Singapore Implements New Rules to Safeguard Retail Investors in Cryptocurrency Trading
The Monetary Authority of Singapore (MAS), the nation’s central bank and financial regulator, has recently announced the strengthening of regulations aimed at protecting individuals and limiting their involvement in cryptocurrency trading. These measures have been finalized after a yearlong process of public consultation and review.
New Measures to Protect Retail Investors
Starting from mid-2024, the newly introduced rules will prevent cryptocurrency platforms, also known as digital payment token (DPT) service providers, from accepting purchases made with locally issued credit cards. Furthermore, incentives that encourage individuals to trade digital tokens, such as free trading credits or rewards, will be prohibited.
MAS Acknowledges Inherent Risks
While the MAS aims to protect the interests of customers, it acknowledges that these regulations cannot completely shield them from the inherent risks associated with speculative and highly volatile cryptocurrency trading. Ho Hern Shin, the MAS deputy managing director for financial supervision, urges consumers to exercise caution and avoid dealing with unregulated entities, including those operating internationally.
She emphasized, “While these business conduct and consumer access measures can help meet this objective, they cannot insulate customers from losses associated with the inherently speculative and highly risky nature of cryptocurrency trading.”
Applicability and Criticisms
These new measures will be applicable to all retail customers, regardless of their place of residence, and will encompass individuals who are not accredited or institutional investors. Accredited investors are defined as those who possess over $1 million in net financial assets.
MAS Managing Director Ravi Menon recently criticized cryptocurrencies for their failure as effective digital money, stating, “they have performed poorly as a medium of exchange or store of value, their prices are subject to sharp speculative swings, and many investors in cryptocurrencies have suffered significant losses.”
The MAS has taken a proactive approach to address the growing concerns surrounding cryptocurrency trading and its impact on retail investors. With these new rules and measures in place, it aims to provide a safer environment for individuals while also recognizing the limitations in fully safeguarding them from the risks associated with the cryptocurrency market.
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