Singapore Deputy Prime Minister Heng Swee Kiat: Stay Away from Cryptocurrencies for Retail Investors, Opportunities in Digital Technology
4th June 2022 | Singapore
Singapore Deputy Prime Minister & Coordinating Minister for Economic Policies Heng Swee Kiat gave a speech at the Asia Tech X Singapore Summit on 31st May 2022, highlighting key developments in digital technology, cryptocurrencies, digital assets, cybersecurity and immediate challenges and shifts (Sustainability, Ageing Population, Live with COVID-19, Fallout of Russia-Ukraine War, Global inflation, Risk Global Recession). Key points include: Crypto Assets, Tokenisation, Distributed ledgers, Simultaneous settlement, Cross-border transactions, Cybersecurity, Quantum Computing. Key comments include: “Retail investors especially should steer clear of cryptocurrencies”, “The digital asset ecosystem comprises an entire range of services beyond cryptocurrency trading”, “Cyber threats, like most criminal activities, are ultimately a “cat and mouse” game. We try to stay one step ahead of malicious actors, but these actors seek to exploit new gaps”, “The greatest potential for these new technologies is probably in cross-border transactions”, “Global cybersecurity market is projected to grow at more than 14% annually in the coming years, faster than the growth of the digital economy.” View key highlights below | View the full speech: Click here
“ Stay Away from Cryptocurrencies for Retail Investors, Opportunities in Digital Technology “
- Digital technology is changing the world, and COVID-19 has accelerated the pace of change.
- 50% increase in cyberattacks on corporate networks last year, and a 20x increase in ransomware attacks against governments.
- New digital Technology is emerging: Known loosely as Web 3.0 (Metaverse, NFT, DeFi, DAO)
- Structural Shifts: Sustainability, Ageing population
- Immediate Challenges: Live with COVID-19, Fallout of Russia-Ukraine War, Global inflation, Risk Global Recession
- Crypto Assets, in particular, have garnered much interest. Earlier on, due to their phenomenal growth and promises of higher returns, and lately, due to the crash of Terra Luna, and the rout of crypto currencies.
- Tokenisation enables fractionalisation of assets, which could allow for greater liquidity, better price discovery, and access to illiquid assets.
- Distributed ledgers, without the need for intermediaries, reduce cost, prevent data monopolies, and discourage rent-seeking behaviour.
- Simultaneous settlement – with payment and delivery taking place at the same time – could significantly reduce settlement risks between counterparties.
- Cross-border transactions – The greatest potential for these new technologies is probably in cross-border transactions. Example Project Dunbar, which brings together the Bank of International Settlements Innovation Hub, Singapore, and several other like-minded countries. Project Dunbar explores how a common platform for multiple central bank digital currencies could enable cheaper, faster and safer cross-border payments. One of the supporting tech platforms for Project Dunbar is Partior, a tech company, established by DBS, Temasek and JP Morgan. Partior enables a real-time blockchain-based interbank clearing and settlement network, using commercial bank digital money or wholesale CBDCs.
- The crypto asset space is constantly evolving.
- Highly risky area, but has the potential to transform the future of finance.
- The Monetary Authority of Singapore (MAS) has warned the public against trading in cryptocurrencies
- Taken steps to limit promotion of cryptocurrencies to the general public earlier this year.
- Many investors suffered losses and even lost their life savings in the recent meltdown of TerraUSD and Luna, which triggered knock-on effects on Bitcoin and other cryptocurrencies.
- Retail investors especially should steer clear of cryptocurrencies. We cannot emphasise this enough.
- Digital asset ecosystem comprises an entire range of services beyond cryptocurrency trading.
- We remain keen to work with blockchain and digital asset players to encourage innovation, and build up trust in the sector.
- In the past 2 years, MAS has granted licenses and in-principle approvals to 11 digital payment token service providers. Stablecoin players like Paxos, crypto exchanges like Coinhako, and traditional financial institutions like DBS Vickers.
- Launch of Project Guardian, a collaborative effort by MAS to partner the industry to explore the tokenisation of financial assets and develop the future of finance infrastructure.
- The first industry pilot will be to explore potential DeFi applications in wholesale funding markets.
Vigilance to Intensifying Threats (Cybersecurity)
- Guard against malicious activities – including cyber heists, data theft, and cyber terrorism.
- Global cybersecurity market is projected to grow at more than 14% annually in the coming years, faster than the growth of the digital economy.
- Countries around the world are formulating cybersecurity strategies, introducing legislation, and building capabilities.
- Digital defence the 6th pillar of Total Defence, and updated the Singapore Cybersecurity Strategy.
- Cyber threats, like most criminal activities, are ultimately a “cat and mouse” game. We try to stay one step ahead of malicious actors, but these actors seek to exploit new gaps.
- The cyber landscape is also fast evolving, with quantum technology as a potential game changer.
- Strong encryption is key to the security of digital networks.
- The current encryption standard – AES 256 – has held up, as few have the computing power to use brute force to break the encryption.
- The fastest quantum computer is more than 150 million times faster than the fastest supercomputer. Quantum computers can solve in minutes a problem which takes a supercomputer 10,000 years.
Speech by Heng Swee Kiat, Singapore Deputy Prime Minister & Coordinating Minister for Economic Policies at the Asia Tech X Singapore Summit on 31st May 2022. View the full speech: Click here