Crypto exchange urges Singapore to implement ‘practical’ regulation on back of FTX collapse

Cryptocurrency exchange Independent Reserve wants Singapore to lift its ban on cryptocurrency advertising, urging instead for a regulatory framework that “actually protects” consumers. The country’s central bank, meanwhile, has rebuffed suggestions it could have done more to safeguard investors amidst the FTX debacle. 

Pointing to the recent collapse of FTX, Independent Reserve said “urgent and practical regulatory action” was needed to protect cryptocurrency investors in Singapore. Specifically, it asked that licensed market players to be able to advertise their services and communicate with the public. 

Founded in Australia in 2013, the fintech firm later expanded to Singapore where it secured a Major Payment Institution licence to provide digital payment token services in October last year. It offers crypto trading pairs in Singapore, Australia, New Zealand, and US dollars. 

Independent Reserve CEO Adrian Przelozny said in a statement Tuesday: “The FTX situation has been a major setback for the whole industry. It highlights the need for greater transparency and accountability, and for a regulatory framework that actually protects consumers.      

“Silence hurts consumers the most,” Przelozny said. “It is imperative we look at practical steps to ensure we are able to responsibly communicate with investors in Singapore as a licensed and regulated exchange. This will prevent investors from being exposed to and trading with unlicensed entities, and avoid a potential repeat of the recent FTX events.”

Singapore in January introduced guidelines that prohibited market players from marketing or advertising their services in public areas, such as through ads on websites, social media, and public transport. Promotional banners or pop-up ads, for instance, cannot be used to promote digital payment token or cryptocurrency services. 

Independent Reserve said the marketing ban exposed consumers to crypto scams and unregulated exchanges because potential investors would turn to search engines, forums, and social media as alternative resources. 

Allowing regulated market players to directly engage local consumers will drive awareness of safer options for investors genuinely interested in cryptocurrency, it added.

The fintech firm said it saw its month-on-month customer accounts grow more than double, as FTX users in Singapore scurried to find safer crypto depositories. This indicated continued interest and investment, in spite of the currency’s volatility and current state of the market.

‘No protection’ for cryptocurrency customers

Meanwhile, Monetary Authority of Singapore (MAS) on Monday released another statement regarding the FTX collapse, stressing it was not impossible to protect local users amidst the debacle–for example, through asset ringfencing–since the crypto exchange was not licensed in the country and had operated overseas.

The industry regulator also addressed suggestions it should have put FTX on the Investor Alert List, like it did for another crypto exchange Binance. 

MAS said: “While both 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 also offered listings in Singapore dollars and accepted Singapore-specific payment modes, such as PayNow, said the regulator. It noted that it received several complaints were filed against Binance between January and August last year and other jurisdictions, including Japan, the UK, and Thailand had cited Binance over unlicensed solicitation of  customers. 

MAS said there was no evidence FTX had solicited Singapore users and trades on the crypto exchange could not be transacted in Singapore dollars, although its services still could be accessed online by local users. 

Binance had implemented measures to comply with MAS’ instructions to stop soliciting Singapore users, including removing its mobile app from local app stores and geo-blocking local IP addresses. 

It also was not possible to provide information and list all offshore crypto exchanges, such as FTX, on the country’s Investor Alert List, MAS said. It added that the list served to warn the public of entities that might be wrongly presumed to be regulated by MAS.  

The FTX collapse served as another reminder that dealing in cryptocurrencies, on any platform, was “hazardous”, the Singapore regulator said. 

“Crypto exchanges can and do fail. Even if a crypto exchange is licensed in Singapore, it would be currently only regulated to address money-laundering risks, not to protect investors,” MAS said, adding that this framework currently is adopted by most global jurisdictions. 

“Even if a crypto exchange is well-managed, cryptocurrencies themselves are highly volatile and many of them have lost all value,” it said. “The ongoing turmoil in the crypto industry serves as a reminder of the huge risks of dealing in cryptocurrencies. There is no protection for customers who deal in cryptocurrencies. They can lose all their money.”

RELATED COVERAGE