Singapore Proposes Regulation Amendment for Decentralized Exchanges

Singapore Proposes Regulatory Boost for Blockchain-based and Decentralized Exchanges

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  • Monetary Authority of Singapore (MAS) proposes the introduction of a three-tier regulatory framework structure.
  • This will make market entry for small-scale decentralized exchanges easier.

Singapore: Singapore has taken another step towards embracing the blockchain technology. The latest step is that the Monetary Authority of Singapore (MAS), the city-state’s de facto central bank, proposes changes to present regulations so as to make the market entry for blockchain-based and decentralized exchanges easy.

MAS stated in a consultation paper published yesterday 22nd May that the current single-tier “recognized market operators” (RMO) regulatory framework is not capable of meeting the demand for new business models based on blockchain technology. To solve the issue, MAS is proposing to introduce a three-tier structure in a bid to make market entry for small-scale decentralized exchanges easier.

According to the paper:

“MAS has observed the emergence of new business models in trading platforms, including trading facilities that make use of blockchain technology, or platforms that allow peer-to-peer trading without the involvement of intermediaries.”

MAS added:

“As the current RMO regime has been in place since 2002, it is timely to review to the regulatory framework for market operators to ensure that it continues to meet the demands of the changing landscape.”

Particularly, a three-tier structure applies to decentralized exchanged and market operators that are much smaller than well-known exchanges and the tier 3 of the proposed framework is planned to allow them to make use of the blockchain and P2P technology and carry out their services in a supervised environment.

MAS explained:

“This new tier is designed to facilitate new entrants that develop solutions for wholesale market participants, or market operators that have reached the end of their sandbox tenure and are commercially viable, but whose businesses are not able to meet the requirements of the existing RMO regime.”

Presently, MAS supervises the exchange market under two groups, which are the approved exchanges (AE) and the recognized market operators (RMOs). AE applies to “systemically-important” platforms that are made available to retail investors like Singapore’s stock exchange. The RMO enables regulation of other exchanges like those for commodities and derivatives trading, which would be grouped under the new Tier 2 proposal, should the proposal be enacted.

Financial institutions and other interested parties now have until 22nd June to provide the authority with feedbacks on the proposal.

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