12th August 2026
By Anjali Kochhar
Banks and financial market participants are calling on Singapore to loosen restrictions on their exposure to crypto assets, arguing that the current limits could prevent traditional financial institutions from fully participating in the country’s growing tokenisation market.
Why Singapore Banks Want Crypto Exposure Limits Relaxed
The Monetary Authority of Singapore (MAS) has already softened its approach to digital assets, particularly those considered lower risk, but market participants believe further changes are needed. An interim exposure cap on certain tokenised products is being viewed as a barrier to wider adoption by banks.
The debate comes as Singapore positions itself as a major hub for blockchain-based financial infrastructure. MAS has been supporting initiatives involving tokenised assets, bank liabilities and regulated stablecoins, while Singaporean banks have participated in trials exploring blockchain-based settlement and digital financial instruments.
Under the current prudential framework, banks face tighter capital treatment for riskier crypto assets. International Basel standards generally distinguish between lower-risk tokenised assets and higher-risk crypto assets. Group 2 crypto assets are subject to an aggregate exposure limit linked to a bank’s Tier 1 capital, with the framework setting a 1% threshold and an absolute ceiling of 2%.
Banks argue that applying similar restrictions to tokenised assets that are backed by traditional financial instruments could discourage activity in an area Singapore is actively trying to develop. Tokenised bonds, funds and other financial products can use blockchain technology while retaining links to conventional assets, potentially making them less risky than unbacked cryptocurrencies.
Could Crypto Exposure Caps Slow Singapore’s Tokenisation Growth?
The industry’s concern is that banks could eventually face a situation where regulatory restrictions prevent them from scaling their tokenisation businesses, even as demand for blockchain-based financial products increases.
The issue is particularly important for Singapore because MAS has been pursuing a broader strategy to build a secure and scalable digital-asset ecosystem. The central bank has announced trials involving tokenised MAS bills and wholesale central bank digital currency, while local banks DBS, OCBC and UOB have already participated in live experiments involving digital settlement.
Market participants therefore expect pressure on regulators to increase as tokenised finance moves from experimentation towards commercial use.
For banks, relaxing the exposure limit could provide greater flexibility to offer custody, settlement, trading and financing services linked to tokenised assets. For regulators, however, the challenge will be balancing innovation with financial stability.
How Should Banking Rules Evolve for Tokenised Assets?
The debate highlights a broader question facing financial regulators worldwide: how should traditional banking rules evolve when blockchain technology is used to represent assets that already exist within the conventional financial system?
For now, Singapore appears committed to developing tokenised finance, but banks are pushing for regulatory rules that allow them to participate at a scale they believe matches the market’s future potential.
