Crazy talk about crypto

It’s all becoming predictable, by now. As another week passes, we find another government official trying to stop the flow of history as it relates to crypto.

This week’s culprit? Tharman Shanmugaratnam, the chairman of the Monetary Authority of Singapore (MAS).

Although the MAS, which controls monetary policy for the City-State, has not taken any regulatory action against crypto, Shanmugaratnam had some strong and unfortunate words.

“Cryptocurrencies can be highly volatile, as their value is typically not related to any economic fundamentals, he said. He added that crypto trading was “Certainly not suitable for retail investors.”

There’s a lot to unpack here.

First, how exactly is crypto’s value not related to “any economic fundamentals?” Its value is tied to demand. That’s the most sacred of economic fundamentals – supply and demand. No, what he means is that its value is independent of any single State’s control. The MAS can’t manipulate it to serve the interests of its government or its friends.

And, “not suitable for retail investors?” How paternalistic.

“Crypto is fine for the sophisticated, rich guys. Guys like me,” Shanmugaratnam may as well be saying, “But you lot? Come on! You’re poor and dumb.”

That attitude – that individual investors are too stupid to protect themselves – is rampant in the ruling classes when it comes to their attitudes towards crypto. The idea that people need to be saved from the evils of the unregulated crypto space is central to most governments’ pushback against it.

It’s also a bit rich in this particular case as the reason Shanmugaratnam was talking about crypto in the first place is because the Prime Minister of Singapore, Lee Hsien Loong, got himself mixed-up in a token scam.     

To review: A government official wants to protect people from being scammed in the crypto space because another government official was scammed in the crypto space. Sounds like they’ve got things under control.

It goes without saying that the real reason Shanmugaratnam doesn’t want individual Singaporeans to be trading in the space is because he fears what that would mean for the Singapore Dollar, which trades at $0.75 USD currently and is actually one of the strongest and most stable currencies in the region. They keep a tight reign on things there and, as such, crypto falls outside their comfort one.  

By taking a crypto-reluctant stance, Shanmugaratnam is aligning himself with some other significant players in South-East Asia. Notably, both India and the Philippines are acting in ways that are either outright hostile to crypto (India) or indifferent to it (Philippines).

That’s in sharp contract with Asia’s biggest economy, China. There, they have embraced the digital currency space and have made moves to create the world’s sovereign digital currency — the digital yuan. Rather than being fearful of crypto, China has moved to find a solution that fits its environment. As a result they will not lose ground as the world’s economic system continues to evolve.

Meanwhile, countries like Singapore will get left behind.