The April 30th announcement by the Monetary Authority of Singapore (MAS) that it will provide S$42 million (about US$31.5 million) to Regulatory Technology (RegTech) and the Digital Acceleration Grant (DAG) could impact the cryptocurrency sector, particularly in the compliance regime, even though the fund is not directly focused on cryptocurrency.

“While the MAS’ new regtech grant is not targeted at the cryptocurrency sector, the grant will have substantial impacts on the space,” said Ian Lee, vice president of business development at Merkle Science. He went on to say, “Aside from the fact that regtech will be key to accelerating crypto’s transition into the broader financial ecosystem, under the current PSA licensing regime, cryptocurrency exchanges that other service providers that receive a license will officially be labeled as financial institutions, thus qualifying them for this grant.”

He explained that the grant would assist financial institutions in modernizing their regulatory compliance capabilities. At the same time transitioning the digital currency space into a significant pillar of the nation’s financial ecosystem.

See related article: Singapore’s DBS Bank reports US$60 million crypto under custody

Lee added, “Arguably, one of the biggest hurdles toward the legitimization of digital assets is abusive and illicit behavior — both real and perceived — within the industry that governmental bodies around the world are struggling to navigate and manage. Having robust regtech that keeps pace with fast-changing technologies — such as blockchain and cryptocurrencies — is necessary to create a safe environment for innovation and ensure the healthy growth of the industry.”

On Friday, the MAS announced it would commit S$42 million for the RegTech grant scheme and enhanced DAG scheme.

“The RegTech grant scheme, which is available to Singapore-based financial institutions (FIs), aims to promote the adoption and integration of technology solutions in the risk management and compliance functions of FIs. This will help FIs enhance processes and capabilities in these domains and encourage a vibrant RegTech ecosystem in Singapore,” the regulator said in a statement.