Singapore’s Recently Elected President, Former Central Bank Head, Describes Crypto as ‘Somewhat Unconventional’

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Tharman Shanmugaratnam Elected Singapore’s President with Financial Expertise Tharman Shanmugaratnam, a seasoned figure in Singapore’s financial landscape, who previously served as the country’s finance minister and central bank chairman, has secured the presidency with 70.4% of the vote. His substantial financial background, though primarily a ceremonial role, could have implications for future financial policies, particularly in the realm of cryptocurrencies and central bank digital currencies (CBDCs).

Changing Crypto Landscape in Singapore Singapore, once known for its openness to cryptocurrencies, has been navigating a shifting regulatory landscape. This transformation comes in the wake of the collapse of local crypto ventures Terraform Labs and Three Arrows Capital, events that occurred during Shanmugaratnam’s tenure as the chairman of the Monetary Authority of Singapore (MAS).

Tharman Shanmugaratnam: A Finance Veteran Shanmugaratnam’s extensive financial career includes chairing the MAS from 2011 to 2023 and serving as finance minister from 2007 to 2015. He embarked on his professional journey as an economist at the MAS in 1982, backed by degrees from prestigious institutions like the London School of Economics, the University of Cambridge, and Harvard University’s Kennedy School of Government. Notably, he was even short-listed for the top position at the International Monetary Fund (IMF).

Early Crypto Stance: Laissez-Faire Approach During the early days of crypto’s emergence, Shanmugaratnam adopted a laissez-faire approach. In 2018, he asserted that cryptocurrencies posed no substantial threat to Singapore’s financial system and, consequently, there was no need for prohibitive measures.

Shanmugaratnam’s Skepticism Towards Crypto However, by 2023, Shanmugaratnam had become more skeptical. He described cryptocurrencies as “inherently purely speculative and slightly crazy.” While advocating for an unregulated crypto market, he urged authorities to provide unequivocal clarity about the associated risks, discouraging a continuous cycle of regulatory intervention.

Banking and Stablecoins: Striking a Balance Shanmugaratnam acknowledged the need for a balanced approach in the banking sector concerning cryptocurrencies. He outlined that Singaporean banks must maintain $125 in capital for every $100 in exposure to cryptocurrencies like Bitcoin and Ethereum. Additionally, he recognized the potential of stablecoins in traditional finance, envisioning a role beyond speculation and illicit activities.

Regulatory Developments: Stablecoin Framework In August 2022, Shanmugaratnam disclosed that the MAS was actively reviewing its regulatory approach to stablecoins. The central bank considered implementing reserve requirements for stablecoin issuers, especially in light of the terraUSD (UST) incident in which the stablecoin lost its U.S. dollar peg. Subsequently, the MAS released a regulatory framework for stablecoins.

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