Key Takeaways:
- The MAS will start looking into methods to restrict access to credit facilities, introduce customer suitability checks to add friction to retail access and use credit facilities to discourage foolish investment.
- Singapore’s central bank’s head said the city-state is mulling additional regulations that will make it harder for individual investors to trade cryptocurrencies.
In a time when individual investors appear to be “irrationally ignorant” of the risks, Singapore is preparing to implement new restrictions that will make it more challenging for them to trade cryptocurrencies, according to the head of the country’s central bank.
Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), called retail cryptocurrency investors “irrationally ignorant” of the risks at an event on Monday and called for tighter regulations.
Menon added that leverage and credit facilities for cryptocurrency trading might be restricted, as well as customer suitability checks.
Menon stated on Monday during the Green Shoots Seminar, “Many customers still seem irrationally naive about the risks of cryptocurrency trading despite early, determined steps to limit consumer harm. An outright prohibition, however, is not likely to succeed,” according to Menon, as the market is open to Singaporeans “with just a mobile phone.”
Singapore has become a key center in Asia thanks to the financial hub’s success in luring enterprises involved in digital asset services from China, India, and other countries in recent years.
Menon stated in November that the wisest course of action was not to “crack down or outlaw these things,” emphasizing the importance of crypto-based businesses to Singapore’s future.
In 2021, Singapore saw investment in the sector reach $1.48 billion, a tenfold increase over the previous year’s total and almost half the Asia Pacific total.
That standing has been jeopardized by the recent decline in the cryptocurrency market. The central bank intends to change cryptocurrency regulations in response to the collapse of the Singapore-based cryptocurrency hedge fund Three Arrows Capital and the Singapore-registered Terraforms Labs and Vauld.
The Monetary Authority of Singapore (MAS), the country’s central bank, has asked a few digital asset companies for information.
Tighter controls, according to MAS, protect the retail customer.
By October, the MAS would ask for public input on its ideas, according to Menon, who noted that authorities worldwide are still conducting reviews.
The MAS will also work with other regulatory bodies to develop various measures to lessen investors’ harm and advise consumers to exercise prudence when investing.
In 2020, approximately 180 crypto businesses sought a crypto payments license from the MAS under a new system. Still, Singapore has only granted roughly two dozen licenses thus far following a thorough due diligence process that is currently ongoing.
