The Monetary Authority of Singapore (MAS) clarified yesterday (July 4) the regulator’s position on cryptocurrency platforms in Singapore.
In a written response, Tharman Shanmugaratnam, Senior Minister and minister-in-charge of MAS, warned that cryptocurrencies are not suitable for investments for the retail public, given the tendency for their prices to swing sharply.
He also argued that recent events have demonstrated the risks of such investment, with the prices of cryptocurrencies falling drastically.
In addition, Tharman also stated that while Digital Payment Token service providers are regulated under the Payment Services Act, the act also allows MAS to impose additional measures on these service providers to ensure better consumer protection, maintain financial stability, and safeguard the efficacy of monetary policy.
In response, MAS has been carefully considering the introduction of additional consumer protection safeguards.
These may include placing limits on retail participation, and rules on the use of leverage when transacting in cryptocurrencies. Given the borderless nature of cryptocurrency markets, however, there is a need for regulatory coordination and cooperation globally. These issues are being discussed at various international standard setting bodies where MAS actively participates.– Tharman Shanmugaratnam, Senior Minister and minister-in-charge of MAS
MAS has also been active in attempting to prevent crises from developing by attempting to limit retail investment into cryptocurrencies. Cryptocurrency ATMs have been removed from public spaces, and MAS has stated that cryptocurrency service providers should not market or advertise their services in public areas.
The warning by MAS comes as the cryptocurrency industry is under increasing scrutiny amid a recession in the industry. Many companies have been cutting their headcounts, and several high profile companies are also facing crises.
Singapore-based Terraform Labs, which created the Terra-UST and Luna tokens, collapsed two months ago, and this was followed by the implosion of the Singapore-based hedge fund Three Arrows Capital. Three Arrows Capital has since filed for bankruptcy, and MAS last week also censured the company for exceeding the amount of money it was allowed to manage.
These crises have also resulted in another Singapore-based crypto lending platform, Vauld, suspending withdrawals.
As a result, MAS has reiterated its warning that cryptocurrencies are highly risky and unsuitable for the retail public.
“People can lose most of the money they have invested, or more if they borrow to purchase cryptocurrencies,” cautioned Tharman.
Featured Image Credit: Monetary Authority of Singapore