Rohit Sipahimalani, chief investment officer of Temasek Holdings Pte, spoke during a news conference in Singapore on Tuesday, July 11, 2023.
Ore Huiying | Bloomberg | Getty Images
Singapore’s sovereign wealth fund Temasek does not currently plan to invest in crypto companies due to the regulatory uncertainty in the sector, according to its chief investment officer, Rohit Sipahimalani.
“Given the significant regulatory uncertainty in this environment, it would be very difficult for us to make another investment in the crypto sector at this time,” Sipahimalani told CNBC in an interview on Tuesday.
The U.S. Securities and Exchange Commission has recently charged Ripple, a top U.S. crypto exchange, for violating local securities laws by selling its native token XRP without registering it with the regulator.
The SEC has also charged another U.S. crypto exchange, Coinbase, for operating as an unregistered securities exchange, broker, or clearing firm. Coinbase is accused of failing to register the offer and sale of its staking program, which allows customers to earn rewards for holding certain cryptocurrencies.
“If there is a suitable regulatory framework and we are comfortable with it, and if there is a promising investment opportunity, we would consider it,” Sipahimalani said.
However, he clarified that currently, Temasek is not comfortable investing in crypto exchanges due to the current regulatory environment.
Sipahimalani also pointed out that Temasek never had the intention of investing in cryptocurrencies.
“We have never actively sought to invest in cryptocurrencies. Even the investment in FTX was focused on investing in an exchange that allowed us to generate fee-based revenue without taking on balance sheet or trading risks,” said Sipahimalani.
On Tuesday, Temasek reported its worst returns since 2016, primarily due to macroeconomic and geopolitical challenges.
FTX loss
“Firstly, it’s important to remember that the FTX investment was part of our early-stage investment strategy, where we invest in new disruptive technologies to gain insight into emerging trends and benefit our portfolio companies,” said Sipahimalani.
“Secondly, we are looking for returns from these early-stage companies, but more importantly, we are searching for the next successful ventures that we can further invest in as they grow. Many of these companies eventually become a core part of our portfolio,” he added.
Sipahimalani cited companies like Alibaba and Meituan as examples of such successful investments.
“We acknowledge that investments at this stage carry higher risk, and that’s why we rely on diversification. We limit early-stage investments to 6% of our overall portfolio,” he explained.
Sipahimalani clarified that Temasek conducted thorough due diligence before investing in FTX, considering aspects such as technology, market share, and engagement with regulators.
However, he acknowledged that it is not always possible to guarantee success through due diligence in early-stage investing.
“With early-stage investments, there will inevitably be some losses and write-offs. But it’s important for us that the overall portfolio of early-stage investments performs well,” Sipahimalani concluded.
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