Speaker 1: This is Bloomberg Crypto, a daily Bloomberg I Heard podcast,
Speaker 1: and I'm Stacy Marie Ishmail, Managing editor of Crypto for
Speaker 1: Bloomberg News. It's Wednesday, September seven. Singapore was an early
Speaker 1: proponent of crypto regulation, attempting to establish itself as a
Speaker 1: hub for global digital asset companies, long before similar pronouncements
Speaker 1: by countries like the UK. And for a while it
Speaker 1: seemed to work, and then two happened a year of
Speaker 1: high profile crypto company failures and market meltdowns. Several of
Speaker 1: the biggest casualties of the chill of this current crypto
Speaker 1: winter operated out of Singapore. It was a base for
Speaker 1: Three Arrows Capital, the disgraced Crypto hedge Fund. It was
Speaker 1: home to Vould, zip Max, and hoddle Knot, all of
Speaker 1: which have sought detection from their creditors after being unable
Speaker 1: to meet their financial obligations. These high profile collapses have
Speaker 1: shunn a harsh light on Singapore's regulatory framework. So what's
Speaker 1: next for crypto and Singapore? For more? I'm joined by
Speaker 1: Bloomberg Reports, Joanna Ostenga and Suva shri Gosh in this
Speaker 1: reason as we're calling it on the show and everywhere else.
Speaker 1: Crypto Winter, Singapore has really emerged as one of the
Speaker 1: jurisdictions where things do not seem to have gone quite
Speaker 1: according to plan, either for the cryptocurrency companies that were
Speaker 1: operating in the region or for the regulators responsible for
Speaker 1: those companies themselves. Do you want to just to start
Speaker 1: with you, how long has Singapore had some kind of
Speaker 1: regulatory framework for crypto and what's been going on with
Speaker 1: that recently? They actually got started ineen looking at blockchain,
Speaker 1: and so they've been looking at the edges of it,
Speaker 1: looking at the technology for quite a while, much earlier
Speaker 1: than a lot of jurisdictions, and a couple of years
Speaker 1: ago they decided they wanted to do this licensing framework
Speaker 1: for it, and that has been something that's gotten a
Speaker 1: lot of applicants a lot of interest. UM. The approvals
Speaker 1: have gotten a little more slowly than some people may
Speaker 1: have thought they would, but there is still a premium
Speaker 1: about being regulated by Singapore, which is seen generally as
Speaker 1: a government that um is pretty forward thinking. Who have
Speaker 1: been the major companies in Singapore that are operating in
Speaker 1: and around crypto and what's been going on there over
Speaker 1: the past few months. The biggest shock has come from
Speaker 1: Singapore in the sense that you know, the huge crypto
Speaker 1: had fund which is one of the biggest, the largest
Speaker 1: one actually globally, Three Arrows Capital, they had to file
Speaker 1: bankruptcy and that was one of the biggest even that
Speaker 1: Singapore saw in the last few months. So you mentioned
Speaker 1: Three Arrows Capital and you mentioned that they were at
Speaker 1: their peak where they are no longer. They were one
Speaker 1: of the largest, if not the largest crypto hedge fund
Speaker 1: in the world. There are a lot of people right
Speaker 1: now who are looking at their accounting with a degree
Speaker 1: of skepticism about the assets that they had on their management.
Speaker 1: But they started off in Singapore, but then they left
Speaker 1: Singapore in September one before all of this stuff started
Speaker 1: going down. So did the collapse of Three Arrows really
Speaker 1: cause or lead to potentially the crypto broader crypto contagion? So,
Speaker 1: you know, Joanna, like, what was the failure here as
Speaker 1: it related to how they were regulated in Singapore before
Speaker 1: they redomiciled in the British Version Islands. They were able
Speaker 1: to kind of get the respectability, They were able to
Speaker 1: get a lot of connections here in Singapore, a lot
Speaker 1: of high net worth people and they were able to
Speaker 1: kind of establish this groundwork that led to them being
Speaker 1: very well connected, getting a lot of loans and kind
Speaker 1: of integrating themselves into the crypto ecosystem. If there was anything,
Speaker 1: it's probably that Singapore looks at specific things. Um, Three
Speaker 1: Arrows did have a license to manage some money, but
Speaker 1: it was a max of two fifty million dollars and
Speaker 1: they weren't supposed to go over that, and that might
Speaker 1: have been part of the reason that they left. But
Speaker 1: there are things that Singapore looks at and things it
Speaker 1: doesn't necessarily look at, and so some of the things
Speaker 1: it doesn't necessarily look at may have been some of
Speaker 1: the things they got Three Arrows in trouble. And so
Speaker 1: that you have been reporting on some of the things
Speaker 1: that they do and don't necessarily look at. As it
Speaker 1: relates to a couple of other companies, can you share
Speaker 1: a little bit more about what that reporting has been.
Speaker 1: There are like tons, as you rightly say, right, you know,
Speaker 1: the Vault, Zip, Max, Hoddle, not all three we've seen
Speaker 1: in quick succession. How they have you know, completely had
Speaker 1: to grew off rather right, really, I mean because you see, uh,
Speaker 1: you know, suddenly one fine morning we get information that
Speaker 1: Bold had to stop their withdrawals, and then again the
Speaker 1: same thing happened with zip Max, which is all over
Speaker 1: the Southeast Asia, and then holdle Not which actually had
Speaker 1: a license from the Singapore Central Bank. You know, so
Speaker 1: that shows that, you know, how interconnected this part of
Speaker 1: the world is. They lent, they borrowed, they lent, and
Speaker 1: they leveraged. So eventually what happened was, you know, my
Speaker 1: loan gets bad, then the other person who also bought
Speaker 1: it from me I have to suffer from the same event.
Speaker 1: So that's what happened in this case for all these
Speaker 1: companies in singa probum. And so to that point about
Speaker 1: what shall we describe as like the turmoil that's currently
Speaker 1: affecting the crypto industry in Singapore. You've both been reporting
Speaker 1: on the fact that the various regulatory agencies there are
Speaker 1: considering taking additional steps in response. And one of the
Speaker 1: areas that Ravi Menon for example, who is the head
Speaker 1: of the central bank there, is talking about is additional
Speaker 1: protections for retail investors. MS has said it wants to
Speaker 1: attract leading crypto players to Singapore. On the other hand,
Speaker 1: MS has a stringent and lengthy licensing process for those
Speaker 1: who want to carry out crypto related services in Singapore
Speaker 1: and MS has also been issuing strong warnings against retail
Speaker 1: investments in cryptocurrencies and has been taking increasingly stronger measures
Speaker 1: to restrict retail access to cryptocurrencies. What's the response been
Speaker 1: to some of those proposals, like our folks like great
Speaker 1: the song, like it's going far enough, or their additional
Speaker 1: things that people want to see. Retail investors will not
Speaker 1: like a very strict regulation where they will be told
Speaker 1: what to do and what not to do, which which
Speaker 1: is more than what to do in terms of crypti investments.
Speaker 1: So yes, so it is likely to be an unpopular one,
Speaker 1: but of course, you know, it's for the safety and
Speaker 1: security of of investors, of people like you and me,
Speaker 1: So it's eventually expected to be intended to be actually
Speaker 1: for a better outcome protil investors. And one of the
Speaker 1: things inasmuch as they're starting to gather that information now
Speaker 1: slightly later than some folks might have really preferred, but
Speaker 1: they don't currently hold the companies that they license subjects
Speaker 1: to things like limits on liquidity risk or you know,
Speaker 1: requiring them to safeguard customer assets and make sure, they're
Speaker 1: in sort of separate bits of the business that are
Speaker 1: less exposed to some of those market challenges. Are those
Speaker 1: kinds of additional changes also being discus us by regulators
Speaker 1: or is it or we still in the we have
Speaker 1: to wait and see what they're eventually going to come
Speaker 1: out with phase. It does seem like they're looking at
Speaker 1: that sort of thing, and it's still wait and see.
Speaker 1: They're still developing things. But if you look at what
Speaker 1: happened with the trouble in crypto in the past few months,
Speaker 1: it seems like that would be something regulators would be
Speaker 1: interested in. Those questions from their spreadsheets are certainly looking
Speaker 1: like they may at least be interested in it. Coming up,
Speaker 1: you'll hear more from reports Joanna Osinga and Suvashry discussing
Speaker 1: everything to do with regulation and crypto in Singapore. We'll
Speaker 1: be right back, so if I'm hearing you correctly, these
Speaker 1: sort of extremes are that in India, on the one hand,
Speaker 1: there isn't actually a regulatory framework. There's a tax framework
Speaker 1: that's kind of acting as a proxy for more formal regulation.
Speaker 1: In Singapore on the other end, where especially right now,
Speaker 1: it looks like they're trying to tighten things up that
Speaker 1: might have been missing before. And then in the middle
Speaker 1: you've got Dubai, where there are some rules, there's some policy,
Speaker 1: but they seem to be taking a much more explicit Hey,
Speaker 1: come to business with us kind of approach, Joanna on
Speaker 1: things that we've seen and things we're reporting on here
Speaker 1: at Bloomberg around what happened in Korea, for example, in
Speaker 1: the aftermath of Tera, Korea, much like Singapore, was one
Speaker 1: of those jurisdictions that was perceived as pretty sophisticated. You know,
Speaker 1: it had pretty good guidelines and interest in blockchain and
Speaker 1: crypto and crypto companies that led to a lot of
Speaker 1: retail and consumer interest. There was a lot of activity
Speaker 1: that was happening over there that's now going through a reckoning.
Speaker 1: In the aftermath of the collapse of Luna and Terra,
Speaker 1: people were very upset, are very upset with Kwan, who
Speaker 1: was the founder of these entities. Are you seeing any
Speaker 1: parallels in Singapore to that kind of public anger that
Speaker 1: we're witnessing in Korea or is Singapore Is this a
Speaker 1: very different conversation. It feels somewhat different. The Monetary Authority
Speaker 1: of Singapore has been reminding people all the time about
Speaker 1: the dangers of crypto. In a speech on Tuesday, the
Speaker 1: Deputy Prime Minister said the crypto space is a highly
Speaker 1: risky area and investors have suffered losses or even lost
Speaker 1: their life savings. And it feels like most of the
Speaker 1: people here who might have lost money would have been
Speaker 1: more along the lines of high net worth people or
Speaker 1: people who had some sense of the risks that they
Speaker 1: were taking with it. And I'm sure there were probably
Speaker 1: some people who lost money that they couldn't afford to lose,
Speaker 1: but there is not so much a public uprising, and
Speaker 1: of course that doesn't necessarily happen and as much in
Speaker 1: Singapore anyway, but it is more they just don't want
Speaker 1: the public to invest in crypto. But it's more of
Speaker 1: an academic discussion of how to handle it, as opposed
Speaker 1: to say the public anger or anecdotes about things happening
Speaker 1: to the average person on the street. That's helpful context
Speaker 1: and super just a sweepy question for you, as someone
Speaker 1: who recently moved to Singapore, what do you think have
Speaker 1: been some of the biggest differences in reporting on things
Speaker 1: like crypto and fintech In a jurisdiction like Singapore as
Speaker 1: opposed to some of these other places that you've been covering.
Speaker 1: I think, you know, the biggest difference is again regulation,
Speaker 1: Like you know, I've covered India in in my previous
Speaker 1: role in terms of fintech and also crypto, and I
Speaker 1: think the we we used to look at that particular
Speaker 1: regulatory regime is you know, let it grow, and there
Speaker 1: is no idea or no clarity about how to regulate
Speaker 1: the system. So it's really like, you know, nobody's baby
Speaker 1: there in India. And however, when we've moved to this
Speaker 1: part of the world, which is you know, Singapore, which
Speaker 1: is a little more regulated, not little actually I would
Speaker 1: say a lot more regulated than compared to India, also
Speaker 1: not more organized. So in that sense, yes, there is
Speaker 1: a first mover advantage or one of the early movers
Speaker 1: advantage for Singapore compared to India. However, I would also
Speaker 1: like to add, you know, apart from Singapore, there is
Speaker 1: other countries in this region, like China. You saw how
Speaker 1: they completely banned the crypto and then Japan interestingly slowly
Speaker 1: warming up to crypto now, so there is a lot
Speaker 1: of you know, different style and approach to this entire
Speaker 1: sector when you look at now and when you look
Speaker 1: at maybe two years prior. Yeah, so that's how it is.
Speaker 1: It's not uniform across. Thank you, Johanna, and thank you Suva.
Speaker 1: Thank you, thank you for having us here. You can
Speaker 1: find more of Johanna's and subas reporting on the Bloomberg
Speaker 1: terminal on Bloomberg dot com or follow them on Twitter.
Speaker 1: Joanna is at ossenger J that's O S S I
Speaker 1: N G E R J. And Suva is at Suva Journal.
Speaker 1: That's s U V A J O U R n oh.
Speaker 1: This is Bloomberg Crypto, a daily podcast from Bloomberg and
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Speaker 1: music by Leo Sidron I'm Stacy Marie Schmal we'll be
Speaker 1: back tomorrow. Two