Temasek Holdings, known for its strategic investments across various sectors worldwide has indicated that it would be refraining from investing in crypto startups due to regulatory uncertainty.
“There is a lot of regulatory uncertainty in this environment.” And I believe it will be extremely difficult for us to make another investment and exchange in the midst of all this regulatory uncertainty,” says Chief Investment Officer Rohit Sipahimalani in a CNBC report.
Temasek Adopts Cautious Strategy
Temasek’s cautious approach is based on the company’s commitment to long-term value development while sensibly managing risk. The institution is responsible for managing a substantial percentage of Singapore’s wealth as a globally known sovereign wealth fund, investing across numerous industries.
Notably, Temasek’s cautious approach comes after it incurred $275 million in losses as a result of FTX’s bankruptcy in November. Fortunately for the investment firm, the $275 million spent represents only a very small (0.09%) fraction of the firm’s portfolio, which was valued at S$403 billion ($293 billion) at the end of the first quarter of 2022.
However, the corporation reduced compensation for the team in charge of recommending the investment as well as the senior management team.
Navigating Current Regulatory Challenges
The crypto market has grown exponentially over the past decade, attracting significant attention from both retail and institutional investors. However, despite the potential for substantial returns, regulatory frameworks surrounding digital assets remain a topic of ongoing debate worldwide.
In recent developments, the US Securities and Exchange Commission (SEC) has filed charges against crypto exchange Coinbase for operating as an unlicensed broker or clearing firm. The SEC also accused Coinbase of failing to register the offer and sale of its staking program, which allows consumers to receive rewards for holding specific coins.
Similarly, the SEC also accused Binance and its CEO Changpeng Zhao of operating as an unregistered financial firm.
Future Crypto Investment Optimism
Despite these ongoing challenges, Temasek’s Chief Investment Officer highlighted in the interview that Temasek may contemplate crypto investments in the future under the right regulatory framework.
While acknowledging the innovative potential of blockchain technology and cryptocurrencies, Temasek prefers to wait for a more robust regulatory environment before exploring investment opportunities in this sector.