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Singapore Deputy PM Says No Strong Case To Ban Cryptocurrency Trading

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Singapore's central bank has been closely studying cryptocurrencies and the potential risks posed by them, and currently, there is no strong case to ban their trading, the city-state's Deputy Prime Minister Tharman Shanmugaratnam said.

"Cryptocurrencies are an experiment. The number and different forms of cryptocurrencies is growing internationally," Shanmugaratnam, who is the minister in charge of the de facto central bank Monetary Authority of Singapore, said in a written reply to questions from parliamentarians.

"It is too early to say if they will succeed. If some do succeed, their full implications will also not be known for some time."

The minister said MAS will be imposing anti-money laundering and countering the financing of terrorism, or AML/CFT, requirements on the intermediaries that buy, sell or exchange virtual currencies.

The AML/CFT regulatory framework for virtual currency intermediaries were set out last year.

"As of now, there is no strong case to ban cryptocurrency trading here," Shanmugaratnam said.

"We will keep highlighting to Singaporeans that they could lose their shirts when they invest money in cryptocurrencies," he added.

The nature and scale of cryptocurrency trading in Singapore does not pose risks to the safety and integrity of the city-state's financial system, for now, the minister said.

Compared to the US, Japan, and South Korea, cryptocurrency trading volumes in Singapore are not high. And connections between cryptocurrency trading and Singapore's financial system are also not significant at present, the minister noted.

Further, the domestic banks do not have any significant exposure to cryptocurrency dealing, Shanmugaratnam said. "We hence do not have broader, systemic risk concerns with regard to cryptocurrencies."

Meanwhile, cryptocurrencies' underlying technology, blockchains or distributed ledgers, may prove to have potentially useful applications in facilitating payments and trade settlements, the minister noted.

"We will continue to encourage experiments in the blockchain space that may involve the use of cryptocurrencies, because some of these innovations could turn out to be economically or socially useful," he said. "But equally, we will stay alert to new risks."

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