13 As another example, the MAS recently issued a consultation paper on changes to our Recognised Market Operator (or “RMO”) regime. Under the current approach, Singapore-based market operators must be Approved Exchanges if they are systemically important, or else regulated as RMOs. But new forms of market places have emerged – such as trading facilities that make use of blockchain technology or peer-to-peer platforms without intermediaries. Our regulatory framework will need to be flexible to accommodate innovative business models by market operators with rules that are commensurate with the risks including factors such as retail access and scale of business. 2/4  BIS central bankers' speeches  14 There have been some queries on our regulatory stance towards crypto-currencies, or more generally, digital tokens and ICOs (initial coin offerings). We have issued a public advisory to caution those who “invest” in crypto-tokens to do so with caution and to understand their characteristics including being volatile and non-legal tender. 15 MAS has also issued a guide on digital token offerings last year to explain that our regulatory treatment depends on the digital tokens’ inherent characteristics. For utility tokens, which are for restricted usage within a defined set of products or services, these are not subject to MAS regulations. On the other hand, for payment tokens which are designed to be an alternate form of a medium of exchange, the intermediaries processing these tokens will come into our regulatory ambit under the proposed Payment Services Bill.

But this 1/4  BIS central bankers' speeches  time, technology and its use has permeated into our lives through the ubiquity of smart devices. This coupled with advances in “AIDA”, or Artificial Intelligence and Data Analytics, mean that new technology can transform or create new business models in ways unseen previously. The rise of social networks and the digital ecosystems, enabled by BigTech and FinTech players, have spurred new business collaborations including with conventional financial institutions that cut across economic sectors. Advancements in distributed ledger technology (blockchain) have also opened up new possibilities to disrupt existing market infrastructure. 8 Already, FinTech developments have revolutionised the way financial services can be delivered. Some examples in capital markets include: (a) In fund and wealth management, the rise of robo-advisory services and AI-driven investment management; (b) In equity research, the use of AI to generate analyst reports; and (c) In primary and secondary markets, blockchain-based platforms that can substitute for central trusted parties by providing an alternate reliable protocol for fund-raising, trade execution, settlement and custody. Regulatory Stance to Innovation 9  Let me broadly share MAS’ stance towards innovation in financial services. 10 Financial institutions have always been at the forefront of innovative use of technology. To the extent that new developments in technology and business models bring benefits to the broader economy, allow improvements in business management, and give customers better choices or services, these are to be encouraged and even supported.