Tharman Shanmugaratnam, the former finance minister and central bank chairman of Singapore, who has referred to cryptocurrencies as “purely speculative” and “slightly crazy,” was elected as the country’s president on Saturday with 70.4% of the vote. While the role is mainly ceremonial, Shanmugaratnam’s extensive experience suggests that he may have some influence in shaping policies related to the future of finance, including cryptocurrencies and central bank digital currencies (CBDCs).
During his tenure as chairman of the Monetary Authority of Singapore (MAS) from 2011 to 2023, Shanmugaratnam witnessed Singapore’s transition from being an early adopter of cryptocurrencies to a jurisdiction seeking the right regulatory balance. Notably, the collapse of local crypto companies Terraform Labs and Three Arrows Capital occurred during his time as chairman. Prior to his role at MAS, Shanmugaratnam served as the finance minister of Singapore from 2007 to 2015.
Shanmugaratnam’s initial stance on cryptocurrencies was laissez-faire. In 2018, he stated that cryptocurrencies and related trading activities did not pose a threat to Singapore’s financial system and did not require prohibition. He reiterated this position in 2023, describing crypto as “inherently purely speculative and slightly crazy.” While he believed that crypto should remain an unregulated market, he suggested that authorities should provide clear information on the associated risks. He cautioned against engaging in a never-ending game of regulating products like crypto.
However, the situation is somewhat different for banks and stablecoins. In November 2022, Shanmugaratnam stated that Singaporean banks are required to hold $125 of capital against every $100 exposure to cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH). Although the banks’ exposure to crypto is considered insignificant, accounting for less than 0.05% of total risk-weighted assets, these types of crypto assets are subject to stringent risk management requirements set by international standard-setters. He also noted that the prudential treatment for less risky crypto assets, such as tokenized corporate bonds, is similar to that of traditional non-tokenized assets.
In 2021, Shanmugaratnam expressed the belief that there could be a future role for cryptocurrencies beyond speculation and illicit finance. He envisioned a scenario where regulated stablecoins would play a useful role in traditional payment systems.