No cause to list FTX on same basis as Binance, operator is neither licensed nor exempt: MAS
While FTX does not operate in Singapore, it is not possible to prevent Singapore users from directly accessing overseas service providers, said the Monetary Authority of Singapore.
SINGAPORE: The Monetary Authority of Singapore (MAS) said on Monday (Nov 14) that it did not have cause to list cryptocurrency exchange operator FTX on the same basis as fellow operator Binance, which it ordered to stop providing payment services to Singapore residents in September.
In a statement, MAS addressed questions as to whether banning Binance and placing it on its investor alert list have led Singapore users to invest through FTX. The list warns consumers that Binance is not regulated or licensed to provide any payment services in Singapore.
Binance was ordered to stop providing payment services to Singapore residents as it may have been doing so without an appropriate licence.
“Binance was not banned from operating in Singapore,” it said. “Binance did not have the requisite licence to solicit customers from Singapore and had to cease doing so.”
The authority said it includes entities that may be wrongly perceived as being regulated by it on the Investor Alert List.
However, it added that it "would not be meaningful to list all unlicensed entities there".
It noted that while FTX does not operate in Singapore, it is not possible to prevent Singapore users from directly accessing overseas service providers. The website could therefore onboard such users.
It also said that FTX is neither licensed nor exempted from licensing here. The company started bankruptcy proceedings in the United States last week, with founder and chief executive officer Sam Bankman-Fried also resigning.
Last week, traders rushed to withdraw US$6 billion from the platform in just 72 hours. Binance, which had been in talks with FTX, also backed down from its proposed rescue deal.
“MAS has consistently reminded the public of the risks of dealing with unlicensed entities,” it said.
Questions have also been raised as to why FTX's Singapore users have not migrated to its Singapore subsidiary Quoine, which operates the liquid exchange here.
In its statement, MAS said Quoine is currently exempt from licensing while its license application is under review.
“MAS is carefully reviewing the application, taking into account recent developments,” it said. “The funds of Singapore investors in FTX.com are not parked under Quoine as FTX.com and Quoine operate as separate legal entities.”
It added that Singapore users have the choice to deal with either website, and that it has not required FTX to migrate its Singapore users to Quoine.
Digital payment token service providers licensed by MAS are regulated for money laundering and terrorism financing risks, as well as technology risks. However, they are not regulated for 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,” MAS said. “This is similar to the approach taken in most jurisdictions.”