Singapore pushes forward with cautious digital assets policy

Written by || June 28 2023

The month of June has been a busy one for digital assets in Singapore. Several more big names have been approved for a Major Payments Institution (MPI) license, while the Monetary Authority of Singapore (MAS) published a new white paper outlining its vision for purpose-bound money. What is becoming clear about Singapore’s approach to digital assets is that the city-state wants to capture the promising aspect of these new forms of money while ring-fencing its economy and citizenry from the unsavory elements of cryptocurrency.

Hundreds of firms have applied for an MPI license in Singapore since the city-state issued corresponding guidelines several years ago. 190 have been approved, 11 of which are digital payment token companies. More than 200 companies have withdrawn their applications, including Binance. While the full list is not widely known, we can assume that it includes others in the vein of Binance that do not conform to the MAS’s vision for how digital money should function in Singapore.

Some big names were greenlighted this month for an MPI license. Last week, Ripple received in-principle approval for an MPI license, which Ripple said will allow its Singapore branch to offer regulated digital payment token products and services. For its part, Circle this month was also approved for an MPI, which will also allow it to provide cross-border and domestic money transfer services in Singapore. The account allows institutional customers access to USDC, a stablecoin issued by the group. Finally, also in June, Singapore-based was granted an MPI for digital payment token (DPT) services.

The MAS’s new white paper, meanwhile, fleshes out its vision for digital currency. The digital monies covered under the White Paper include central bank digital currencies (CBDCs), tokenized bank deposits and stablecoins. The focus on stablecoins is notable as they offer the best way thus far to leverage the strengths of cryptocurrencies while eschewing their extreme volatility. 

Additionally the MAS White Paper lays out a set of requirements to protect the use of such assets as a medium of exchange, and provides a technical overview of PBM. Crucially, the paper explains how PBMs can be designed such that money is transferred only upon fulfillment of goods or services, and can be used to protect both consumers and merchants. The MAS said that PBM features the use of a common protocol that is designed to work with different ledger technology and forms of money. It “enables money to be directed to a specific purpose without requiring money itself to be programmed."