Singapore authorities weigh the implications of the FTX collapse for the economy

On 30 November, hearings were held in Singapore’s Parliament on the potential impact of the FTX collapse on the economy. The transcript of the proceedings опубликована on the MAS website.

Speaking on behalf of the regulator, Deputy Prime Minister, Finance Minister and MAS Deputy Chairman Lawrence Wong noted that authorities support innovation in digital assets, seeing potential for cross-border payments and trade.

“Cryptocurrencies are a separate matter. They are purely speculative as an investment asset and have no intrinsic value,” noted Wong.

According to him, Singapore accounted for 6% of FTX’s total client base. MAS does not have exact information on the number of affected. He described the fallout for Singapore’s financial system and economy as “very limited.”

The deputy prime minister noted that the authorities plan to strengthen investor-protection measures. On 26 October the regulator presented two advisory documents, aimed at reducing potential consumer harm from cryptocurrency volatility.

“Even with these proposed measures, MAS will not be able to prevent disruptions of DPT or losses to customers. Crypto platforms can fail due to fraud, unsustainable business models or excessive risk. FTX is not the first […], and not the last,” Wong emphasized.

He also reminded about the Investor Alert List (IAL), where Binance was added in September . Earlier, MAS explained that the latter offered listings in Singapore dollars and implemented local payment methods. There were no grounds to add FTX to the IAL.

“This does not mean that it is safe to deal with all entities not listed. MAS cannot provide an exhaustive list of all unsafe or unlicensed entities existing in the world,” the deputy prime minister added.

Wong also touched on Temasek Holdings’ investments in FTX and the exchange’s American subsidiary. On 17 November the Singaporean holding wrote down its investments, valuing losses at $275 million.

“For our investment institutions, the government sets a limit on permissible risk; it monitors appropriate diversification by asset class, sector and geographic region; […]. Accordingly, the government does not set a list of exceptions for particular assets […] and places responsibility for developing investment strategies on boards and management teams,” the official explained.

According to him, the FTX incident inflicted Temasek with not only financial but also reputational damage. Wong recalled the holding’s internal review “to study and improve its processes.”

“The occurrence of investment losses in itself does not mean that the governance system is not functioning. Rather, that is the nature of investing and taking risks,” Wong concluded.

As US Representative Tom Emmer described the FTX crisis as a regulatory failure of the crypto industry.

According to media reports, American authorities have begun investigations into the Bitcoin exchange. It later emerged that the Texas State Securities Board sent a notice to Sam Bankman-Fried about his participation in hearings on 2 February 2023.

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