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Singapore wants to be crypto hub, not just speculate on cryptocurrency trading

According to Ravi Menon, managing director of Singapore’s central bank, the Monetary, the country aspires to be a hub for digital assets but not for speculating on cryptocurrencies. Menon said in his opening speech at the Singapore Fintech Festival 2022 on Thursday, “If a crypto hub is about experimenting with programmable money, applying digital assets for use cases, or tokenizing financial assets to increase efficiency and reduce risk in financial transactions, yes, we want to be a crypto hub.”

The process of tokenizing a financial asset entails transferring ownership rights into electronic tokens. Government vouchers are being tested using Singapore’s first live digital money trial by DBS Bank, which gives businesses the ability to plan and manage their own distribution and use.

Although it has been cracking down on the business after many retail investors lost their entire life savings to cryptocurrency trading, Singapore has plans to become a worldwide hub for cryptocurrencies. Due to its volatile and speculative character, the city-state has frequently cautioned that cryptocurrency trading is “extremely dangerous and not fit for the general public.” In January 2021, it even outlawed cryptocurrency advertising in public spaces and on social media. More recently, in response to Terra’s Luna’s $60 billion collapse, it suggested new regulations to safeguard ordinary investors.

However, Singapore has publicly expressed its support for blockchain technology and has started a number of projects. Among them is Project Ubin, which completed its blockchain experiment successfully for the clearing and settlement of securities and payments.

Another is Project Guardian, which just finished its first industry trial and includes DBS Bank, JPMorgan, and SBI Digital Assets Holdings in tokenized foreign exchange and government bond transactions. “The first pilot of Project Guardian has shown the potential for lowering risks in trading,” stated Menon.

These programmes “strive to minimise efficient issuance and servicing costs, promote transparency and accessibility, and increase efficiency in the product value chains. According to Menon, “Project Guardian can assist pave the way for Singapore’s financial markets to move to the next stage of development.

Two additional industry pilots will be conducted by MAS; the first will be led by Standard Chartered Bank and explore the possibility of issuing tokens tied to trade finance assets, and the second will involve HSBC, UOB, and Marketnode and enable the native digital issuance of wealth management products.

The MAS will launch Project Ubin+, a global initiative on the cross-border exchange and settlement of foreign currency transactions using wholesale central bank digital currencies, Menon also stated in his speech. DBS Bank, JPMorgan, and Temasek’s Partior, a blockchain-based payments clearing and settlement network, is being developed on the back of Project Ubin, which was first launched in 2016.