Singaporeans' Exposure to Recent Collapse TerraUSD Stablecoin and Luna Tokens
Prime Minister's OfficeSpeakers
Summary
This question concerns Singaporeans' exposure to the TerraUSD and Luna collapse and the Monetary Authority of Singapore's (MAS) regulatory review of crypto assets. Mr Saktiandi Supaat inquired about systemic economic risks and data regarding local cryptocurrency holdings following these high-profile failures. Senior Minister Tharman Shanmugaratnam stated that while public data is unavailable, Singapore's banks have insignificant exposure and mainstream economic spillovers remain limited. He noted that MAS is reviewing its approach to stablecoins, which are currently regulated for money laundering and technology risks under the Payment Services Act. MAS is assessing a tailored regime for reserve requirements and peg stability, with a public consultation planned for the coming months.
Transcript
1 Mr Saktiandi Supaat asked the Prime Minister (a) whether there is data on the extent of Singaporeans' exposure to the recent collapse in value of the TerraUSD (UST) stablecoin and the Luna token; (b) whether there are further systemic risks to the economy arising out of fundraising efforts to shore up the UST through the Luna Foundation Guard; and (c) what is the status of the MAS' review and consideration of its overarching regulatory approach towards crypto assets, including stablecoins.
Mr Tharman Shanmugaratnam (for the Prime Minister): The recent chain of high profile failures in the cryptocurrency markets, starting from the collapse of the TerraUSD (UST) and Luna tokens, illustrates the high risks involved in investments in cryptocurrencies that the Monetary Authority of Singapore (MAS) has warned the public about repeatedly.
Despite this turmoil, spillovers to the mainstream financial system and the economy remain limited at this point. While data on cryptocurrency holdings among the Singapore public are not available, statistics collected by MAS show that banks in Singapore have insignificant exposures to the cryptocurrency ecosystem.
Alongside other regulators globally, MAS is actively reviewing its approach to the regulation of stablecoins. Currently, stablecoins, together with other cryptocurrencies such as Bitcoin, are considered digital payment tokens (DPTs) under the Payment Services Act. The regulatory regime for DPT services under the Act primarily targets money laundering, terrorism financing and technology risks. Hence, services relating to DPTs that pose such risks, including dealing and facilitation of exchange, are subject to regulation1. MAS is assessing the merits of a regulatory regime tailored to the specific characteristics and risks of stablecoins, such as regulating the reserve requirements and the stability of the peg, and will consult the public in the coming months.