One Regulatory System for Crypto and Traditional Finance in Singapore
Singapore, known for its bustling financial sector and progressive approach, has elected Tharman Shanmugaratnam as its ninth president. The former deputy prime minister and central bank chairman is set to initiate a new vision for the nation: a unified regulatory system, or “one regulatory system for everything,” that covers both cryptocurrencies and traditional finance.
President-Elect Tharman Shanmugaratnam’s Innovative Approach
Shanmugaratnam's extensive political career, including roles as finance minister and education minister, has prepared him well for this momentous role. His tenure as chairman of the Monetary Authority of Singapore (MAS) from 2011 to 2023 cemented his expertise in the financial sector, setting the stage for his innovative approach to regulation.
Even before his election, President-Elect Shanmugaratnam had been vocal about his stance on cryptocurrency regulation. He boldly proclaimed that there should be one regulatory system that applies uniformly to both crypto and traditional finance. His message is clear: "If you're outside of the regulatory system, buyer beware."
In his own words, "If crypto, or blockchain, or any component of that ecosystem wishes to engage in activities akin to traditional finance, the same rules of capital, liquidity, and reserve backing should apply without exception."
“So people are very clear. There is one regulatory system for everything. And if you’re outside of the regulatory system, buyer beware,” Shanmugaratnam clarified at the time. This commitment to consistency across financial sectors aims to eliminate any ambiguity and ensure a level playing field for all.
Shanmugaratnam Backs Unified Approach with Targeted Regulation
The former MAS chairman has previously stated that some segments of the crypto market should be regulated, such as stablecoins. He also stressed that all financial activities, whether in crypto or traditional finance, must be regulated to prevent money laundering.
“Something is very clear: whether it’s crypto or traditional finance, you've got to regulate for things like money laundering. So that’s very clear,” he said.
While Shanmugaratnam emphasizes a unified approach, he acknowledges the need for targeted regulation. He believes certain segments of the crypto market, such as stablecoins, warrant closer oversight. Additionally, his commitment to combating money laundering extends to all financial activities, regardless of whether they exist in the crypto or traditional financial sectors.
However, the president-elect maintains a degree of skepticism towards cryptocurrency investments. During a panel discussion at the World Economic Forum in January, he challenged the notion of subjecting cryptocurrencies to the same rigorous regulations as banks and insurance companies. Shanmugaratnam urged consideration of the fundamental question: Does extensive regulation validate a speculative and potentially unpredictable market?
“If you have to think about regulating crypto the same way we regulate banks, insurance companies, and so on for prudential reasons, for financial stability reasons, 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?’… Or are we better off just providing ultra-clear guidance as to what’s an unregulated market, and if you go in, you go in at your own risk? I lean a bit more towards the latter view.”
His perspective leans towards providing crystal-clear information to potential investors, warning them of the inherent risks involved. He favors an "ultra-clear" approach that leaves no room for misinterpretation.
As he puts it, "This is a risk you are taking at your own expense, and by the way, please don't take that risk because it's going to be foolish."
Tharman Shanmugaratnam's election as Singapore's president signals a unique chapter in the nation's financial evolution. His call for a unified regulatory system, coupled with a cautious approach to crypto investments, has ignited discussions across the financial sector.
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