Given the recent news of Singapore state investor Temasek Holdings leading a USD 100 million investment in Animoca Brands, I wanted to discuss why a state investor is pouring money into a sector that the Monetary Authority of Singapore (MAS) has publicly pushed back against.
Here’s what Ravi Menon, managing director of the MAS, said at the Green Shoots Seminar on August 29, 2022:
“Cryptocurrencies are actively traded and heavily speculated upon, with prices that have nothing to do with any underlying economic value related to their use on the distributed ledger. This speculation in cryptocurrencies is what MAS strongly discourages and seeks to restrict. The extreme price volatility of cryptocurrencies rules them out as a viable form of money or investment asset.”
Let’s now look at Temasek and Animoca. The first question is: Do Web3 companies under the Animoca umbrella—given their use of NFTs and cryptocurrencies—fall under what the MAS considers to be speculative?
I say yes. To be clear, Temasek, one of the world’s largest investors, has said it doesn’t directly invest in cryptocurrencies and prefers to back service providers in the space instead. Fair enough. But Animoca is a company that focuses specifically on Web3 games, with many featuring NFTs and cryptocurrencies.
Imagine you’ve publicly announced that your family is against gambling, that you strongly discourage it, and that you’d never be seen playing dice. But the next day, the news breaks that your brother decided to become an investor in a new casino. Kind of makes people question what’s going on, doesn’t it?
So, here’s question two: The crypto space is volatile, and if the MAS is discouraging speculation in crypto, why is Temasek—the state investor—putting so much money into a company that’s contributing to it?
If you ask us, it’s because there’s a potential for profit. While both MAS and Temasek have government affiliations, they ultimately serve different purposes. The former, being a regulatory body, has to publicly discourage speculation in cryptocurrencies. Temasek, on the other hand, may have the might of government money behind it, but it’s neither a statutory board nor a government agency.
It’s an investor who has to be smart about what it invests in. Ultimately, Temasek hopes that Animoca will continue to perform well, which in turn means Temasek will make money on its investment. And let’s not forget, Animoca isn’t the first crypto-based company that Temasek has invested in. The state investor joined crypto exchange FTX US’s USD 400 million Series A round in January and led a USD 200 million round in liquidity provider and market maker Amber Group in February.
Temasek is no small fish, and while USD 100 million might seem like a lot of money, the state investor knows it needs to diversify to minimize risk and, for better or for worse, believes investing in Web3 companies will prove to be lucrative.
What the future holds for Animoca and Temasek, as well as crypto-related regulations in Singapore, is anyone’s guess, but for the sake of the city-state, let’s hope the future is bright.
All opinions expressed in this piece are the writer’s own and do not represent the views of KrASIA. Questions, concerns, or fun facts can be sent to [email protected]