MAS, or the Monetary Authority of Singapore, the de facto central bank of the city, is now proposing some transformations to the existing regulations which would ease market entry for blockchain-based decentralized exchanges.

The Statements of the Monetary Authority of Singapore

According to a consultation paper which was published on Tuesday, MAS stated that the current single-tier “recognized market operations” (RMO) regulatory framework cannot meet a demand for new business models that are based on such emerging technologies. To address this problem, the authority proposed to introduce a three-tier structure in an attempt to ease market access from small-scale exchange platforms.

In the paper, the MAS wrote that they have already observed the emergence of new business models in trading platforms, even those which include trading facilities which make use of blockchain technology, or platforms which permit peer-to-peer trading without the involvement of intermediaries. MAS also added that as the current RMO regime has been in place since 2002, it is the right time to review to the regulatory framework for market operations to make sure it continues to go in line with demands of the changing landscape.

Tier 3 of the proposed framework

Notably, the tier 3 of the proposed framework applies to market operators who were importantly smaller than established exchanges and it intended to permit them to implement blockchain and P2P technology and roll out services in a supervised environment.

MAS explained that the new tier had been designed to facilitate new entrants that develop solutions for wholesale market participants, or market operators which have reached the end of their sandbox tenure and which are also commercially viable, but whose businesses cannot meet the requirements of the existing RMO regime.

The exchange market under two basic categories

Currently, the authority supervises the exchange market under two basic categories: approved exchange (AE) and the recognized market operators (RMOs). The first one applies to “systemically-important” platforms which are available to retail investing in such exchanges as Singapore’s stock exchange.

On the other hand, the RMO framework permits regulation of other exchanges like those for commodities and derivatives trading, which are considered under the new proposal’s tier 2, if the proposal is enacted.

Some interested parties like the financial institutions, now have until the 22nd of June to provide MAS with feedback on the proposal.


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