Singapore considers stricter crypto regulations to protect retail traders

Singapore plans to extend the entry barrier into cryptocurrency buying and selling for retail buyers as a result of they’re “oblivious” to the related dangers, in keeping with a speech delivered by the Financial Authority of Singapore (MAS) managing director Ravi Menon on August 29.

In line with Menon, retail curiosity in cryptocurrencies stays very excessive regardless of the trade dangers warnings. He continued that almost all of those pursuits had been birthed by the lure of fast positive aspects made by sharp worth will increase within the house.

Menon famous that banning the crypto trade “isn’t more likely to work” due to the “borderless” nature of the house.

Nonetheless, the authorities may introduce new measures like buyer suitability exams and restrict the usage of credit score and leverage amenities for crypto buying and selling to guard retail buyers.

Menon added that cryptocurrencies couldn’t perform as cash due to their risky nature. Nonetheless, he acknowledges that tokenization and distributed ledgers maintain financial potential.

Singapore’s crypto stance is “not contradictory”

The regulator’s prime govt touched on the company’s posture in the direction of the crypto trade. Menon mentioned:

“MAS’ facilitative posture on digital asset actions and restrictive stance on cryptocurrency hypothesis should not contradictory.”

In line with Menon, the crypto market is vulnerable to dangers of market manipulation. Nonetheless, MAS and different international regulators are working to reinforce rules on this house.

Singapore has been one of many forward-thinking international locations concerning crypto rules globally. However the latest market crash confirmed the regulators that its guidelines should not complete sufficient.

The market downturn has pressured a rethink of its methods, with better emphasis now on defending retail buyers from the trade’s dangers.

In January, MAS restricted public promotions of crypto. The regulator has additionally launched various rules for the reason that file market crash.

Bloomberg additionally reported that Singapore’s Central Financial institution despatched questionnaires to all crypto corporations licensed by MAS to inquire about their operations and holdings.

The report revealed that the questionnaire is designed for the regulator to find out these corporations’ monetary stability, enterprise actions, and interconnectivity.


Ravi Menon mentioned the regulator is engaged on a regulatory method in the direction of stablecoins, which might be revealed by October.

Menon mentioned stablecoins will attain their potential if customers had been assured they’d preserve a secure worth.

Nonetheless, many stablecoins can not uphold their worth as a result of their reserves, like industrial papers, “are uncovered to credit score, market, and liquidity dangers.”

In the meantime, Menon famous that the broader monetary market is at “threat of contagion” as a consequence of monetary establishments’ publicity to digital property.

Nonetheless, regulators are engaged on a framework to make clear the extent of crypto publicity conventional establishments can have. In line with Menon, the framework will “scale back dangers of spillovers into the normal banking system.”

Posted In: Singapore, Regulation

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