Singapore’s central bank has proposed a series of new regulations on cryptocurrency trading to protect consumers from the volatility of new digital assets.
The Monetary Authority of Singapore (MAS) disclosed the measures in two consultation documents it published yesterday, according to Reuters. reported. Among the proposed measures are bans on cryptocurrency trading firms that offer incentives to attract retail customers and the use of lines of credit to finance cryptocurrency purchases. Retail investors in Singapore may also have to undergo a risk awareness assessment before being allowed to trade cryptocurrencies.
The MAS said in a press release yesterday that because these digital tokens play a supporting role in the broader digital asset ecosystem, “banning them would not be feasible.” But he said trading them was “highly risky and not suitable for the general public.”
“Therefore, to reduce the risk to consumers from speculative trading in cryptocurrencies, MAS will require that [crypto] service providers ensure proper business conduct and proper risk disclosure,” it said. From now until December 21, the MAS will collect feedback from the crypto industry on the suggested restrictions and its efforts to regulate the sector.
The proposed restrictions are the latest attempt by the city-state to control cryptocurrencies and other digital assets. In recent years, Singapore has become a popular destination for cryptocurrency and blockchain companies: Crypto.com, whose ads are now seen in sports stadiums around the world, is based in the city-state, but the volatility of the market was demonstrated. by a series of sudden collapses over the past year have made the central bank and financial regulator increasingly skeptical.
The MAS has largely deterred the Singaporean public from speculative cryptocurrency trading. In January, it introduced restrictions on the advertising of crypto services, with Loo Siew Yee, the central bank’s deputy managing director for policy, payments and financial crime, arguing that while the central bank supported the development of blockchain technology “in value-added use cases,” cryptocurrency trading was “highly risky and not suitable for the general public.”
According to Channel News Asia, the advertising ban included “placing any form of advertisements or promotional materials in public areas, such as public transportation and related locations, public websites, print and broadcast media, and the provision of physical ATMs.”
When cryptocurrency trading companies like ByBit, FTX and Crypto.com tried to circumvent the restrictions by sponsoring Formula 1 teams during the Singapore Grand Prix, the MAS hardened on that too.
The regulation reflects MAS’s own divided position towards cryptocurrencies and blockchain technology. On the one hand, the financial regulator has spoken of Singapore as a bastion of financial innovation, encouraging cryptocurrency trading platforms to establish themselves in the city-state and speaking of the potential of digital assets. He has made it clear that Singapore wants to actively develop and promote a digital asset ecosystem, and has used blockchain technology to ubin projectits central bank digital currency project.
On the other hand, as the volatility of the industry has become evident, between November 2021 and June of this year, the global crypto market lost $2 billion in value, wiping out investors around the world – has expressed skepticism about the current state of the digital asset sector. In August, MAS managing director Ravi Menon acknowledged that cryptocurrencies lacked the fundamental qualities of money and had few uses outside of pure speculation. “Cryptocurrencies have taken [on] a life of its own outside of the distributed ledger, and this is the source of the cryptocurrency world’s problems,” he said, according to the Wall Street Journal.
Singapore has long wanted to become a hub for technological innovation and prudent financial management. As such, moves by MAS to protect consumers from crypto mania are sensible and likely unavoidable, given that digital tokens are at best an insecure and volatile asset and at worst a borderline scam. .