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Explainer: What is the MAS’ Investor Alert List and are crypto sites not on it considered

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SINGAPORE — The Investor Alert List published by the Monetary Authority of Singapore (MAS) should not be seen as the “go-to” reference for users here, cryptocurrency experts cautioned, agreeing with the regulator’s view that it would not be feasible to expand the list exhaustively or meaningfully.

In a statement on Monday (Nov 21) after the collapse of cryptocurrency trading platform FTX, MAS addressed why the platform was not put on the Investor Alert List while its rival Binance was. 

This was because the regulator had received feedback that Binance was soliciting users here, which is against regulations, whereas there were no grounds for MAS to put FTX on the list.

The statement was the second one by MAS on the matter, elaborating on a statement a week earlier that noted: “Questions have been raised as to whether ‘banning’ Binance and placing it on the Investor Alert List have led Singapore users to invest through FTX.com.”

It clarified: “Binance was not banned from operating in Singapore. Binance did not have the requisite licence to solicit customers from Singapore and had to cease doing so.”

If there are entities wrongly perceived as regulated by MAS when they are not, the authority would put such entities on the Investor Alert List. Such was the case for Binance.com, it added.

TODAY spoke to cryptocurrency experts to find out what it means when a crypto platform or exchange is placed on the Investor Alert List or included in the Financial Institutions Directory of MAS, and how end-users should be using the list or directory if they are checking these before dabbling in cryptocurrency.

WHAT IS THE INVESTOR ALERT LIST?

The Investor Alert List was launched in July 2004 and contains a list of unregulated persons who, based on information received by MAS, may have been wrongly perceived as being licensed or regulated by MAS.

These are based on what MAS knows or gathers from feedback.

“In publishing the Investor Alert List, MAS does not conclude that the person has contravened the law,” it said in a statement when first launching the list.

“Our aim is to provide early warning to consumers by highlighting to them that if they choose to deal with an unregulated person, they do not have all the protection under laws administered by MAS.”

As of Tuesday, there were 755 listings on the Investor Alert List.

WHY IS ALERT LIST NOT A SAFETY CATCH-ALL? 

MAS said on Tuesday that it was “not possible” to list all of the entities or persons wrongly perceived as being regulated and no regulator in the world has done so — which was also what experts who spoke to TODAY said.

For example, Blockchain Association Singapore’s co-chairman Chia Hock Lai noted that the list now includes a broad range of entities that include casino websites as well. 

Therefore, it is “not feasible” and “impossible to list or monitor all” activities and trading platforms. Mr Chia said. 

MAS also cautioned on Tuesday: “It does not mean that the thousands of other entities operating offshore, which are not listed on the Investor Alert List, are safe to deal with.”

Giving his view on the matter, crypto expert Anson Zeall said: “I don’t think you should treat the Investor Alert List as the go-to list for your investments. You can’t expect MAS to (perpetually) watch out for you, right?”

Mr Zeall, co-founder and chair emeritus of International Digital Asset Exchange Association as well as the Association of Crypto Currency Enterprises and Start-ups Singapore, was speaking to TODAY in his personal capacity.

He also commented that the fall of FTX not only caught retail investors off-guard, but “everyone”.

One of the investors behind the troubled exchange is state investment firm Temasek Holdings.

Business news site Forbes reported that Temasek has a 1 per cent stake in FTX and the value of its investment at its peak last January was US$320 million (around S$440 million).

WHAT ABOUT LISTING POPULAR CRYPTO ACTIVITIES OR PLATFORMS?

Asked whether the list could pre-emptively include prominent names in the crypto field that receive a lot of traction here, experts said that this, too, was not feasible.

Mr Chia said: “It might be challenging to define what is considered a big name; perhaps MAS could work with industry associations on this.”

Mr Lin Ruizi, a lawyer from Shook Lin & Bok who handles crypto disputes, said that listing entities simply because they draw a lot of attention “would dilute the specific purpose of the Investor Alert List”.

“Any sort of middle-ground approach that lists dozens or up to hundreds of names in the cryptocurrency sphere simply does not relate to the stated purpose, especially with the constantly moving nature of that sphere.”

Furthermore, such an approach might “further compound the perception problem” that MAS is implicitly approving all entities not on the list, Mr Lin added.

Mr Zeall said that putting an entry on the Investor Alert List would not necessarily deter users from using that trading platform or entity on the list.

For example, Binance.com is still on the Investor Alert List and a check on a mobile application store found that its app is downloadable here.

MAS said in its statement on Tuesday said that Binance had put in place measures including blocking of Singapore internet provider (IP) addresses and the removal of its app from Singapore app stores as a means to “demonstrate beyond doubt” that it had stopped soliciting and providing services to Singapore users.

“Should Binance decide now to dismantle some of these restrictions, it has to continue to comply with the prohibition against soliciting Singapore users without a licence,” MAS added.

ARE LICENSED CRYPTO ENTITIES ANY SAFER?

The experts said that although the Investor Alert List is a useful tool for users to do their research, it should be used in conjunction with other resources such as the Financial Institutions Directory, which can be found on MAS’ website.

The directory lists all financial entities regulated by Singapore’s central bank.

In June, Deputy Prime Minister Heng Swee Keat announced that MAS was issuing in-principle approvals to three digital payment token service licence applicants. These were on top of 11 of such service providers granted licences or in-principle approvals over the past two years.

Entities that receive the full licence will be listed on the Financial Institutions Directory.

While licensed entities may be safer to deal with, experts warned against mistaking a licence as a stamp of approval or safety.

“They’re definitely safer than the ones without in-principle approvals. But as MAS stated, even licensed ones could fail, especially now that they are only regulated for illicit financing and technology risk,” Mr Chia said.

Agreeing, Mr Zeall said: “A licence is not an endorsement though, is it? I mean, it’s like I have a driver’s licence from the Land Transport Authority, but it doesn’t mean the authority endorses me as a good driver.

“MAS doesn’t endorse anyone, ever.”

In its first statement relating to FTX on Nov 14, MAS said: “Digital payment token service providers licensed by MAS under the Payment Services Act are regulated for money laundering and terrorism financing risks as well as technology risks, but not safety and soundness.

“They are not subject to risk-based capital or liquidity requirements, nor are they required to safeguard customer monies or digital tokens from insolvency risk.”

Adding that this approach is similarly taken in most jurisdictions, the central bank said that this was why it has repeatedly reminded the general public since 2017 of the hazards of dealing in cryptocurrency.

QUESTIONS ABOUT FTX, CRYPTO TO BE ASKED IN PARLIAMENT

With the collapse of FTX, several opposition Members of Parliament (MP) informed TODAY that they would be filing questions relating to the platform and to cryptocurrency in general.

Mr Leong Mun Wai, Progress Singapore Party’s Non-Constituency MP, said that he would be asking if the Government will consider introducing more investment guidelines to the investment mandate of Singapore’s sovereign funds, in view of the recent investment made on cryptocurrency exchanges.

Workers’ Party MPs are also filing more than 10 questions on to the matter and on the guidelines for government-related investment entities’ involvement with cryptocurrency and cryptocurrency exchanges, as well as safeguards for retail investors in general.

On Oct 26, MAS issued a consultation paper proposing regulatory measures to reduce consumer risks from crypto trading. This is set to close on Dec 21.

Earlier in August, the regulator announced that it was considering implementing measures such as customer suitability tests and restricting the use of credit facilities for cryptocurrency trading to further reduce consumer harm caused by volatile cryptocurrency investments.

In the meantime, Mr Zeall said that MAS cannot be expected to “hand-hold” every investor.

The best way forward was public education to ensure users understand the risks they are…



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