MAS Cannot Protect Local Users Who Dealt with the Unlicensed FTX

The Monetary Authority of Singapore (MAS) today issues a statement, addressing some questions and misconceptions that have arisen in the wake of the FTX.com (FTX) debacle.

Fazzaco Hall of Fame 2022 Officially Opens (Click to Nominate)!

A first misconception is that it was possible to protect local users who dealt with FTX, such as by ringfencing their assets or ensuring that FTX backed its assets with reserves. MAS cannot do this as FTX is not licensed by MAS and operates offshore.

A second question is why MAS treated Binance.com (Binance) differently from FTX, specifically why it was placed on the Investor Alert List (IAL) while FTX was not.

"While both Binance and FTX are not licensed here, there is a clear difference between the two: Binance was actively soliciting users in Singapore while FTX was not. Binance in fact went to the extent of offering listings in Singapore dollars and accepted Singapore-specific payment modes such as PayNow and PayLah," the MAS explains.

"With regard to FTX, there was no evidence that it was soliciting Singapore users specifically. Trades on FTX also could not be transacted in Singapore dollars. But as in the case of thousands of other financial and crypto entities that operate overseas, Singapore users were able to access FTX services online."

MAS placed Binance on the IAL because it had solicited Singapore users without a licence. Further, on MAS' referral, the Commercial Affairs Department commenced investigation into Binance for possible contravention of the Payment Services Act (PS Act). There was no reason to place FTX on the IAL as there was no evidence that it had contravened the PS Act.

A third question is whether MAS should exhaustively list on the IAL and provide information on all the offshore crypto exchanges in the world.

"There are hundreds of such exchanges, and thousands of other entities offshore that accept investments in non-crypto assets. It is not possible to list all of them and no regulator in the world has done so," the authority says.