WEBVTT - Singapore Refines Its Crypto Regulations

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<v Speaker 1>This is Bloomberg Crypto, a daily Bloomberg I Heard podcast,

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<v Speaker 1>and I'm Stacy Marie Ishmail, Managing editor of Crypto for

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<v Speaker 1>Bloomberg News. It's Wednesday, September seven. Singapore was an early

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<v Speaker 1>proponent of crypto regulation, attempting to establish itself as a

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<v Speaker 1>hub for global digital asset companies, long before similar pronouncements

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<v Speaker 1>by countries like the UK. And for a while it

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<v Speaker 1>seemed to work, and then two happened a year of

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<v Speaker 1>high profile crypto company failures and market meltdowns. Several of

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<v Speaker 1>the biggest casualties of the chill of this current crypto

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<v Speaker 1>winter operated out of Singapore. It was a base for

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<v Speaker 1>Three Arrows Capital, the disgraced Crypto hedge Fund. It was

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<v Speaker 1>home to Vould, zip Max, and hoddle Knot, all of

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<v Speaker 1>which have sought detection from their creditors after being unable

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<v Speaker 1>to meet their financial obligations. These high profile collapses have

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<v Speaker 1>shunn a harsh light on Singapore's regulatory framework. So what's

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<v Speaker 1>next for crypto and Singapore? For more? I'm joined by

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<v Speaker 1>Bloomberg Reports, Joanna Ostenga and Suva shri Gosh in this

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<v Speaker 1>reason as we're calling it on the show and everywhere else.

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<v Speaker 1>Crypto Winter, Singapore has really emerged as one of the

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<v Speaker 1>jurisdictions where things do not seem to have gone quite

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<v Speaker 1>according to plan, either for the cryptocurrency companies that were

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<v Speaker 1>operating in the region or for the regulators responsible for

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<v Speaker 1>those companies themselves. Do you want to just to start

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<v Speaker 1>with you, how long has Singapore had some kind of

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<v Speaker 1>regulatory framework for crypto and what's been going on with

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<v Speaker 1>that recently? They actually got started ineen looking at blockchain,

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<v Speaker 1>and so they've been looking at the edges of it,

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<v Speaker 1>looking at the technology for quite a while, much earlier

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<v Speaker 1>than a lot of jurisdictions, and a couple of years

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<v Speaker 1>ago they decided they wanted to do this licensing framework

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<v Speaker 1>for it, and that has been something that's gotten a

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<v Speaker 1>lot of applicants a lot of interest. UM. The approvals

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<v Speaker 1>have gotten a little more slowly than some people may

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<v Speaker 1>have thought they would, but there is still a premium

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<v Speaker 1>about being regulated by Singapore, which is seen generally as

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<v Speaker 1>a government that um is pretty forward thinking. Who have

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<v Speaker 1>been the major companies in Singapore that are operating in

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<v Speaker 1>and around crypto and what's been going on there over

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<v Speaker 1>the past few months. The biggest shock has come from

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<v Speaker 1>Singapore in the sense that you know, the huge crypto

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<v Speaker 1>had fund which is one of the biggest, the largest

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<v Speaker 1>one actually globally, Three Arrows Capital, they had to file

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<v Speaker 1>bankruptcy and that was one of the biggest even that

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<v Speaker 1>Singapore saw in the last few months. So you mentioned

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<v Speaker 1>Three Arrows Capital and you mentioned that they were at

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<v Speaker 1>their peak where they are no longer. They were one

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<v Speaker 1>of the largest, if not the largest crypto hedge fund

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<v Speaker 1>in the world. There are a lot of people right

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<v Speaker 1>now who are looking at their accounting with a degree

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<v Speaker 1>of skepticism about the assets that they had on their management.

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<v Speaker 1>But they started off in Singapore, but then they left

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<v Speaker 1>Singapore in September one before all of this stuff started

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<v Speaker 1>going down. So did the collapse of Three Arrows really

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<v Speaker 1>cause or lead to potentially the crypto broader crypto contagion? So,

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<v Speaker 1>you know, Joanna, like, what was the failure here as

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<v Speaker 1>it related to how they were regulated in Singapore before

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<v Speaker 1>they redomiciled in the British Version Islands. They were able

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<v Speaker 1>to kind of get the respectability, They were able to

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<v Speaker 1>get a lot of connections here in Singapore, a lot

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<v Speaker 1>of high net worth people and they were able to

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<v Speaker 1>kind of establish this groundwork that led to them being

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<v Speaker 1>very well connected, getting a lot of loans and kind

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<v Speaker 1>of integrating themselves into the crypto ecosystem. If there was anything,

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<v Speaker 1>it's probably that Singapore looks at specific things. Um, Three

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<v Speaker 1>Arrows did have a license to manage some money, but

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<v Speaker 1>it was a max of two fifty million dollars and

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<v Speaker 1>they weren't supposed to go over that, and that might

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<v Speaker 1>have been part of the reason that they left. But

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<v Speaker 1>there are things that Singapore looks at and things it

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<v Speaker 1>doesn't necessarily look at, and so some of the things

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<v Speaker 1>it doesn't necessarily look at may have been some of

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<v Speaker 1>the things they got Three Arrows in trouble. And so

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<v Speaker 1>that you have been reporting on some of the things

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<v Speaker 1>that they do and don't necessarily look at. As it

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<v Speaker 1>relates to a couple of other companies, can you share

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<v Speaker 1>a little bit more about what that reporting has been.

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<v Speaker 1>There are like tons, as you rightly say, right, you know,

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<v Speaker 1>the Vault, Zip, Max, Hoddle, not all three we've seen

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<v Speaker 1>in quick succession. How they have you know, completely had

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<v Speaker 1>to grew off rather right, really, I mean because you see, uh,

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<v Speaker 1>you know, suddenly one fine morning we get information that

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<v Speaker 1>Bold had to stop their withdrawals, and then again the

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<v Speaker 1>same thing happened with zip Max, which is all over

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<v Speaker 1>the Southeast Asia, and then holdle Not which actually had

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<v Speaker 1>a license from the Singapore Central Bank. You know, so

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<v Speaker 1>that shows that, you know, how interconnected this part of

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<v Speaker 1>the world is. They lent, they borrowed, they lent, and

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<v Speaker 1>they leveraged. So eventually what happened was, you know, my

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<v Speaker 1>loan gets bad, then the other person who also bought

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<v Speaker 1>it from me I have to suffer from the same event.

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<v Speaker 1>So that's what happened in this case for all these

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<v Speaker 1>companies in singa probum. And so to that point about

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<v Speaker 1>what shall we describe as like the turmoil that's currently

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<v Speaker 1>affecting the crypto industry in Singapore. You've both been reporting

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<v Speaker 1>on the fact that the various regulatory agencies there are

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<v Speaker 1>considering taking additional steps in response. And one of the

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<v Speaker 1>areas that Ravi Menon for example, who is the head

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<v Speaker 1>of the central bank there, is talking about is additional

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<v Speaker 1>protections for retail investors. MS has said it wants to

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<v Speaker 1>attract leading crypto players to Singapore. On the other hand,

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<v Speaker 1>MS has a stringent and lengthy licensing process for those

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<v Speaker 1>who want to carry out crypto related services in Singapore

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<v Speaker 1>and MS has also been issuing strong warnings against retail

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<v Speaker 1>investments in cryptocurrencies and has been taking increasingly stronger measures

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<v Speaker 1>to restrict retail access to cryptocurrencies. What's the response been

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<v Speaker 1>to some of those proposals, like our folks like great

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<v Speaker 1>the song, like it's going far enough, or their additional

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<v Speaker 1>things that people want to see. Retail investors will not

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<v Speaker 1>like a very strict regulation where they will be told

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<v Speaker 1>what to do and what not to do, which which

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<v Speaker 1>is more than what to do in terms of crypti investments.

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<v Speaker 1>So yes, so it is likely to be an unpopular one,

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<v Speaker 1>but of course, you know, it's for the safety and

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<v Speaker 1>security of of investors, of people like you and me,

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<v Speaker 1>So it's eventually expected to be intended to be actually

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<v Speaker 1>for a better outcome protil investors. And one of the

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<v Speaker 1>things inasmuch as they're starting to gather that information now

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<v Speaker 1>slightly later than some folks might have really preferred, but

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<v Speaker 1>they don't currently hold the companies that they license subjects

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<v Speaker 1>to things like limits on liquidity risk or you know,

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<v Speaker 1>requiring them to safeguard customer assets and make sure, they're

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<v Speaker 1>in sort of separate bits of the business that are

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<v Speaker 1>less exposed to some of those market challenges. Are those

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<v Speaker 1>kinds of additional changes also being discus us by regulators

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<v Speaker 1>or is it or we still in the we have

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<v Speaker 1>to wait and see what they're eventually going to come

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<v Speaker 1>out with phase. It does seem like they're looking at

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<v Speaker 1>that sort of thing, and it's still wait and see.

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<v Speaker 1>They're still developing things. But if you look at what

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<v Speaker 1>happened with the trouble in crypto in the past few months,

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<v Speaker 1>it seems like that would be something regulators would be

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<v Speaker 1>interested in. Those questions from their spreadsheets are certainly looking

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<v Speaker 1>like they may at least be interested in it. Coming up,

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<v Speaker 1>you'll hear more from reports Joanna Osinga and Suvashry discussing

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<v Speaker 1>everything to do with regulation and crypto in Singapore. We'll

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<v Speaker 1>be right back, so if I'm hearing you correctly, these

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<v Speaker 1>sort of extremes are that in India, on the one hand,

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<v Speaker 1>there isn't actually a regulatory framework. There's a tax framework

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<v Speaker 1>that's kind of acting as a proxy for more formal regulation.

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<v Speaker 1>In Singapore on the other end, where especially right now,

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<v Speaker 1>it looks like they're trying to tighten things up that

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<v Speaker 1>might have been missing before. And then in the middle

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<v Speaker 1>you've got Dubai, where there are some rules, there's some policy,

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<v Speaker 1>but they seem to be taking a much more explicit Hey,

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<v Speaker 1>come to business with us kind of approach, Joanna on

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<v Speaker 1>things that we've seen and things we're reporting on here

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<v Speaker 1>at Bloomberg around what happened in Korea, for example, in

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<v Speaker 1>the aftermath of Tera, Korea, much like Singapore, was one

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<v Speaker 1>of those jurisdictions that was perceived as pretty sophisticated. You know,

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<v Speaker 1>it had pretty good guidelines and interest in blockchain and

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<v Speaker 1>crypto and crypto companies that led to a lot of

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<v Speaker 1>retail and consumer interest. There was a lot of activity

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<v Speaker 1>that was happening over there that's now going through a reckoning.

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<v Speaker 1>In the aftermath of the collapse of Luna and Terra,

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<v Speaker 1>people were very upset, are very upset with Kwan, who

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<v Speaker 1>was the founder of these entities. Are you seeing any

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<v Speaker 1>parallels in Singapore to that kind of public anger that

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<v Speaker 1>we're witnessing in Korea or is Singapore Is this a

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<v Speaker 1>very different conversation. It feels somewhat different. The Monetary Authority

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<v Speaker 1>of Singapore has been reminding people all the time about

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<v Speaker 1>the dangers of crypto. In a speech on Tuesday, the

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<v Speaker 1>Deputy Prime Minister said the crypto space is a highly

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<v Speaker 1>risky area and investors have suffered losses or even lost

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<v Speaker 1>their life savings. And it feels like most of the

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<v Speaker 1>people here who might have lost money would have been

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<v Speaker 1>more along the lines of high net worth people or

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<v Speaker 1>people who had some sense of the risks that they

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<v Speaker 1>were taking with it. And I'm sure there were probably

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<v Speaker 1>some people who lost money that they couldn't afford to lose,

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<v Speaker 1>but there is not so much a public uprising, and

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<v Speaker 1>of course that doesn't necessarily happen and as much in

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<v Speaker 1>Singapore anyway, but it is more they just don't want

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<v Speaker 1>the public to invest in crypto. But it's more of

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<v Speaker 1>an academic discussion of how to handle it, as opposed

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<v Speaker 1>to say the public anger or anecdotes about things happening

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<v Speaker 1>to the average person on the street. That's helpful context

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<v Speaker 1>and super just a sweepy question for you, as someone

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<v Speaker 1>who recently moved to Singapore, what do you think have

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<v Speaker 1>been some of the biggest differences in reporting on things

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<v Speaker 1>like crypto and fintech In a jurisdiction like Singapore as

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<v Speaker 1>opposed to some of these other places that you've been covering.

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<v Speaker 1>I think, you know, the biggest difference is again regulation,

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<v Speaker 1>Like you know, I've covered India in in my previous

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<v Speaker 1>role in terms of fintech and also crypto, and I

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<v Speaker 1>think the we we used to look at that particular

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<v Speaker 1>regulatory regime is you know, let it grow, and there

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<v Speaker 1>is no idea or no clarity about how to regulate

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<v Speaker 1>the system. So it's really like, you know, nobody's baby

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<v Speaker 1>there in India. And however, when we've moved to this

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<v Speaker 1>part of the world, which is you know, Singapore, which

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<v Speaker 1>is a little more regulated, not little actually I would

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<v Speaker 1>say a lot more regulated than compared to India, also

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<v Speaker 1>not more organized. So in that sense, yes, there is

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<v Speaker 1>a first mover advantage or one of the early movers

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<v Speaker 1>advantage for Singapore compared to India. However, I would also

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<v Speaker 1>like to add, you know, apart from Singapore, there is

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<v Speaker 1>other countries in this region, like China. You saw how

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<v Speaker 1>they completely banned the crypto and then Japan interestingly slowly

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<v Speaker 1>warming up to crypto now, so there is a lot

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<v Speaker 1>of you know, different style and approach to this entire

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<v Speaker 1>sector when you look at now and when you look

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<v Speaker 1>at maybe two years prior. Yeah, so that's how it is.

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<v Speaker 1>It's not uniform across. Thank you, Johanna, and thank you Suva.

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<v Speaker 1>Thank you, thank you for having us here. You can

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<v Speaker 1>find more of Johanna's and subas reporting on the Bloomberg

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<v Speaker 1>terminal on Bloomberg dot com or follow them on Twitter.

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<v Speaker 1>Joanna is at ossenger J that's O S S I

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<v Speaker 1>N G E R J. And Suva is at Suva Journal.

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<v Speaker 1>That's s U V A J O U R n oh.

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<v Speaker 1>This is Bloomberg Crypto, a daily podcast from Bloomberg and

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