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Mr. Dong He, Annamaria Kokenyne, Xavier Lavayssière, Ms. Inutu Lukonga, Nadine Schwarz, Nobuyasu Sugimoto, and Jeanne Verrier
Capital flow management measures (CFMs) can be part of the broader policy toolkit to help countries reap the benefits of capital flows while managing the associated risks. Their implementation typically requires that financial intermediaries verify the nature of transactions and the identities of transacting parties but is facing the rising challenge of crypto assets. Indeed, crypto assets have become a significant instrument for payments and speculative investments in some countries. They can be traded pseudonymously and held without identification of the residency of the asset holder. Many crypto service providers operate across borders, making supervision and enforcement by national authorities more difficult. The challenges posed by the attributes of crypto assets are compounded by gaps in the legal and regulatory frameworks. This paper aims to discuss how crypto assets could impact the effectiveness of CFMs from a structural and longer-term perspective. To preserve the effectiveness of CFMs against crypto-related challenges, policymakers need to consider a multifaceted strategy whose essential elements include clarifying the legal status of crypto assets and ensuring that CFM laws and regulations cover them; devising a comprehensive, consistent, and coordinated regulatory approach to crypto assets and applying it effectively to CFMs; establishing international collaborative arrangements for supervision of crypto assets; addressing data gaps and leveraging technology (regtech and suptech) to create anomaly-detection models and red-flag indicators that will allow for timely risk monitoring and CFM implementation.
Mr. Aditya Narain and Ms. Marina Moretti

entities, such as crypto exchanges. Finally, in addition to developing a framework that can regulate both actors and activities in the crypto ecosystem, national authorities may also have to take a position on how the underlying technology used to create crypto assets stacks up against other public policy objectives—as is the case with the enormous energy intensity of “mining” certain types of crypto assets. In essence, crypto assets are merely codes that are stored and accessed electronically. They may or may not be backed by physical or financial collateral. Their

International Monetary Fund. Monetary and Capital Markets Department

stablecoins; newer technologies, such as Ethereum; other “smart contract” blockchains; and decentralized finance. Stablecoins : Their market capitalization has quadrupled in 2021 to more than $120 billion ( Figure 2.1 , panel 4). Tether is the largest stablecoin, but its market share has declined sharply as major centralized crypto exchanges have introduced their own versions (for example, USD Coin by Coinbase and Binance USD by Binance). Stablecoin trading volumes outpace those of all other crypto assets ( Figure 2.1 , panel 5) primarily because they are highly usable

International Monetary Fund. Monetary and Capital Markets Department
This technical note examines the implications of fintech for the regulation and supervision of the Singaporean financial services sector. It provides an overview of the financial system with a focus on fintech developments. The note looks at not only fintech developments but also the institutional setup as well as Monetary Authority of Singapore’s (MAS) approach to fintech. The MAS has so far managed to strike the right balance between innovation and safety and soundness. MAS has responded quickly to the challenges of fintech. The impact of fintech on the financial services sector has largely been internalized by financial institutions (FI). FIs are swiftly digitizing and modernizing their systems, products and business models. Because of their market knowledge and higher investment capacities, incumbent FIs are getting better at providing services and products by adopting new technologies or improving existing ones. The note also recommends that it is imperative to develop a cyber network map that considers both financial linkages and Information and Communications Technology connections and use it for cyber risk surveillance.
International Monetary Fund. Monetary and Capital Markets Department

Singapore-based crypto-exchanges may increase following the enactment of the new Payment Services Act (PS Act). Although the Act enhances MAS’ powers over crypto-exchanges trading digital payment tokens, they focus on financial integrity and do not provide MAS with the same type of prudential, investor protection or market integrity powers as currently applied to crypto-exchanges trading securities tokens. Many crypto-exchanges operate through a global network of affiliated entities and are quick to change their structures to react to regulatory developments. Any hack

International Monetary Fund. Communications Department

operated by Tokocrypto, an Indonesian affiliate of Binance, the world’s largest crypto exchange. “There are people who are not in the mood to talk about crypto,” said Antria Pansy, who runs community engagement for Tokocrypto in Bali. “But there have been winters in the past.” Tokocrypto claims to have tens of thousands of registered users in Bali, an order of magnitude increase over just one year. Pansy said this breakneck growth could be the result of tens of thousands of newly unemployed tourism workers searching for income during the pandemic and of media

Mr. Dong He, Annamaria Kokenyne, Xavier Lavayssière, Ms. Inutu Lukonga, Nadine Schwarz, Nobuyasu Sugimoto, and Jeanne Verrier

Japan the aging population is cited to be a major factor in the relatively low level of crypto adoption. Regulatory uncertainty and the history of cyber incidents like the Coincheck hack in 2018 also played a role in dampening demand. KOREA In accordance with UN Security Council Resolutions, Korea maintains exchange restrictions for security reasons, which make it difficult for foreigners to use Korea-based crypto exchanges. As a result, Bitcoin commands a steep premium, the so-called kimchi premium, in Korea. Despite this premium, demand for Bitcoin in Korea

Mr. Dong He, Annamaria Kokenyne, Xavier Lavayssière, Ms. Inutu Lukonga, Nadine Schwarz, Nobuyasu Sugimoto, and Jeanne Verrier

. Crypto exchanges play a vital role in this ecosystem. Most large crypto exchanges are centralized entities ( Figure 1 , panel 5). Many of them play the critical role of allowing users to access crypto assets, including stablecoins, through a large selection of sovereign currencies (serving as on- and off-ramps); others focus on intermediating trading of crypto assets. Buying and selling crypto assets directly between users, without a third party or intermediary, are called peer-to-peer, or P2P, transactions. The ownership and use of crypto assets rely on the private

in the United Kingdom and France became a systemic crisis. People borrow money to join the party, because other people are making tons of money. (They must know something, right?) Just how much money investors are borrowing to buy crypto assets is still mostly unknown, because of this market’s opaque and unregulated nature and early stage of development and the seemingly minimal exposure of major banks. But leverage is clearly involved. Some crypto exchanges allow investors to borrow as much as 100 times the cash balance in their accounts. A recent poll by