The Monetary Authority of Singapore (MAS) has issued a consultation paper proposing changes to the existing regulations that would lower market entry for blockchain-related exchanges.MAS is proposing to expand the current recognized market operators (RMO) regime from a single tier to three separate tiers that would better match regulatory requirements to the risks posed by different types of market operators.
"MAS has observed the emergence of new business models in trading platforms, including trading facilities that make use of blockchain technology, or platforms that allow peer-to-peer trading without the involvement of intermediaries," said MAS. "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."
Currently, the MAS regulates market operators under two categories, namely the approved exchanges (“AEs”) and the recognised market operators. The proposed changes added RMO Tier 1 to target market operators with limited access to Singapore-based retail investors, and RMO Tier 3, targeted at market operators that have a significantly smaller scale of business compared to more established operators under the current AE and RMO regime.
In particular, for Tier 3 operators, the MAS proposed reduced capital requirements, simplified set of requirements in relation to technology risk management and outsourcing, and simplified regulatory requirements. Tier 3 operators will also be allowed by engage overseas regulated clearing houses to provide central clearing services.
MAS believes that the proposed tiers within the RMO regime would provide market operators with greater flexibility to choose a regulatory tier that better match their risk profile and business model. As market operators grow in size, they will have to move up the regulatory tiers and be subject to a step up in regulatory requirements and supervisory intensity
MAS invites all financial institutions and other interested parties to submit written comments by 22 June.