Singapore central bank proposes protocols for the use of “Purpose Bound” cryptocurrencies

• The Monetary Authority of Singapore has published a whitepaper proposing a common protocol for the use of digital currencies. 
• Financial institutions in Singapore will run trials with Purpose Bound Money and specify conditions when making transfers, like validity periods and shops. 
• Digital currencies’ life cycle would be defined by institutions, and the regulator will support transfers upon fulfillment of service terms.

The central bank of Singapore, the Monetary Authority of Singapore (MAS), has released a white paper opening doors to digital currency usage, in a “Purpose Bound” manner. This implies that the regulator would control the life cycle of the digital currency, and institutions would specify terms of use while supporting digital asset transfers. 

At a time when cryptocurrencies are facing a regulatory crackdown in the US, MAS has welcomed crypto adoption in the city- state of Singapore. Cryptocurrency market capitalization is likely to recover with adoption of digital currencies for payments and transfers in Southeast Asian countries. 

Also read: Crypto lender Vauld’s creditors to receive payback soon, firm owes over $400 million

Monetary Authority of Singapore publishes whitepaper to support digital currency use 

The Southeast Asian country’s central bank is keen on ushering in crypto usage and adoption in Singapore. MAS’s whitepaper outlines technical specifications on the life cycle of digital assets used as purpose bound money. The central bank explains how arrangements can be programmed such that money is transferred only upon fulfillment of the terms of service and use, defined by financial institutions. 

The common protocol outlined in the document can be used to specify conditions for trial runs and usage of cryptocurrencies within Singapore. 

The whitepaper elaborates conditions for the use of Central Bank Digital Currencies (CBDCs), tokenized bank deposits and stablecoins on a distributed ledger. The release is supported by software prototypes that demonstrate the concept of purpose bound money and how senders can specify the validity period of use, across different payment systems.

Key fintech institutions have recently received approvals from MAS for serving clients within Singapore. 

Circle and Sygnum join the ranks of financial institutions approved by MAS

Circle, a leading stablecoin issuer, has cemented its presence in Asia and obtained a license as a Major Payment Institution (MPI) from MAS. The central bank awarded the license to subsidiary Circle Internet Singapore Pte. Ltd.

Circle announced that it has received in-principle approval for its operations on June 13. Alongside Circle, fintech startup Sygnum has received the green light to operate as an MPI and offer payment services within specified thresholds in Singapore.

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