Following in the footsteps of other jurisdictions, not least the USA, Hong Kong approved initial spot Bitcoin ETFs earlier this month. It was unquestionably a significant step.
Yet, this direction of travel is not being followed worldwide. Several key players in the global cryptocurrency market continue to keep their cards close to their chest, whilst a handful of regulators have made their stance on ETF approvals crystal clear. In Singapore, the Monetary Authority of Singapore (MAS) has shown no signs of following suit. Nor should we expect MAS to approve spot Bitcoin ETFs anytime soon.
Why the MAS holdout?
One reason that MAS may feel confident in continuing to chart its own course is that accredited investors are already able to invest in overseas spot Bitcoin ETFs – a course of action which is being recommended by fund managers increasingly regularly. This is significant for a few reasons. Firstly, it provides these investors with more options for diversification and exposure to the cryptocurrency market. Secondly, it indicates a growing acceptance and recognition of Bitcoin as an asset class by regulatory authorities. Finally, it may contribute to increased liquidity and stability in the Bitcoin market as more institutional investors participate. It is also a recognition that the more well-resourced accredited investors can and do have access to these products available in other markets in any case.
What next for MAS
Over the coming years, MAS is expected to provide clear guidelines and regulatory frameworks tailored to Bitcoin ETFs, addressing concerns related to custody, valuation, liquidity, and investor protection. Regulatory certainty encourages innovation and investment in the cryptocurrency ecosystem, which is still something MAS seeks to foster. The spike in interest in Bitcoin following the initial approvals of spot ETFs and the recent halving event is unlikely to change this.
We also shouldn’t expect to see any reaction from MAS in response to the halving. During previous halving events, it has maintained its position, and even when crypto prices tanked in 2022, it made sure to re-iterate, its regulatory stance. We have every reason to think that not only will MAS stay on the course it is currently charting, but that it is in fact becoming increasingly confident in its regulatory decisions. Moving forward, we expect MAS to be guided by three key factors when it comes to deciding its regulatory stance: enhancing market infrastructure, prioritising investor education and awareness, and collaborating with international partners.