Singapore Signals Exclusion of Private Cryptocurrencies from Monetary Landscape

Private cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) will not have a place in the financial system, according to Managing Director of the Monetary Authority of Singapore Ravi Menon. Menon, expressing pessimism during a panel discussion on the Future of the Monetary System, claimed that these cryptocurrencies “have miserably failed the test of money because they can’t keep value.”

Menon identified the drawbacks of private cryptocurrencies, pointing out that they are not a trustworthy store of wealth and are instead largely utilized for speculation. Speaking on the ephemeral nature of investing in these assets, he said, “People buy and sell these things to make a quick buck.”

Menon made hints about the future monetary system being based on tokenized bank liabilities, well-regulated stablecoins, and central bank digital currencies (CBDCs) without naming the cryptocurrencies that would be excluded. The remarks are consistent with previous regulatory actions taken by Singapore to stabilize stablecoins that only support one currency.

Singapore’s Regulatory Approach

The Monetary Authority of Singapore published a complete regulatory framework aimed at single-currency stablecoins in mid-November 2023. The framework establishes requirements for capital, redemption at par, value stability, and audit result publication. Only stablecoin issuers that fulfill these requirements are eligible to apply for their stablecoins to be recognized and designated as “MAS-regulated stablecoins.”

The financial authority in Singapore is preparing a live trial program for a CBDC for wholesale interbank payments in 2024 at the same time. This program is a component of the Orchid Blueprint, a framework created by MAS to investigate and apply novelties in the field of digital money.

Menon’s remarks demonstrate Singapore’s commitment to promoting integrity and stability in its developing financial ecosystem as the nation moves in slow motion toward a more regulated and controlled cryptocurrency environment.