As the global crypto market grapples with uncertainties amid government crackdowns, Singapore launched a new project to explore the tokenisation of financial assets and develop the future of Blockchain-based finance infrastructure.
"Project Guardian", a collaboration between the Monetary Authority of Singapore and the finance industry, will explore potential decentralised finance (DeFi) applications in wholesale funding markets, while working to manage risks to financial stability and integrity, according to Deputy Prime Minister Heng Swee Keat.
"The way to approach Web 3.0 is to keep an open mind. We must pierce through both the hubris and the veil of suspicion, to understand the potentially transformative underlying technologies. Let us not throw the baby out with the bath water," Keat said during the 'Asia Tech X Singapore Summit'.
"Through regulation, we work constructively to realise the gains of these new technologies, and partner responsible and innovative players with strong risk management capabilities to build the foundations of the digital asset ecosystem," he added.
Singapore is a friendly country when it comes to crypto and Blockchain-based technologies, allowing innovation to continue irrespective of global crackdown on crypto ecosystem.
Keat said that the crypto asset space is constantly evolving.
"We recognise this is a highly risky area, but it also has the potential to transform the future of finance. We must continue to adapt our rules to ensure that regulation remains facilitative of innovation, and yet addresses the key risks that crypto assets pose," he noted.
The Monetary Authority of Singapore, or MAS, has consistently warned the public against trading in cryptocurrencies, and has 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. But the 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," the deputy prime minister said.
The shocking implosion of the TerraUSD stablecoin and Luna cryptocurrencies threw many young investors into a panic, some of them saying their entire assets were blown up or even leaving suicidal messages.
In total, over $15 billion in cryptocurrency value was wiped after the TerraUSD stablecoin collapsed.