Singapore Set to Bring New Regulations for Decentralized Exchanges

Singapore Set to Bring New Regulations for Decentralized Exchanges

The MAS (Money Authority of Singapore), the city-state’s central bank and financial regulatory authority has proposed some new changes to existing rules and regulations, in an attempt to ease the market entry for all decentralized exchanges. If the proposal gets accepted, blockchain-based exchanges would also have an easy entry into the market.

A consultation paper published by MAS on Tuesday, states that the current RMO (Recognised Market Operators) regulatory framework fails to meet the increasing demand for new business models based on nascent technologies like blockchain. To solve this problem, the authority proposes a 3-tier framework, as opposed to the single-tier framework currently in use. The MAS writes in the consultation paper:

“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.”

More specifically, the proposed framework applies to smaller market operators wishing to implement technologies like blockchain and P2P, and roll out their services in a supervised and regulated working environment. The paper explains –

“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.”

The exchange market is currently supervised under 2 different categories: AE (Approved Exchanges) and RMO (Recognised Market Operators). Approved Exchanges refer to the ‘systematically-important’ exchange platforms, like Singapore’s stock exchange, that are open to retail investors.

The latter, i.e. RMOs are basically exchanges for derivatives trading and commodities. If the proposal is enacted, RMOs would fall in tier 2 of the 3-tier framework and see new regulations.

Financial institutions and other interested parties now have about a month left until June 22 to provide the MAS with a feedback on the proposal.

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