SINGAPORE — The Monetary Authority of Singapore (MAS) has issued a statement on Monday (21 Nov) to address some questions and misconceptions that have arisen in the wake of the FTX.com (FTX) debacle.
The cryptocurrency exchange announced that it was filing for bankruptcy protection on 11 November after a bailout deal from Binance.com collapsed and users withdrew around US$6 billion in funds.
FTX’s own cryptocurrency token, FTT had traded for as high as US$59 last October and its price dropped to around US$6 after it halted trading on 8 November and subsequently dropped all the way to US$1.3 following the news of the bankruptcy.
MAS said that it is a misconception that it could protect local users who dealt with the cryptocurrency exchange, such as by ringfencing their assets or ensuring that FTX backed its assets with reserves, as it did not license FTX and the exchange operates offshore.
It also noted that the reason why Binance was placed on the Investor Alert List (IAL) while FTX was not, is because Binance was actively soliciting users in Singapore while FTX was not.
MAS said Binance had, in fact, gone to the extent of offering listings in Singapore dollars and accepted Singapore-specific payment modes such as PayNow and PayLah.
It shared that it received several complaints about Binance between January and August 2021. There were also announcements in multiple jurisdictions of unlicensed solicitation of customers by Binance during the same period.
On the other hand, MAS claims that there was no evidence that FTX was soliciting Singapore users specifically and trades on FTX also could not be transacted in Singapore dollars.
However, it also noted that Singapore users were still able to access FTX services online.
According to MAS, the Commercial Affairs Department commenced an investigation into Binance for possible contravention of the Payment Services Act (PS Act) under its referral.
“There was no reason to place FTX on the IAL as there was no evidence that it had contravened the PS Act.” said MAS in its statement.
Straits Times reported last week that some Singapore users can access Binance.com when previously the buying and selling of crypto on the platform was blocked.
It understands that the Binance mobile app is now back in Singapore app stores and Singapore users can trade crypto via the app, a speculative activity that has garnered repeated warnings from authorities.
In response to this latest development, MAS notes that Binance had put in place various measures including geo-blocking of Singapore IP addresses and the removal of its mobile application from Singapore app stores after it required it to stop soliciting Singapore users.
MAS added that Binance has to continue to comply with the prohibition against soliciting Singapore users without a licence if it decides to dismantle some of these restrictions,
It also pointed out that it is not possible to list all the offshore crypto exchanges in the world on IAL and no regulator in the world has done so.
MAS said that the purpose of the IAL is to warn the public of entities that may be wrongly perceived as being MAS-regulated, especially those which solicit Singapore customers for financial business without the requisite MAS licence.
“It does not mean that the thousands of other entities operating offshore, which are not listed on the IAL, are safe to deal with.”
In addition to maintaining the IAL, MAS publishes a Financial Institutions Directory on its website that is an exhaustive list of all MAS-regulated entities.
MAS has recently published a consultation paper proposing basic investor protection measures for crypto players who are licensed to operate in Singapore.
It reminds the public that the most important lesson from the FTX debacle is that dealing in any cryptocurrency, on any platform, is hazardous and there is no protection for customers dealing with cryptocurrencies.
“Crypto exchanges can and do fail. Even if a crypto exchange is licensed in Singapore, it would be currently only regulated to address money-laundering risks, not to protect investors.”
Noting that even if a crypto exchange is well-managed, cryptocurrencies themselves are highly volatile and many of them have lost all value.
