The Chief Executive Officer (CEO) of Temasek recently emphasized the entity’s cautious approach toward cryptocurrency investments. Despite suffering substantial losses amounting to $275 million, Temasek has decided to steer clear of this nascent asset class until a more defined regulatory framework is in place.
Due to the requirement for legislative clarity, Temasek’s CEO, Rohit Sipahimalani, has stated that the company is not interested in cryptocurrency operations. In an interview, he said this. The failure of FTX was a catastrophe for the company, and it resulted in losses of $275 million for the business.
Possible Readmission Subject to Strict Regulations
Institutional investors considering the risky cryptocurrency sector need regulatory clarification. Temasek’s CEO said this industry’s “lot of regulatory uncertainty” makes it “very difficult” to reinvest.
However, the corporation would reconsider its position if the competent authorities imposed rigorous industry-wide regulation. This ruling highlights the importance of regulatory predictability and protection for cryptocurrency investors.
“I do think that it be very difficult for us to make another investment and exchange in the middle of all this regulatory uncertainty,” Sipahimalani remarked.
On the other hand, Temasek could look into crypto-related business opportunities in the future. Sipahimalani further emphasized, “If you have the right regulatory framework, and we are comfortable with it, and you have the right investment opportunity, there’s no reason for us not to look at it.
It’s vital to highlight that Singapore’s Monetary Authority has protected cryptocurrency users. Businesses offering loan and staking services to individual investors in digital assets are under consideration by the regulatory authorities. By 2023, these companies may have to put their clients’ assets in a trust.
Temasek’s losses on its FTX investments and Accepting Responsibility
Temasek was one of many companies that sustained significant financial damage due to their interactions with the now-defunct cryptocurrency exchange FTX. When FTX went under in November of last year, the company that oversees roughly $500 billion in assets suffered a complete loss of the $275 million it had invested in the exchange.
According to Sipahimalani, Temasek’s investment in FTX was a part of the company’s early-stage strategy of investing in “new disruptive technologies to see what’s around the corner.”
The chief executive officer stated that before making a move, the company completed its research and came to the conclusion that it was in the best interest of the business to proceed since the sector “had good technology, was gaining market share, and showed a willingness to engage with regulators and be licensed.”
Temasek said in May that it had decreased the compensation of those engaged in the FTX investment. This was done despite the fact that the investment team should have engaged in proper behavior in arriving at their investment recommendation. According to the statement given by the corporation, the investment team and senior management should be “ultimately responsible for investment decisions made.”