Singapore, 21 November 2022… The Monetary Authority of Singapore (MAS) wishes to address some questions and misconceptions that have arisen in the wake of the FTX.com (FTX) debacle.

2. A first the misconception is that it was possible to protect local users who dealt with FTX, for example by freezing their assets or ensuring that FTX backed its assets with reserves. MAS cannot do this because FTX is not authorized by MAS and operates overseasAnother misconception is that if Singaporean investors’ assets in FTX had been placed in Quoine Pte Ltd (Quoine), a local subsidiary of FTX, they would have been protected. This is not the case. Quoine, like other foreign subsidiaries of FTX, was included in US bankruptcy proceedings and halted withdrawals.. MAS has consistently warned of the dangers of dealing with unregulated entities.

3. A second question is why MAS treated Binance.com (Binance) differently than FTX, specifically why it was placed on the Investor Alert List (IAL) when FTX was not.

4. Although Binance and FTX are not licensed here, there is a clear difference between the two: Binance was actively soliciting users in Singapore while FTX was not. Binance has actually gone so far as to offer Singapore dollar listings and accepts Singapore-specific payment methods such as PayNow and PayLah.

5. MAS received several complaints regarding Binance between January and August 2021. There were also announcements in several jurisdictionsFor example, Italy, Japan, Malaysia, the UK, and Thailand made announcements regarding Binance operating without the required licenses in their jurisdictions. unauthorized solicitation of customers by Binance during the same period.

6. As for FTX, there was no evidence that it specifically solicited users from Singapore. Transactions on FTX also could not be made in Singapore dollars. But as with thousands of other financial and crypto entities that operate overseas, users in Singapore were able to access FTX services online.

seven. MAS placed Binance on the IAL because it solicited unlicensed Singapore users. In addition, on the recommendation of MAS, the Department of Commercial Affairs has opened an investigation of Binance for a possible breach of the Payment Services Act (PS Act). There was no reason to place FTX on the IAL as there was no evidence that he broke PS law.

8. MAS asked Binance to stop soliciting Singapore usersThere has been some confusion regarding MAS’ earlier statement released on November 14, 2022 that Binance was not “banned” in Singapore but was prohibited from soliciting Singapore users. In practice, the MAS does not “prohibit” entities from operating in Singapore. Binance was able to continue to perform other unregulated activities in Singapore, such as corporate functions and blockchain technology services. Additionally, Binance Asia Services continued to provide services to Singapore users as an exempt payment service provider while its PS Act license application was under review by MAS. Binance Asia Services later withdrew its license application but continues to conduct unregulated business in Singapore.. To assure MAS that it was no longer doing so, Binance implemented various measures, including geo-blocking Singapore IP addresses and removing its mobile app from Singapore app stores. These actions were intended to demonstrate beyond doubt that Binance had stopped soliciting and providing services to users in Singapore. If Binance now decides to dismantle some of these restrictions, it must continue to comply with the ban on soliciting unlicensed Singapore users.

9. A third question is whether MAS should comprehensively list on the IAL and provide information on all offshore crypto exchanges in the world. There are hundreds of such exchanges and thousands of other offshore entities that accept investments in non-crypto assets. It is not possible to list them all and no regulator in the world has done so.

ten. The purpose of the IAL is to warn the public about entities that may be mistakenly perceived to be MAS-regulated, particularly those that solicit Singapore customers for financial activities without the required MAS license. This does not mean that the thousands of other entities operating overseas, which are not listed on the IAL, can be safely dealt with.

11. In addition to maintaining the IAL, MAS publishes a Directory of Financial Institutions on its website which is a comprehensive list of all entities regulated by MAS.

12. The most important lesson of the FTX debacle is that trading any cryptocurrency, on any platform, is dangerous..

13. Crypto exchanges can and do fail. Even if a crypto exchange is licensed in Singapore, it would currently only be regulated to address money laundering risks, not to protect investors. This is similar to the approach currently taken in most jurisdictions. MAS recently released a consultation paper proposing basic investor protection measures for crypto players licensed to operate in SingaporeMAS also released a separate consultation paper on stablecoin issuers. This includes a proposal that full reserve support should be required for stablecoin issuers that are licensed by MAS. Stablecoins pegged to fiat currencies, unlike other cryptocurrencies, may have potential advantages and longer-lasting relevance in a digital payment ecosystem..

14. Additionally, even if a crypto exchange is well run, cryptocurrencies themselves are very volatile and many of them have lost all value.

15. The current turmoil in the crypto industry is a reminder of the enormous risks involved in trading cryptocurrencies. As MAS has repeatedly stated, there is no protection for clients trading in cryptocurrencies. They can lose all their money.

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