraUSD took many victims, including 3AC, a major cryptocurrency hedge fund also based in Singapore. Due to the market downturn, 3AC failed to meet margin calls in June 2022. The fund’s founders then entered liquidation in July 2022 after they could not repay several creditors and exchanges.

Following 3AC’s liquidation, the contagion spread through the cryptocurrency market, with other major companies like Celsius Network and Voyager Digital failing soon after.

Both companies and their founders have faced legal challenges. Do Kwon, the founder of Terraform Labs, is currently jailed in Montenegro for passport fraud. He is due to be extradited to South Korea and the US for alleged crimes related to the company’s collapse.

Considering these failures happened during his tenure at MAS, it’s likely he would have been burned by the experience.

In June 2022, the MAS reprimanded 3AC for providing misleading information and exceeding the allowed assets under management (AUM) threshold. Thus violating its status as a registered fund management company.

Shanmugaratnam Questioned Whether Regulation Would Legitimize Crypto

Back in 2018, Singapore’s new president, who was then also the country’s powerful finance minister, questioned whether broad regulation would give undue legitimacy to a speculative market.

“I think we’ve got to take a step back and ask the basic philosophical question: does that legitimize something that’s inherently, purely speculative and, in fact, slightly crazy?” he said during the 2018 World Economic Forum.

Like many of his contemporaries, he stressed the importance of anti-money laundering measures. And also advocated for educating consumers about the risks in the unregulated crypto sector.

Shanmugaratnam also acknowledged the potential for blockchain to enhance global payment systems. However, he has also emphasized the value of integrating existing traditional payment mechanisms as an alternative to blockchain innovations.

All of this is secondary, however, now that Shanmugaratnam is the president and head of state. The president of Singapore has largely ceremonial duties and has a limited role in the day-to-day running of the country.

However, the president can initiate corruption investigations on the advice of the nation’s cabinet.