Recently, the cryptocurrency and the pass market represented by Bitcoin and Ethereum have recovered slightly from the downturn. Although many blockchain innovation companies have encountered difficulties in the issuance of financing and project promotion, we also see To some exciting developments, for example, JPMorgan Chase Bank's application blockchain has issued a pass – JPM Coin, and the industry has recently heated up the proposed Facebook Coin, which may cover 2.7 billion users. . What we have noticed is that these are the traditional financial institutions and industrial enterprises that are actively deploying blockchain technology applications and innovation projects. They have plans to introduce some certificates that focus on different uses, which seems to mean the district. Blockchain technology is moving towards the mainstream, and it is beginning to mature and develop, leading the development of digital currency into a new stage.
Looking back from the beginning of 2017 to the beginning of 2018, many ICO (token starters) projects have raised too much funds, which greatly exceeds the funds required for the project development and testing period; the white papers are fake and empty; there are more and more running news, including sudden loss of cooperation and transactions. Events such as closed projects without any reason, no progress in the project, and high-profile fraudulent acquisitions have caused investors to lose confidence in cryptocurrencies and legal litigation cases have increased. In the first quarter of 2018, the cryptocurrency bubble burst, the market value shrank, and the call for supervision was one after another.
When the speculative market was speculated by hot money, the Monetary Authority of Singapore (HKMA: MAS) took timely regulatory and enforcement actions to maintain market order and protect the interests of investors. It is commendable. On May 24, 2018, the HKMA warned the eight certificates and crypto assets exchanges on the island, clearly stating that no securities with securities or futures contract attributes could be traded without the approval of the HKMA. Products, the ongoing trading business must be stopped immediately; at the same time, it is also called to stop the ICO activities with the nature of equity issuance, order the issuing company to immediately terminate the issuance, recycle the tokens, and return the funds to the investors. By the end of 2018, the vast majority of cryptocurrencies (ie, certificates) circulating in the virtual market fell more than 95% of the market value. In fact, as early as February 5, 2018, Mr. Daman, the chairman of the HKMA , had explained that the supervisory authorities had adopted a relatively open and cautious attitude towards the innovative development of cryptocurrency in response to the inquiries from the parliament, and severely warned the Chinese to guard against the height of the cryptocurrency. Risk and its price volatility. The HKMA embraces new technologies, keeps up with innovation, understands new technologies to bring new risks, promptly issues risks to alert the public, and even decisively take enforcement actions to stop market violations. It once again demonstrates that the HKMA has always achieved financial security and development. A well-balanced approach to regulation.
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According to the author's long-term observation, we can use the "four -digit " argument to analyze the supervision concept of the HKMA.
First, the regulatory authorities cannot be “ missing” because it affects financial security. Financial supervision is still the country's heavy weapon. It is related to the national economy and the people's livelihood. It must not be "absent". There are many reasons for the “absence” of supervision, but the consequences are exactly the same, the economic order is destroyed, the security of national assets is not guaranteed, and major property losses are suffered.
Regulators cannot be “ offside” . The HKMA is well aware that the introduction of regulation too early may stifle innovation and may hinder the use of new technologies. Therefore, the HKMA has always ensured that regulation cannot lead innovation and cannot over-emphasize “precautions”. The financial industry itself is a “risk-taking business”, and any innovation is accompanied by risks. In the case that the risks and impacts of a new technology are still unclear, premature supervision of “offside” will often curb the potential of innovation, making the industry tend to be conservative and even lacking vitality. Regulatory should guard against major risks that affect financial stability and the interests of general investors, not because technological development may lead to “subversion” of business models or reshuffling of interest distribution.
The regulatory authorities should be “ in place” , not only to keep up with new technologies, but also to be relatively tolerant (not conniving) and encouraging attitudes towards innovation, but also to do a good job of supervision, and be sure to act decisively to “take the shot when it is shot”, 2018 The rapid and decisive action taken by the HKMA in May is a good example to balance innovation and safety. In the concept of “in place” supervision, the HKMA adopted the principle of materiality and proportionality. This means that when new technologies bring significant and important risks, regulation is in place. In addition, regulatory actions must be proportional to the risks posed. For example, the HKMA imposes strict supervision on banking institutions mainly because the banking institutions absorb deposits from ordinary people. The crowdfunding platform does not allow deposits to be taken. Investors are limited to recognized or qualified investors, so the HKMA has lowered the regulatory requirements for these platforms. However, when some crowdfunding platforms began to help companies raise funds from retail investors, the HKMA took steps to require these platforms to obtain the HKMA's license in advance and to comply with minimum capital and disclosure requirements. The aim is to strike a balance between providing financing for start-ups and SMEs and protecting the interests of investors.
Furthermore, in the early days of technological innovation, the regulatory authorities should be "in place" ! “Responsible” means that regulators should be like entrepreneurs, be in the operation of the market, empathize with each other, and thoroughly understand the pulse, difficulty, and development trend of technological innovation in real time, so as to timely launch “practical” and “forward-looking”. Regulatory policies, such as setting standards, advocating compatibility or interoperability between different developers' innovative systems or applications, to open up technical application channels, and to guide and strengthen enterprise innovation chain integration and coordination. Develop, thereby amplifying technological innovations and achieving maximum benefits for society and consumers. This is crucial in the current rapid changes in technology and rapid development. Before 2016, in Singapore, payment service providers developed their own payment products, resulting in a variety of payment card readers at the cashier counters in the store. The variety of payment readers was “various”, causing customers to be dazzled and confused, wasting valuable store space for shop owners, and wasting payment service providers. Time and resources! In 2016, the relevant authorities introduced a unified card reader terminal, allowing different payment service providers' information systems and applications to communicate with each other and operate compatible. In September 2018, the relevant regulatory authorities integrated 27 different electronic payment services and launched a shared QR code – “SGQR” code . In the end, it created a unified standard of “one machine, one yard, one card”, which is the benefit of “in-place” supervision. Drawing on this experience, the “The Payment Services Act” recently passed by Congress empowers the HKMA to empower companies to apply common platforms and uniform standards to save social resources, increase efficiency, and benefit the people. We feel that this is a very correct approach.
We can say that the "four-digit" argument has made financial innovation regulation a core competitiveness of Singapore's financial industry. But we can't be complacent. We need to look at the world and participate in the forefront of the development of financial technology. We need to be in the forefront of innovation, rapid development, and rapid development of the standard Silicon Valley innovation, into the most cutting-edge, cutting-edge innovation flood. Also, to truly understand the uncertainty of compliance with financial technology startup companies, regulators need to work with financial technology operators to fight side by side, "swim in swimming middle schools, while learning and supervision." Furthermore, we often hear that overseas technology innovation elites have praised the Singapore government's policies and measures to encourage technological innovation, but we also criticize our lack of a bottom-up creative culture like Silicon Valley.
Therefore, we suggest that the Singaporean government can “mare to be bigger and step faster” in the field of technological innovation.
First of all, our concept must advance with the times and enter the era of the Industrial Revolution 4.0. The concept must be changed. The old concept of "reporting the country to sang the land" and "returning to the country to contribute" has fallen behind in the digital world where new technology has no borders. We can build Singapore's technology and financial innovation base around the world, so that Singapore's innovation and entrepreneurs overseas can enjoy the preferential policies to attract talents without having to return to Singapore. We should encourage Singaporeans to develop in the best environment in any place. “There is no such thing as a mutual ecstasy.” The new digital economy will be domain-free. The prerequisite for asking for preferential policies is to attract talents to return to China. It is better to invest in them. Bringing more Singaporeans to Silicon Valley or other global markets where innovation culture and entrepreneurship are thriving, promoting the globalization of non-domain open source and manufacturing Singapore's gross national product (GNP), not limited to domestic production Value (GDP) and spread Singapore's global influence. Governments and regulatory agencies should create “global” employment opportunities for Chinese people. With less domestic demand, lack of data, and light digital assets, they cannot meet the expectations of young people’s employment development space. Only by looking at the world can we make our talents Leap, the sky is high and the birds fly." From this perspective, whether Singapore's financial innovation supervision can make it more "open source" and export our best practices is a topic worth considering and studying.
Secondly, we must be in the torrent of innovation, cooperate with financial technology operators, and fight side by side. We might as well try to make government officials or regulators a part of the company's innovation ecosystem, and let them work with the company, Government + Business + Techno-preneur, under the same roof. Such “learning by the side” can make “Just-in-time regulation” more quickly, and the time required for consultation, feedback, and formulation will be greatly shortened compared to the design of traditional regulations. In an environment where new technology information is changing, such rapid and clear regulatory requirements and transparency will help create an environment conducive to innovation and take advantage of “in-place” supervision to enhance the international competitiveness of Singapore's technological innovation.
Finally, in order to break through the small limitations of the Singapore market, we can actively welcome financial technology start-up companies that only target international markets outside Singapore, and consider developing a new incentive and regulatory framework for them to exempt or reduce the existing Government regulations or regulatory requirements to attract them to settle in Singapore and freely develop products and services for overseas customers, export technological innovation capabilities, help promote the integration of the digital economy in the ASEAN region, and enhance the influence of Singapore's regional and even international technological innovation.
Li Guoquan (Professor of Financial Technology and Blockchain, Singapore New Social Science University)
Bai Shizhen (Visiting Professor, National University of Singapore)
Yan Li (Senior Lecturer and Director of Senior Management Education, Department of Strategy, Nanyang Business School, Nanyang Technological University)
This article first appeared in Lianhe Zaobao