Singapore’s financial watchdog, the Monetary Authority of Singapore (MAS), has unveiled stringent new regulations aimed at curbing retail speculation in cryptocurrencies. The move comes as the city-state grapples with the risks associated with the volatile crypto market.
The MAS announced that individual investors would be barred from borrowing to trade cryptocurrencies. Additionally, digital payment token service providers are prohibited from offering incentives for retail trading in cryptocurrencies. This includes financing, margin, or leverage transactions. The use of locally issued credit cards for such transactions will also be prohibited.
Expanding Restrictions and Coverage
Previously, the MAS’ retail curbs only applied to investors within Singapore. However, the new measures will now encompass all investors, irrespective of their residency. Furthermore, the guidelines will cover incentives such as referrals and learn-and-earn programs associated with crypto trading.
These expanded measures are scheduled to be gradually introduced starting from mid-2024. The MAS aims to roll out these regulations in phases to allow time for adaptation within the industry.
Image Source: bloomberg.com
Ho Hern Shin, MAS’ deputy managing director for financial supervision, cautioned that while these measures aim to mitigate risks, they cannot completely shield customers from the inherent volatility and risks of cryptocurrency trading. He urged people to avoid dealing with unregulated entities, including those operating from overseas.
Additional Requirements
Apart from curbing speculative trading, the MAS will require crypto firms to maintain high availability and recoverability of critical systems, mirroring the stringent standards expected of traditional banks. Moreover, these firms must establish robust processes to handle customer complaints and resolve disputes.
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Singapore, a prominent crypto hub in Asia, has been taking steps to distance itself from speculative activities in the digital asset space. Previous efforts included plans to ban lending and staking following incidents like the collapse of hedge fund Three Arrows Capital.
As Singapore strengthens its regulatory framework, the MAS emphasizes the need for caution and adherence to the new guidelines to mitigate potential risks associated with cryptocurrency trading. These measures represent the government’s ongoing efforts to protect investors while fostering a responsible and secure financial ecosystem in the burgeoning crypto landscape.
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