Singapore considers stricter crypto regulations to protect retail traders

Singapore plans to raise barriers to entry into cryptocurrency trading as retail investors are “unaware” of the risks involved. speech The announcement was made by Ravi Menon, Managing Director of the Monetary Authority of Singapore (MAS), on 29 August.

According to Menon, private interest in cryptocurrencies remains very high despite industry risk warnings. Most of this interest, he continued, was driven by the lure of quick profits gained by sharp price increases in the sector.

Menon noted that a crypto industry ban would “likely not work” due to the “borderless” nature of the industry.

However, authorities may introduce new measures, such as customer suitability tests, and restrict the use of credit and leverage facilities for trading cryptocurrencies to protect retail investors.

Menon added that cryptocurrencies cannot function as money due to their volatile nature. However, he recognizes the economic potential of tokenization and distributed ledgers.

Singapore’s Crypto Stance Is “Contradictory”

A senior official of the regulator touched on the agency’s stance on the cryptocurrency industry. Mr Menon said:

“MAS’s facilitative stance on digital asset activity and its restrictive stance on cryptocurrency speculation are not inconsistent.”

According to Menon, the cryptocurrency market is prone to market manipulation risks. However, MAS and other global regulators are working to tighten regulation in this area.

Singapore is one of the leading countries when it comes to crypto regulation in the world. However, the recent market crash has shown regulators that their rules are not comprehensive enough.

The market downturn forced a rethink of the company’s strategy, now focused on protecting retail investors from industry risks.

In January, MAS ran an exclusive promotion for cryptocurrencies. Regulators have also introduced various regulations since the record market crash.

Bloomberg too report The Central Bank of Singapore has sent a questionnaire to all MAS-licensed cryptocurrency companies, asking about their operations and holdings.

The report revealed that the questionnaire is designed to help regulators determine the financial stability, business activities and interconnectedness of these companies.


Ravi Menon said regulators are working on a regulatory approach to stablecoins, which will be revealed by October.

Menon said a stablecoin will reach its potential if its users are confident that it can maintain a stable value.

However, many stablecoins, like commercial paper, cannot maintain their value because their reserves are “subject to credit, market, and liquidity risks.”

Meanwhile, Menon said the broader financial markets are at “risk of contagion” as financial institutions are exposed to digital assets.

However, regulators are working on a framework to clarify the level of exposure to cryptocurrencies that traditional institutions can have. According to Menon, the framework “reduces the risk of spillovers into the traditional banking system.”

Posted In: Singapore, Regulation

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