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Singapore's Financial Regulator Defends Itself After FTX Blowup

Walter Bibikow

“FTX is not the first cryptocurrency platform to collapse, nor will it be the last,” said Singapore’s Deputy Prime Minister Lawrence Wong while answering lawmakers' questions about the crypto giant’s rapid failure in early November.

The country's parliament put financial regulators and the Ministry of Finance in the hot seat on Wednesday with a series of questions about crypto regulation and the potential impact of FTX’s demise on the broader economy.

Since the collapse, the Monetary Authority of Singapore (MAS), which was one of the first in the world to set up a rigorous regulatory regime for crypto companies, has had to answer tough questions about its treatment of crypto entities – particularly why the regulator had placed FTX’s rival Binance on an investor alert list (IAL) but had allowed state fund Temasek to invest in the former.

Wong, who is also deputy chairman of the country’s central bank, reiterated that the IAL targets crypto companies that solicit Singapore customers without a requisite license.


“This does not mean that all entities which are not listed on the IAL are safe to deal with. MAS cannot possibly provide an exhaustive list of all the unsafe or unlicensed entities that exist in the world,” Wong said, answering questions on behalf of the MAS.

Singapore made up 6% of FTX’s global customer distribution, according to a chart shown during FTX’s bankruptcy hearing. Wong said on Wednesday that the MAS does not have data on the “number of retail users of FTX.”

Read more: There Was No Cause to Add FTX to Investor Alert List Before Collapse, Singapore's MAS Says

Wong also addressed the investment of Singapore’s state-owned investment fund Temasek into FTX, saying that it had caused not just financial loss but also reputational damage. Days after Sam Bankman-Fried’s crypto enterprise filed for bankruptcy protection in the U.S., Temasek announced it had written off its entire FTX investment of $275 million, which it said was made after conducting eight months of due diligence. Wong said that Temasek had initiated an internal review by an independent team to study and improve its processes, and to draw lessons for the future.

He pushed back on calls for more guidelines and safeguards over Temasek investments, saying that there was “no need for additional audit requirements or Parliamentary Committees,” and that the boards should be insulated from political pressure.

Wong also defended the standards already in place.

“The occurrence of investment losses does not in itself imply that the governance system is not working. Rather, this is the nature of investment and risk-taking,” Wong said.

He added that Singapore’s investment entities must take lessons from success and failure and “continue to take well-judged risks in order to achieve good overall returns in the long term.”

Wong assured that spillovers from the FTX collapse will be “very limited” for Singapore’s broader financial system and economy. MAS’ surveillance shows that key financial institutions in Singapore have insignificant exposures to cryptocurrency and crypto players.

“The collapse of FTX and other major cryptocurrency platforms should bring about much-needed rationalization in the cryptocurrency space. The repercussions on the cryptocurrency ecosystem globally are still unfolding, and we are watching this,” Wong said.

The MAS plans to introduce basic investor protection measures, he added. The proposals laid out in a consultation paper published Oct 26., include having service providers administer risk awareness tests, segregate customers’ assets from their own assets and refrain from operating a trading platform while taking proprietary positions for their own accounts.

Read more: Singapore Banks' Exposure to Bitcoin 'Insignificant' but Subject to Highest Risk Weight