Singapore’s Temasek says it is not considering investing in cryptocurrency companies amid current regulatory uncertainty

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  • Temasek is currently not considering investing in cryptocurrency companies following a $275 million FTX loss.
  • “There is a lot of regulatory uncertainty in this environment, and I think it would be very difficult to make new investments and deals in the midst of all this regulatory uncertainty.” Chief Investment Officer Rohit Sipahimalani said in an interview with CNBC on Tuesday.
  • Sipahimarani said Temasek would be reluctant to invest in exchanges given the current situation.

Rohit Sipahimalani, chief investment officer of Temasek Holdings, said at a news conference in Singapore on Tuesday, July 11, 2023.

Ole Huiyin | Bloomberg | Getty Images

Temasek, a Singapore sovereign wealth fund, is not considering investing in cryptocurrency companies at this time due to regulatory uncertainty in the sector, said Chief Investment Officer Rohit Sipahimalani. Stated.

“There is a lot of regulatory uncertainty in this environment, and making new investments and deals in the midst of all this regulatory uncertainty,” Sipahimalani said in an interview with CNBC on Tuesday. I think it’s very difficult,” he told CNBC.

The U.S. Securities and Exchange Commission has accused top U.S. cryptocurrency exchange Ripple of violating local securities laws by selling its native token XRP without registering it with regulators.

The SEC has separately accused Coinbase, another US cryptocurrency exchange, of operating as an unregistered stock exchange, broker and clearing house. It also accused Coinbase of failing to register offers and sales for its staking program, which allows customers to earn rewards for holding certain cryptocurrencies.

Read more about technology and cryptocurrencies from CNBC Pro

“If you have the right regulatory framework, we are comfortable with it, and you have the right investment opportunities, there is no reason why we should not consider it,” Sipahimalani said. rice field.

“However, as I said earlier, given the current situation, I am reluctant to invest in exchanges at this time.”

He added that Temasek had no intention of investing in cryptocurrencies.

“We have never considered investing in cryptocurrencies. Even investing in FTX talks about investing in exchanges where you can earn fee-based earnings without even thinking about it.” [of] Balance sheet risk and trading risk,” Sipahimalani said.

On Tuesday, Temasek posted its worst earnings since 2016 amid a combination of macroeconomic and geopolitical challenges.

“First, investing in FTX is part of our early-stage investment strategy, investing in new disruptive technology to see what happens around the corner, bringing it to our portfolio companies, Please remember that we want to be able to take advantage of our ecosystem,” Sipahimalani said.

“Second, of course, we’re looking for returns to these early-stage companies, but perhaps most importantly, let’s find the next winner who can double down when we break out. And many of them will eventually become a core part of our portfolio.”

He cited companies such as Alibaba and Meituan as such companies.

“We recognize that investing at that level is dualistic and risky, which is why we rely on diversification. We limit early-stage investments to 6% of our portfolio,” he added. .

Sipahimarani said that when Temasek considered FTX, it did the due diligence necessary for an early-stage investment and ultimately concluded that FTX “has great technology, is gaining market share, and the regulators He expressed his willingness to acquire a license in cooperation with the company, so he decided to invest.

Ultimately, however, “due diligence is always very difficult to reveal,” Sipahimalani said.

“There will be some losses and write-offs when making early-stage investments, but what is important to us is that the overall portfolio of early-stage investments should do well.”

Correction: This article has been updated to accurately reflect that Rohit Sipahimalani is Temasek’s Chief Investment Officer.

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