Singapore Regulator Explains Action Against Binance vs FTX — Warns Even Licensed Crypto Exchanges Can Fail

The Monetary Authority of Singapore (MAS), the regulator overseeing the crypto sector, has defended the action it took against crypto exchange Binance and not the folded crypto platform FTX. The financial institution jointly warned that cryptocurrencies are “highly volatile and lots of them have lost all worth.”

Singapore’s Central Bank Clarifies Its Stance on Binance and FTX

The Monetary Authority of Singapore (MAS), the country’s Central Bank, issued a promulgation in the week “to address some queries and misconceptions that have arisen within the wake of the FTX.com (FTX) debacle.”

The Central Bank explained: “A first misconception it was possible to protect local users who restricted FTX … MAS cannot try this as FTX isn’t authorized by MAS and operates offshore.”

The MAS proceeded to justify the action it took against Binance and not FTX. The former was placed on the central bank’s capitalist Alert List (IAL) whereas the latter wasn’t. The regulator clarified:

While Both Binance and FTX aren’t licensed here, there’s a transparent distinction between the two: Binance was actively soliciting users in Singapore whereas FTX wasn’t.

The MAS ordered Binance to stop providing payment services to Singapore residents in Sep last year. Many months later, the crypto exchange closed up its exchange services within the city-state.

“Binance in fact visited the extent of providing listings in Singapore greenbacks and accepted Singapore-specific payment modes like Paynow and Paylah,” the Central Bank stressed, adding that it received many complaints concerning Binance between January and August 2021. The MAS detailed:

MAS placed Binance on the IAL as a result of it having invited Singapore users while not having a license. Further, on MAS’ referral, the Commercial Affairs Department commenced investigation into Binance for attainable resistance to the Payment Services Act (PS Act). There was no reason to position FTX on the IAL as there was no proof that it had contravened the notation Act.

Commenting on FTX specifically, the regulator noted: “There was no proof that it had been soliciting Singapore users specifically. Trades on FTX conjointly couldn’t be transacted in Singapore greenbacks. However, as within the case of thousands of alternative monetary and crypto entities that operate overseas, Singapore users were ready to access FTX services on-line.”

A recent study indicated that once Binance closed up services in Singapore, its users switched to FTX. After that, a lot more users from Singapore were using the FTX.com web site before the exchange collapsed than from other countries, except South Korea.

Singapore’s Central Bank Warns About the Risks of Investing in Crypto

Noting that “The most significant lesson from the FTX debacle is that dealing in any cryptocurrency, on any platform, is hazardous” and investors “can lose all their cash,” the MAS warned:

Crypto exchanges will and do fail. Even though a crypto exchange is licensed in Singapore, it’d be presently solely regulated to deal with money-laundering risks, to not defend investors.

Furthermore, the MAS emphasized: “Cryptocurrencies themselves are extremely volatile and lots of them have lost all their worth … The continued turmoil within the crypto trade is a reminder of the massive risks of dealing in cryptocurrencies.”

Following the meltdown of FTX, Singapore government’s Temasek wrote down its $275 million investment within the crypto company. Singapore has been making an attempt to scale back risks for retail crypto investors with restrictive rules.