Singapore’s central bank calls blockchain ‘fundamental’ tech to change financial services
There were 57 blockchain projects in Singapore which raised a total of US$574.8 million through initial coin offering activities in the second quarter of this year
Singapore’s central bank is counting on blockchain, along with artificial intelligence, to serve as “fundamental” technologies that will help transform financial services, according to a senior official.
Deep changes are expected from the adoption of those two technologies, according to Damien Pang, who heads the technology infrastructure office at the Monetary Authority of Singapore (MAS), in his speech on Wednesday at an annual blockchain and cryptocurrency forum hosted by industry publication CoinDesk in the city state for the first time.
“We take an approach where our regulations aim at the purpose rather than the technology platform itself,” Pang said on stage at the event called Consensus: Singapore. “We aim not to directly regulate a specific technology itself, because technologies are always getting better.”
Singapore’s blockchain-friendly environment looked to bolster its own transformation into the world’s top cryptocurrency haven, following the crackdown in China on the trading of digital currencies and crowdsourced fundraising called initial coin offerings (ICOs) that use cryptocurrencies.
Chinese start-ups imToken, which developed one of the first cryptocurrency wallet apps to support the ethereum blockchain; Bitmain, operator of the world’s largest bitcoin mining collective; and Huobi Group, which runs the world’s third biggest cryptocurrency exchange by daily trading volume, have each set up regional headquarters in Singapore amid the crackdown on digital currencies and ICOs by Beijing.
While the Chinese government is looking to adopt blockchain in areas from record management to cybersecurity, Beijing has made it clear it does not want retail investors to get involved with cryptocurrency exchanges and ICO schemes because of concerns these activities would cause financial instability.
Blockchain, the distributed ledger technology behind cryptocurrencies like bitcoin and ethereum, was designed to provide greater transparency to its users. The technology enables the creation of an online database network in which multiple participants share and store records of transactions in a secure and efficient manner, according to a white paper commissioned by the Hong Kong Monetary Authority. Such an online network makes a full audit trail of transaction history constantly available for examination.
There were 57 blockchain projects in Singapore which raised a total of US$574.8 million through ICOs in the second quarter of this year, according to data compiled by research firm ICORating. By comparison, 14 blockchain projects in Hong Kong raised a total of US$47.6 million in the same period.
Pang reiterated that the MAS, based on guidelines published in November last year, breaks down digital assets into three groups: utility tokens, payment tokens and securities. The MAS has no plans to regulate utility tokens, which allow users to access a company’s product or service, but will enact a payment service law for payment tokens by the end of this year, according to Pang. He said the MAS has not approved any security tokens.
Singapore’s central bank recently joined forces with the city state’s stock exchange and three technology partners to develop a system for the settlement of digital tokens across different blockchain platforms. That forms part of the authority’s initiative, called Project Ubin, which makes use of blockchain technology for the clearing and settlement of payments and securities.
Despite the crackdown in China, the world’s second largest economy has seen an explosion of companies registered with “blockchain” in their names from January to July 16, almost sixfold the number for the whole of last year.
China is now home to more than 4,000 such firms that identify with blockchain, according to estimates made by the South China Morning Post based on government data gathered by Qixin.com.
In comparison, there are currently a total of 817 companies in the US and 335 in the UK using blockchain in their registered names, according to a search on OpenCorporates.com, which gathers corporate registry data from dozens of countries globally.