Singapore is open to innovation in digital assets, but not crypto speculation: DPM Wong

SINGAPORE – Singapore is open to digital asset innovation, but it is not open to crypto speculation at all, Deputy Prime Minister and Finance Minister Lawrence Wong said on Thursday.

And recent developments have shown that the Republic is on the right track in taking a strong stance against such speculation, especially trading by retail investors, he said at the Bloomberg New Economy Forum.

“We were on the right track to go big on digital assets innovation, which is an important enabler and something that potentially can transform financial markets, cross border payments, settlements, capital markets,” he said.

“But, and we’ve said this for a long time, even when people criticized us for saying that… we need to take a strong stance against crypto speculation and trading especially by retail investors,” he added.

Bloomberg News editor-in-chief John Micklethwait, who moderated the discussion, had asked Mr Wong about Singapore’s openness to digital currencies in the wake of the collapse of cryptocurrency firm FTX. Mr Micklethwait noted that Singapore is one of the biggest crypto centres in the world and FTX former chief executive Sam Bankman-Fried had attended the Singapore Fintech Festival. Were developments in the past couple of weeks a cause for concern?

“Even before FTX happened, we had put out a consultation paper on tightening regulatory rules around this aspect – on crypto trading, on retail investors’ access to crypto,” said Mr Wong.

“We will review the rules as necessary. But we will continue to embrace innovation around digital assets which we think has tremendous potential,” he added.

His remarks come after state investor Temasek said on Thursday that it will write off its US$275 million (S$377 million) investment in FTX irrespective of the outcome of FTX’s bankruptcy protection filing, and that it had misplaced its belief in the leadership of Mr Bankman-Fried.

Asked if the collapse of FTX was a necessary shakeout for the crypto industry and part of the market’s maturing process, Mr Wong said: “Partly. But in the FTX case, there are very serious allegations that amount to potential fraud even. So it’s not just about its governance, it’s a whole range of issues. We’ll have to see what happens with the investigations. But I think there was a bit of a bubble and now we’re starting to see some shaking out as well.”

In the interview, Mr Wong was also asked about US-China relations following Monday’s meeting between Chinese President Xi Jinping and US President Joe Biden, who expressed the desire for their countries to work together to manage tensions and avoid conflict.

Mr Wong noted the leaders had an important and constructive meeting, but added that it was “just the beginning of a long and difficult journey”.

“We shouldn’t have any illusions that this one meeting will have changed things overnight because there have been such deep suspicions and distrust built up over so many years,” he said.

While both sides have made clear they do not want conflict and want to manage differences, the fundamental differences have not changed, Mr Wong noted. “America considers China its strategic rival, and it has stated very clearly that it wants to not just have a lead in technology, for one or two bounds, but an absolute lead, as far a lead as possible. And the more America takes action in that direction, the more China will feel well, you are really just trying to keep me down permanently, to contain me, and that will elicit a reaction,” he said.

“So the risk of us moving into a more bifurcated and balkanized world still remains.”

Mr Wong also expressed hope that the two countries would deepen their interactions and develop guiding principles or guardrails so that both sides understand where the other’s red lines are.