The MAS recommends verifying whether investors understand the potential risks of crypto assets, but high-net-worth investors are not subject to restrictions. Various crypto breaches like the TerraUSD crash led the MAS to announce stricter regulations to offer users maximum security amid market volatility.
The authorities of Singapore have proposed new regulations to supervise how citizens use cryptocurrencies and protect consumers.
The central bank of the Asian country and the Monetary Authority of Singapore (MAS), the financial regulator, have been working together. They recently released two consultation documents with suggestions to support the government’s regulatory position on crypto assets.
MAS Recommends Banning the Use of Credit Cards to Buy Cryptocurrencies
The consultation document outlines the proposal of banning retail investors from using credit cards to borrow funds to buy or sell crypto assets.
The MAS has also recommended requiring cryptocurrency investors to answer a questionnaire to see if they understand the potential risks of those assets.
However, high-net-worth investors are not subject to those restrictions, as they qualify for a broader range of investments. The document proposed a limit of SGD 200,000 (about USD 142,000) for accredited investors to invest in cryptocurrencies.
The volatility of cryptocurrencies has led the MAS to ban crypto companies from offering loans, staking, and leveraged transactions. The central bank of Singapore considers that the instability of prices may cause consumers to suffer considerable losses.
The financial regulator also highlighted that crypto service providers must segregate their clients’ assets. Besides, it said it was necessary to provide information about risk assets to mitigate consumer complaints.
The document addresses the recent bankruptcy of several companies in the digital payment token (DPT) sector. It states that this situation underscores the importance of having effective and robust arrangements to identify and segregate their clients’ assets.
MAS Plans to Regulate the Issuance of Stablecoins in Singapore
The MAS revealed its plans to regulate the issuance of single currency-pegged stablecoins (SCS) in a separate consultation document. It said that the value of the tokens in circulation exceeds 5 million Swiss dollars, equivalent to around USD 3.6 million.
The document noted that stablecoins must have parity with the Singapore dollar or a group of 10 currencies fully backed by reserve assets. In addition, the issuers of those crypto assets must publish a white paper revealing essential details, like the redemption rights of holders.
The Central Bank Does Not Plan to Ban Cryptocurrency Services Completely
The Singaporean authorities made those proposals a few months after various crypto breaches, like the TerraUSD crash, affected the country.
The MAS announced in August that it seeks to establish stricter regulations to offer cryptocurrency investors maximum security against market volatility.
However, the central bank of Singapore has made it clear that it does not plan to ban cryptocurrency services completely. They intend to prevent retail consumers from seeking those services on unlicensed platforms.
During the new consultation period endings on December 21st, the regulator expects to collect feedback on the guidelines from stakeholders.
By Alexander Salazar
