Singapore Plans to Optimize Capital Regulation for Crypto Assets: Public Chain Assets May No Longer Be Categorized as High Risk

On April 21, Caixin reported that the Monetary Authority of Singapore (MAS) has released a consultation document proposing to establish a more favorable regulatory capital guideline for the treatment of crypto assets on permissionless blockchains (commonly referred to as public chains) before implementing the Basel capital requirements for crypto assets. It is understood that the Basel capital regulations categorize crypto assets into two groups: the first group includes tokenized traditional assets and stablecoins, which are subject to lower capital requirements, while the second group includes crypto assets that do not meet the above conditions. The MAS plans to abandon the practice of categorizing crypto assets on permissionless blockchains as high-risk assets in the second group, allowing them to be classified as lower-risk, more leniently regulated first group assets, provided they meet a series of principled requirements, thereby achieving regulatory technology neutrality. The specific regulations are as follows: For banks registered in Singapore, the risk exposure of permissionless blockchain crypto assets classified as first group assets must not exceed 2% of the bank’s Tier 1 capital, and if the issuance creates liabilities at the bank level, the issuance scale must not exceed 5% of Tier 1 capital.