Singapore’s financial regulator and the central bank have pledged to be “brutal and unrelentingly hard” on any “bad behavior” from the cryptocurrency industry.

The comments come from the Monetary Authority of Singapore (MAS)’s chief fintech officer Sopnendu Mohanty, explaining in an interview that “if somebody has done a bad thing, we are brutal and unrelentingly hard.”

He also hit back at the rhetoric of certain crypto market participants who have criticized the regulator for not being friendly enough to crypto, and instead questioned the legitimacy of the market, saying:

“We have been called out by many cryptocurrencies for not being friendly, my response has been: Friendly for what? Friendly for a real economy or friendly for some unreal economy?”

The fintech chief believes the world is “lost in private currency” and is the cause behind the wider market turmoil. Mohanty added the city-state enacted an “extremely draconian” and “painfully slow” due diligence process for licensing crypto businesses in response to the conservative stance the regulator has toward crypto.

Singapore introduced licensing for crypto firms in January 2020 and has been stringent on which companies can be approved for a license. Cointelegraph reported in December 2022 that the MAS had knocked-back approvals for over 100 licenses from companies who had applied.

In January, cryptocurrency providers were barred from advertising their services in public areas such as public transportation and extended to public websites as well as print, broadcast and social media.

MAS is extending its ability to police crypto businesses, too. In April, the regulator passed new requirements for firms to obtain a license and be subject to Anti-Money Laundering (AML) and Combating the Financing of Terrorism requirements if they wanted to provide services outside of the country.

Related: Singapore to explore digital asset tokenization on public chains

Many crypto businesses were set up in Singapore due to both its low taxes and the perception that the city-state was one of the more crypto-friendly but the regulatory tightening suggests that is changing as the country focuses on its central bank digital currency (CBDC).

On Tuesday, payment systems provider the Mojaloop Foundation opened a CBDC Center of Excellence (COE) in Singapore, which sees MAS on its Working Group and Mohanty as a board adviser.

With the opening of the COE, Mohanty thinks a state-backed alternative cryptocurrency could be launched within three years.

The COE is aimed at reducing costs and inefficiencies of payment platforms and cross-border payments. Mohanty said he welcomed the move as a “step forward into the future of financial services”.