Singapore strives to remain relevant amid regulatory tightening for retail investors

Singapore's largest bank, DBS, has announced another move to expand its crypto services while remaining cautious in complying with the financial authorities' view that crypto assets are not suitable for retail investors in the country.

On Friday, the bank disclosed its decision to expand crypto trading services on its digital exchange (DDEx) to approximately 100,000 "wealth clients who are accredited investors." Investors who are considered accredited must meet certain criteria regarding their income, net worth, qualifications and understanding of financial markets.

Caroline Malcolm, head of international public policy and research at Chainalysis, noted:

"Singapore has long indicated that it views most crypto assets as volatile and as a result, not well-suited to retail investors. At the same time though, it continues to indicate its support for DLT-based innovation, such as in the area of asset tokenization." 

Previously, the DDEx was only available to corporate and institutional investors, family offices and DBS Private Bank and Treasures Private Client customers. DBS is also a trust anchor for the pilot Project Guardian in Singapore, a blockchain-based liquidity pool of tokenized bonds and deposits for borrowing and lending transactions.

The move comes after dramatic months for the crypto space in the country that was once ranked as the most crypto-friendly in the world due to its positive legislative environment. In June, the Monetary Authority of Singapore (MAS)’s chief fintech officer, Sopnendu Mohanty, said in an interview that “if somebody has done a bad thing [in the cryptocurrency industry], we are brutal and unrelentingly hard.”

Another chapter in the regulatory tightening came weeks later, as the authority sent detailed questionnaires to some applicants and holders of the MAS’ Digital Payment Token licenses, reportedly seeking “highly granular information” about business activities. The questions included top tokens owned and staked via DeFi protocols and aimed to intensify the spotlight on crypto firms amid upcoming regulations.

The new framework responds to issues with liquidity and withdrawals that have occurred with firms in the country this year. During this crypto winter, Three Arrows Capital (3AC) went bankrupt after failing to meet margin calls in mid-June.

"After recent events, from the Terra-Luna crash, to 3AC, and also the Hodlnaut exchange collapse, I expect we will see more such measures, aimed at further protecting consumers in the crypto asset market, in the future."

The updated regulatory approach does not seem sufficient to keep crypto firms out of the country. RRMine Global, a Filecoin service provider, recently announced that it has shut down business operations in mainland China and is relocating its headquarters to Singapore after Chinese restrictions narrowed operations for Web3 companies.

Next week, Singapore will host Token2049, an industry conference that was held in Hong Kong before the pandemic. The event is expected to receive over 5,000 attendees, according to its organization.