Singapore wealth fund Temasek to cease crypto industry investments

The chief investment officer of Singapore’s second-largest wealth fund said Tuesday regulatory uncertainty on digital assets was the main reason for not investing further in the industry.

Speaking at a press conference, Rohit Sipahimalani of Temasek Holdings — one of Singapore’s two wealth funds — said it would be “difficult” to justify such a move.

The wealth fund is second only to GIC and manages a portfolio of around S$382 billion ($284.65 billion), primarily across Singapore and Asia. On Tuesday, Temasek reported a 5.2% decline in the value of its portfolio from March figures of S$403 billion ($301.1 billion).

Temasek noted that while its investments in the city-state have continued to hold their ground, the worth of its direct investments worldwide has seen a reduction in the last two years, Reuters reported.

Temasek invested more than $200 million into failed crypto exchange FTX for a 1% stake in 2021 and a further $65 million to the exchange’s US subsidiary from October through to January 2022. 

It also poured $100 million into Asia’s largest blockchain investment firm, Animoca Brands, through convertible bonds as it sought exposure to the Web3 sector.

Sipahimalani highlighted on Tuesday that Temasek’s early-stage investment in the exchange followed thorough due diligence, emphasizing that FTX’s growing market share and active regulatory engagement spurred its decision.

FTX write downs

After the exchange went bust in early November, Temasek immediately moved to write down all of its FTX investments. Temasek subsequently punished executives and team members responsible for its investment into the exchange in May, leading to a reduction in their salaries.

“We’ve never been looking to invest in cryptocurrencies,” the executive said, as reported by CNBC. “We would not be comfortable investing in exchanges given the way things are right now.”

Should regulations become clearer and frameworks are hashed out, the executive said his firm would consider looking at future investments only if the right opportunity came along.

Singapore, along with other Asian countries and competing jurisdictions, has continued tightening digital asset rules, including provisions aimed at effectively banning centralized lending and staking services.

Those rules center around the disclosure of company assets and separation of funds from corporate balance sheets in order to avoid commingling — a major gripe levied against FTX last year.

“Even the investment in FTX, we’ll be talking about investing in an exchange, which allowed us to get fee-based revenue without thinking [of] balance sheet risk or any trading risks,” the executive reportedly said.

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