Updated 8:47 AM EST, Fri, Mar 05, 2021

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Singapore's Deputy PM Provides Bitcoin Vote of Confidence Amid China's Blanket Bans

Singapore's Deputy PM Provides Bitcoin Vote of Confidence Amid China's Blanket Bans

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(Photo: "Singapore 2018" (CC BY 2.0) by GillyBerlin )

Singapore's deputy Prime Minister, Tharman Shanmugaratnam, has reiterated the Singaporean government's commitment "not to ban" digital currencies within its future regulatory plans. Mr. Shanmugaratnam admitted that the Monetary Authority of Singapore (MAS) had been "closely studying" developments in the cryptocurrency sector and deduced that, as of now, there is "no strong case to ban cryptocurrency trading" in Singapore.

This was a written response to questions posed by MPs regarding the prospect of banning cryptocurrency in the city-state. It has been a popular topic of conversation within government given that neighbouring nations such as China and Indonesia have taken a hard-line approach to prohibiting digital currency transactions.

(Photo : "Singapore 2018" (CC BY 2.0) by GillyBerlin)

The deputy PM added that cryptocurrency's current use in "making payments [in Singapore] is small" and "trading volumes of cryptocurrencies in Singapore are also not high". Consequently, it does not present a considerable risk to "the safety and integrity of [Singapore's] financial system". These comments remain closely aligned to those made last October by Ravi Menon, Managing Director of the MAS, suggesting that the central bank would not look to regulate digital currencies.

The one difference in this month's statement was that the deputy PM insisted the Singaporean government would continue to "highlight to Singaporeans that they could lose their shirts" when it comes to investing their personal wealth in cryptocurrencies such as Bitcoin and Ethereum. It certainly remains a more volatile investment method than even trading currency pairs on a forex exchange. Although currency trading is considered one of the most changeable forms of traditional trading, with price movements capable of occurring very quickly, it's still not as uncertain as cryptocurrencies that are decentralized and deregulated and have been likened to an asset 'bubble'.

Earlier in February, the People's Bank of China (PBOC) confirmed it would "block access to all domestic and foreign cryptocurrency exchanges and ICO websites". It is not a huge surprise given that the Chinese government has been publishing periodic advisories and attempting to deter the use of digital currencies as a payment method throughout the country. A ban on new initial coin offerings (ICOs) had been made last September, forcing Shanghai's BTCC exchange to cease its trading operations to Chinese traders.

As a consequence of China's actions, Bitcoin slumped well below the $8,000 mark, maintaining its significant downturn since Christmas. China isn't the only nation to continue to spook the bitcoin market. Major banks throughout the United States have sought to ban the use of their credit cards to purchase digital currencies. This was a move that the British-based Lloyds Banking Group also adopted days later.

China's ban may also be Hong Kong's gain as cryptocurrency investors seek alternative trading options. According to Aurelien Menant, CEO of Hong Kong-based cryptocurrency exchange, Gatecoin, the platform has already received "a high number of inquiries from blockchain project founders [based in the mainland] who would like to list their tokens" on the Gatecoin exchange. It's unclear whether the Chinese government wishes to ban cryptocurrency exchanges and ICOs forever. It's possible they are hoping a short-term blanket ban will speed up the development of a more secure, stable solution that features controlled regulation.

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