Singapore Elects Crypto-Skeptical Ex-Central Bank Chief as President..."Crypto is Slightly Crazy"

While he advocated for keeping it an unregulated market, he suggested that authorities should offer clear information about the associated risks, emphasizing that attempting to regulate crypto or other similar products would be a never-ending challenge.

Nevertheless, the situation for banks and stablecoins was different. In November 2022, Shanmugaratnam revealed that Singaporean banks were required to maintain $125 in capital for every $100 of exposure to cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH).

He pointed out that although the banks had minimal exposure to crypto, constituting less than 0.05% of total risk-weighted assets, they were subject to stringent risk management standards set by international bodies. Additionally, he noted that the regulatory treatment for less risky crypto assets, such as tokenized corporate bonds, was akin to traditional non-tokenized assets.

In 2021, Shanmugaratnam hinted at the potential role of crypto in future finance beyond speculation and illicit activities, envisioning a scenario where regulated stablecoins could play a useful role in traditional payment systems.

By August 2022, he announced that the MAS was actively reassessing its approach to regulating stablecoins, considering the implementation of reserve requirements for stablecoin issuers, partly influenced by the previous collapse of terraUSD (UST), a stablecoin that lost its peg to the U.S. dollar in May of that year.

The MAS subsequently released a regulatory framework for stablecoins in the following month.