Singapore Proposes Regulatory Boost for Decentralized Exchanges

The city-state of Singapore’s de facto central bank, The MAS (Monetary Authority of Singapore) is suggesting modifications to existing regulations that would facilitate market entry for decentralized exchanges based on the blockchain.

In a consultation paper published on Tuesday, MAS asserts that the current single-tier “recognized market operators” (RMO) regulatory body is not able to meet the demand for new business models based on such developing technologies.

To address the concern, the authority offers to introduce a three-tier body in an attempt to expedite market access for small-scale digital assets exchange platforms.

“MAS has noted the development of new business models in trading platforms, as well as trading facilities that make utilizes the blockchain technology, or platforms that provide peer-to-peer trading without the engagement of third parties,” the MAS writes in the statement, continuing:

“As the prevailing RMO regime has been in play since 2002, it is timely to analyze to the regulatory body for market operators to make sure that it remains to meet the demands of the dynamic landscape.”

In particular, ier 3 of the suggested structure applies to market operators that are relatively smaller than more prominent exchanges and is intended to enable them to incorporate the blockchain and peer-to-peer technology and offer services in a regulated environment.

“This new tier is created to promote new entrants that generate solutions for market operators or wholesale market shareholders that have gotten to the end of their sandbox tenure and are viable commercially, but whose companies are not able to meet the conditions of the current RMO regime,” explained the MAS.

Right now, the authority controls the cryptocurrency exchange market under two divisions: the recognized market operators (RMOs) and approved exchanges (AE).

The latter pertains to “systemically-important” trading platforms that are accessible to retail traders like the Singapore stock exchange.

On the other hand, the RMO framework provides regulation of other cryptocurrency exchanges such as those concerned with derivatives and commodities trading, which would be classified under the new proposal’s tier 2, if the project is established.

Affected parties such as financial institutions must now provide MAS with feedback on the proposal before June 22.

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