Singapore wants to be a hub for blockchain in finance, just not speculative crypto trading

Singapore still wants to be a hub for digital assets, but not for cryptocurrency speculation, according to Ravi Menon, managing director of Singapore's central bank, the Monetary Authority of Singapore.

“If a crypto hub is about experimenting with programmable money, applying digital assets for use cases, or tokenizing financial assets to increase efficiency and reduce risk in financial transactions, yes, we want to be a crypto hub,” Menon said on Thursday during his opening address to the Singapore Fintech Festival 2022.

The process of tokenizing a financial asset entails transforming its ownership rights into digital tokens.

DBS Bank is putting Singapore's first digital money live pilot for government vouchers to the test, allowing businesses to program and self-execute distribution and usage.

“However, if it is about trading and speculating in cryptocurrencies, that is not the type of crypto center we want to be,” Menon said.

Singapore aspires to be a worldwide crypto hub, but the government has been cracking down on the business after many retail investors lost their life savings to crypto trading. Due to its volatile and speculative nature, the city-state has frequently warned that cryptocurrency trading is “extremely dangerous and not fit for the general public.” It even outlawed crypto advertising in public places and on social media in January 2021, and recently suggested new regulations to protect ordinary investors in the aftermath of Terra's Luna's $60 billion collapse.

Nonetheless, Singapore has openly expressed its support for blockchain technology and has begun a number of projects. Project Ubin is one of them, having successfully completed its blockchain trial for the clearing and settlement of payments and securities.

Another example is Project Guardian, which just completed its first industry pilot with DBS Bank, JPMorgan, and SBI Digital Assets Holdings executing tokenized foreign exchange and government bond transactions.

“The first trial of Project Guardian has showed the potential for decreasing risks in trade execution,” Menon said.

“These programs aim to improve product value chain efficiency, minimize issuance and servicing costs, and boost transparency and accessibility.” “We believe Project Guardian can help pave the road for the next generation of Singapore's financial markets,” Menon added.

MAS will follow up with two new industry pilots, one led by Standard Chartered Bank to investigate the issue of tokens connected to trade finance assets, and the other by HSBC and UOB in collaboration with Marketnode to enable native digital issuance of wealth management products.

Menon also announced the start of Project Ubin+, a global project for the cross-border exchange and settlement of foreign currency transactions using wholesale central bank digital currencies, in his speech.

Project Ubin began in 2016 and serves as the foundation for the development of Partior, a blockchain-based payments clearing and settlement network developed by DBS Bank, JPMorgan, and Temasek.