SG regulator cancels crypto lender Hodlnaut's licence as troubles mount 

Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 14, 2018. REUTERS/Dado Ruvic/Illustration/File Photo

The Monetary Authority of Singapore (MAS) has cancelled its in-principle approval for crypto lender Hodlnaut to obtain a digital payment token services licence, it confirmed in a statement on Wednesday.

“As Hodlnaut has informed MAS of its intention to withdraw its licence application, MAS has rescinded the in-principle approval…With the withdrawal of its application, Hodlnaut will no longer be an exempt entity under the PS Act, and will not be allowed to conduct regulated activities,” wrote an MAS spokesperson in an email.

The Singapore-based crypto firm on Monday announced that it was suspending its customer withdrawals with immediate effect. In a Hodlnaut statement, the firm said it had reached the decision due to “recent market conditions”.

“We are actively working on the recovery plan that we hope to provide updates and details on as soon as permissible. We are consulting with Damodara Ong LLC on the feasibility and timelines of our intended execution plan and are strategising our recovery plan with our users’ best interests in mind,” a Hodlnaut spokesperson wrote on its website.

MAS added that digital payment token service providers licensed by MAS under the Payment Services Act are regulated for money laundering, terrorism financing risks and technology risks. They are not subject to risk-based capital or liquidity requirements, nor are they required to safeguard customer monies or digital tokens from insolvency — in line with most jurisdictions globally.

A number of Singapore-linked crypto firms have fallen under hard times since the collapse of crypto at the beginning of this year.

Singapore crypto hedge fund Three Arrows Capital is in liquidation, while B Capital-backed trading platform Zipmex has halted withdrawals. Other crypto lenders such as Vauld and Babel Finance have also stopped customer withdrawals since crypto prices crashed. Year-to-date, bitcoin and ethereum prices have slumped around 50%.

“MAS has been continually reminding the general public that dealing in cryptocurrency is highly hazardous.  Not only are the values of cryptocurrencies extremely volatile, customers’ monies are not protected under the law,” cautioned MAS in the statement.

The MAS has since begun tightening scrutiny over crypto operations in the country prompting the likes of Binance and BitMEX to shift their base from Singapore to friendlier regimes like Dubai. The pace of licensing approvals by the MAS has also reportedly slowed.

Earlier this year, Singapore passed another law that required virtual asset service providers in Singapore to be licensed in another move to tighten crypto oversight in the country.

“The turmoil in the cryptocurrency market has not posed financial stability risks in Singapore. Spillover to the domestic financial system has been very limited as our key financial institutions do not have significant exposures to either distressed cryptocurrency firms or cryptocurrencies,” the MAS spokesperson added.

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