- On Wednesday, the Monetary Authority of Singapore (MAS) proposed restricting retail investors from borrowing money or using credit cards to buy cryptocurrencies and from lending out their digital tokens in search of yield.
- To be fair, many of the entities which imploded in recent times had only a tenuous connection with Singapore.
After a series of high-profile crypto implosions linked to the city-state, including the collapses of stablecoin terraUSD in May and the once iconic hedge fund Three Arrows Capital, Singapore’s regulators have ramped up warnings to retail investors and proposed a broader range of cryptocurrency rules to bolster consumer protection.
On Wednesday, the Monetary Authority of Singapore (MAS) proposed restricting retail investors from borrowing money or using credit cards to buy cryptocurrencies and from lending out their digital tokens in search of yield.
Crypto exchanges are also being required to test would-be crypto buyers to check they understand risks in what it calls a “highly volatile” asset class.
In two consultation papers, it said “MAS strongly discourages speculation in cryptocurrencies by consumers,” and “several misconduct cases have been reported by international media, including where legal proceedings were commenced against entities that did not have sufficiently robust business conduct practices in place.”
To be fair, many of the entities which imploded in recent times had only a tenuous connection with Singapore.
Three Arrows Capital had already shifted its contracts offshore to the British Virgin Islands and had surrendered its license to operate in Singapore well before its implosion.
Others like Terraform Labs had their development teams located in Singapore, but the bulk of the alleged failures and malfeasances were committed by foreigners outside of the jurisdiction.
Nevertheless, MAS has taken on a proactive role to ensure that cryptocurrencies can be interacted with safely within its jurisdiction and is looking to ensure that stablecoins, which are designed to track the value of real assets such as the dollar, must be properly backed with reserve assets pegged to the Singapore dollar or other major currencies.
Being well known for providing a welcoming environment for the cryptocurrency industry, Singapore is often described as a “crypto paradise” and several prominent firms have established themselves there.
But regulators have sounded the alarm after a series of high-profile crypto implosions this year, without embracing the innovative and transformative benefits of blockchain technology and cryptocurrencies.
That sentiment was coined in comments made by MAS,
“Support for a digital asset ecosystem does not mean support for cryptocurrency speculation.”
Broader proposals include requiring service providers to ensure customer assets are segregated from their own assets and adopting “good industry practices” against unfair trading, including monitoring trading activity and setting out rules governing trading.
