It is often referred to as the distributed ledger’s native currency, used as a medium of exchange and store of value within the network, for example to pay transaction fees or incentivise users to keep the network secure. But cryptocurrencies have taken a life of their own outside of the distributed ledger – and this is the source of the crypto world’s problems. Cryptocurrencies are actively traded and heavily speculated upon, with prices that have nothing to do with any underlying economic value related to their use on the distributed ledger. The extreme price volatility of cryptocurrencies rules them out as a viable form of money or investment asset. This speculation in cryptocurrencies is what MAS strongly discourages and seeks to restrict. Let me now elaborate on Singapore’s strategy to develop a digital asset ecosystem as well as our regulatory approach to manage the risks of digital assets. SINGAPORE’S STRATEGY TO DEVELOP A DIGITAL ASSET ECOSYSTEM Our vision is to build an innovative and responsible digital asset ecosystem in Singapore. This is a core part of MAS’ overall FinTech agenda. As with everything else we do in FinTech, innovation through industry collaboration is key to growing the digital asset ecosystem. Crypto technologies are promising and there is great potential to improve financial services – this is a common goal shared by MAS, the financial industry, and the FinTech community. But the only way to find out what works is through experimentation and exploration – “learning by doing”.
MAS does not see a compelling case for retail CBDCs in Singapore. Retail CBDCs are issued to the general public. They are like the cash we carry with us, except in digital form. The case for a retail CBDC in Singapore is not compelling for now, given wellfunctioning payment systems and broad financial inclusion. Retail electronic payment systems are fast, efficient, and at zero cost, while a residual amount of cash remains in circulation and is unlikely to disappear. Nevertheless, MAS is building the technology infrastructure that would permit issuance of retail CBDCs should conditions change. MAS has been actively experimenting with digital currency connectivity since 2016. On the international front, MAS is participating in Project Dunbar, which the Bank for International Settlements Innovation Hub is working on in its Singapore Centre. The project is exploring a common multi-CBDC platform to enable cheaper, faster and safer cross-border payments. Domestically, MAS is working with the industry on Project Orchid to develop the infrastructure and technical competencies necessary to issue a digital Singapore dollar should there be a need to do so in future. ANCHOR PLAYERS WITH STRONG VALUE PROPOSITIONS AND RISK MANAGEMENT MAS seeks to anchor in Singapore crypto players who can value add to our digital asset ecosystem and have strong risk management capabilities. A vibrant digital asset ecosystem will encompass a wide range of value-adding activities. Let me cite three examples. JP Morgan has established its digital asset capabilities in Singapore via its Onyx division, which has pioneered several DLT-based products and initiatives.