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SG is World’s Most Crypto ‘Business-Friendly’ But Banks’ Bitcoin Exposure ‘Insignificant’

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Singapore has been crowned as the “world’s most ‘business-friendly’ crypto country” at a time when the Little Red Dot is taking a more reserved approach to crypto.

In a report by Coincub, Singapore was ranked above the UK, the Cayman Islands, Hong Kong and the USA in the “business friendly” crypto rankings.

“The ambitious island nation scores highly on the proportional number of crypto firms, the overall number of crypto firms, fundraising ($374 million), and venture capital presence,” Coincub states.

A recent Coincub Q3 2022 Crypto Country ranking had listed Singapore fifth, slipping from third place in the quarter before.

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Coincub explained the discrepancy by stating “the Coincub bi-monthly crypto report is different from the company’s widely acknowledged quarterly ‘country rankings’ that take a wider, socio-economic perspective of the growth of crypto and blockchain across the world.”

Crypto Not-So-Friendly

Singapore might be crypto business friendly but its official stance is far more reserved. On Monday, Senior Minister and Minister in charge of the Monetary Authority of Singapore Tharman Shanmugaratnam said Singapore banks are to limit their exposure to cryptocurrencies.

Banks in Singapore will be required to hold S$125 of capital against an exposure of S$100 to risky cryptocurrencies.

“Pending the finalization of the framework, MAS requires Singapore-incorporated banks to apply a 1250% risk weight for exposures to riskier crypto assets such as Bitcoin and Ether,” Shanmugaratnam said.

“Based on MAS’ minimum total capital adequacy requirement of 10% for systemically important banks incorporated in Singapore, this means that Singapore-incorporated banks are required to hold S$125 of capital against an exposure of S$100 to a crypto asset like Bitcoin.”

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“For less risky crypto assets, such as tokenized corporate bonds that meet a set of conditions to ensure that they pose the same level of financial risks as traditional corporate bonds, the prudential treatment is similar to that applied to the traditional non-tokenized asset,” Shanmugaratnam said.

The mixed messaging is a narrative we’re becoming used to. Whilst Singapore wants to embrace innovation, the recent fallout with FTX, 3AC and LUNA has cornered authorities to take a more cautious approach to the industry. As MAS MD Ravi Menon said in August, Singapore’s stance is “yes to digital asset innovation, no to cryptocurrency speculation.”

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