3AC and Terra Crises Push Central Banks’ Crypto RegulationJuly 20, 2022
Singapore’s central bank and the Monetary Authority plan to toughen crypto regulations in the country. It says that would help prevent the kind of crisis seen around 3AC and Terra. The Monetary Authority is Singapore’s financial regulator.
MAS Considers More Stringent Policies
The Managing Director of the Monetary Authority, Ravi Menon, made a state on Tuesday. He said retail investors’ access to crypto will be tightened. Also, the central bank is planning more regulations that would aid its oversight.
Ravi Menon gave his speech at the central bank’s report presentation. He emphasized the country’s commitment to restricting retailers’ access.
He stated further that the Authority will define the country’s regulatory and developmental approaches. It will also determine how they work together to achieve Singapore’s vision. The country wants to be known as a hub for responsible digital innovations.
This development is a result of several criticisms against Singapore from players in the sector. They claim Singapore has little control over crypto service companies. The critics said further that 3AC, Vauld, TerraForm Labs, and LFG were regulated by Singapore.
The collapse of 3AC and Terra-LUNA triggered two other collapses in the crypto market. The two subsequent crashes have no means of recovering from their damages.
3AC filed for bankruptcy last month following its ordeal. After that, the Money Authority called the company to order for giving false information. MAS also said the company went beyond its permit limit for assets under management.
But Ravi Menon stated that 3AC stopped funds management in Singapore before it had problems. As a matter of fact, Vauld, TerraForm Labs, and LFG are not regulated under MAS.
Singapore’s Strict Stance on Crypto Regulation
Singapore is quite strict against sharp practices in the crypto sector. The Monetary Authority permitted just 14 companies from 200 that applied for licenses. There are, thus, limited digital asset service providers.
The country is now tightening its regulatory policy around different crypto arms. These include marketing, retail investors’ protection, and licensing for local firms providing crypto services abroad.
Singapore’s Monetary Authority has warned all crypto firms against sharp practices. It has a strict position on that in many instances. But the country’s strict position has resulted in companies relocating to other countries.
Three Arrows Capital’s crash has had a far-reaching effect on the general crypto market. It led to a lot of crypto companies becoming insolvent. Others simply filed for bankruptcy straight away.