Singapore to curb crypto leveraged bets, impose suitability tests

abdelaziz Fathi

Regulators in Singapore said they may implement consumer protections for crypto investors, which could include suitability tests, curbs on leverage trading and credit facilities.

Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), signaled this stance on Monday. He added that the regulator may restrict retail investment in the crypto sector through new consumer protection safeguards.

“Adding frictions on retail access to cryptocurrencies is an area we are contemplating. These may include customer suitability tests and restricting the use of leverage and credit facilities for cryptocurrency trading,” he explains.

The city-state’s central bank chief further noted that retail investors have been “irrationally oblivious” about the risks associated with crypto trading. Menon reiterated the MAS’s view that cryptocurrencies are “not suitable investments for the retail public,” due to their exceptional price volatility.

Singaporean regulators have received 180 licence applications from digital asset providers as the country was seen to be crypto-friendly and has been attracting global firms to set up offices here. This included top crypto exchanges such as Binance and Kraken. Although the MAS has recently given its in-principle approval to several applicants, but over 30 applications were withdrawn after engagement with the agency and two have been rejected.

Singapore’s regulatory regime for exchanges requires them to provide adequate consumer protections and comply with Anti-Money Laundering measures.

Meanwhile, Singapore’s watchdog published a set of guidelines instructing so-called ‘digital payment token (DPT)’ companies to stop advertising their products in public spaces. The ban applies to both physical and virtual adverts, particularly online and on social media platforms, as the MAS described the trading of crypto assets “highly risky and not suitable for the general public.”

Singapore weighs up DeFi future

The non-binding guidelines also prohibit publishing ads on public transport, or through broadcast and print media. They are also discouraged from engaging third parties, such as social media influencers, or providing physical ATMs in Singapore for dispensing crypto tokens.

Instead, crypto firms can only market their offering on their own corporate websites, mobile applications or official social media accounts.

As the world gets to grips with tokenization and DeFi, Singapore regulators are also exploring the economic potential and value-adding use cases of these new technologies.

Earlier in June, MAS launched a collaborative initiative to research use cases of open and interoperable networks within the blockchain ecosystem.

Not many details were revealed about the matter, but MAS is actively working on regulations that might one day permit so-called tokenization, which allows a crypto token to represent a traditional asset like stocks. On top of that, Singapore’s central bank will look into issues related to trading digital assets, as well as DeFi applications in wholesale funding markets through existing financial infrastructure.

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