Singapore thinks about restricting retail investors’ access to bitcoin trading

The head of Singapore’s central bank said the country is preparing to implement new rules that would make it more challenging for retail investors to trade cryptocurrencies at a time when they appear to be “irrationally ignorant” to the risks.

At a gathering on Monday, Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), noted that despite precautions and warnings, surveys indicate that consumers are increasingly trading in cryptocurrencies everywhere, not just in Singapore, drawn by the possibility of rapid price increases.

Singapore
Singapore

They appear to be irrationally unaware of the risks associated with trading cryptocurrencies, he said.

The MAS was thinking about “adding frictions” to retail access to cryptocurrencies, he said.

At a seminar headlined “Yes to digital asset innovation, No to cryptocurrency speculation,” he continued, “These may include customer appropriateness assessments and banning the use of leverage and credit facilities for cryptocurrency trading.”

Singapore has become a key centre 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.

However, recent failures of certain Singapore-based international cryptocurrency businesses, many of which are exempt from the financial regulator’s rules on market behaviour and consumer protection, have raised concerns about stricter oversight.

By October, the MAS would ask for public input on its ideas, according to Menon, who also noted that authorities around the world are still conducting reviews.

The MAS released guidelines in January to restrict bitcoin trading service providers’ ability to market their offerings to the general public, the complete story.

This year, cryptocurrency prices have plummeted as investors fled riskier investments due to rising U.S. interest rates and raging inflation.

Menon asserted that “MAS’ accommodative position on digital asset activity and restricted stance on cryptocurrency speculation are not incompatible.”

There are several cryptocurrency exchanges with a significant presence in Singapore, including the American exchange Gemini and the Chinese-focused Huobi.

In 2020, the MAS received applications from over 180 crypto enterprises seeking a licence to process crypto payments under a new system, but only about two dozen licences have been granted thus far in Singapore after a thorough due diligence process that is currently ongoing.

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