Singapore’s requirements are consistent with international standards, namely those of the Financial Action Task Force (FATF). MANAGE TECHNOLOGY AND CYBER RISKS Another risk that MAS has sought to address early on is technology and cyber related risk. MAS is one of the earliest regulators to impose on digital asset players the same cyber hygiene standards and technology risk management principles that is expected of other financial institutions. But technology and cyber risks are continually evolving, for example, coding bugs in smart contracts and compromise of digital token wallets or their encryption keys. MAS is reviewing measures to manage these and other technology and cyber risks, including further requirements to protect customers’ digital assets and uplift system availability. These steps are in line with what other jurisdictions are considering, including in the EU and Japan. SAFEGUARD AGAINST HARM TO RETAIL INVESTORS MAS has since 2017 been reiterating the risks of trading in cryptocurrencies. Prices of cryptocurrencies are highly volatile, driven largely by speculation rather than any underlying economic fundamentals. It is very risky for the public to put their monies in such cryptocurrencies, as the perceived valuation of these cryptocurrencies could plummet rapidly when sentiments shift. We have seen this happen repeatedly. MAS has issued numerous advisories warning consumers that they could potentially lose all the monies they put into cryptocurrencies. Just take for example Luna, the sister token of the so-called stablecoin TerraUSD. Luna was, at one point, worth over $ but tumbled to zero. MAS has taken early decisive steps to mitigate consumer harm.

We are taking a four-pronged approach to building the digital asset ecosystem. first, explore the potential of distributed ledger technology in promising use cases; second, support the tokenisation of financial and real economy assets; third, enable digital currency connectivity; and fourth, anchor players with strong value propositions and risk management. EXPLORE POTENTIAL OF DISTRIBUTED LEDGER TECHNOLOGY IN PROMISING USE CASES The most promising use cases of digital assets in financial services are in crossborder payment and settlement, trade finance, and pre- and post-trade capital market activities. There are several promising developments, including in Singapore. In cross-border payments and settlements, wholesale settlement networks using distributed ledger technologies such as Partior – a joint venture among DBS, JP Morgan and Temasek – are achieving reductions in settlement time from days to mere minutes. In trade finance, networks like Contour – formed by a group of trade banks – are establishing common ledgers with traceability to automate document verification, enabling faster financing decisions and lower processing cost. In capital markets, Marketnode – a joint venture between SGX and Temasek – is leveraging distributed ledger technology to tokenise assets, which reduces the time needed to clear and settle securities transactions, from days to just minutes. SUPPORT TOKENISATION OF FINANCIAL AND REAL ECONOMY ASSETS The concept of asset tokenisation has transformative potential, not unlike securitisation 50 years ago. Tokenisation enables the monetisation of any tangible or intangible asset. It makes it easier to fractionalise an asset or split up its ownership.