The city-state regulator proposes measures to curtail trading in cryptocurrencies by retail investors, requiring providers to ensure proper business conduct and risk disclosure.
The Monetary Authority of Singapore has issued two consultation papers for review by crypto industry participants that are aimed at sharply curtailing trading activities by the general public, a statement released Wednesday indicated.
The papers are intended to reduce the risk of «consumer harm» from cryptocurrency trading activities while supporting the development of stablecoins as a medium of exchange in the wider ecosystem. The finalized measures are intended to form part of Singapore's Payment Services Act.
«Trading in cryptocurrencies (also known as digital payment tokens or DPTs) is highly risky and not suitable for the general public,» the MAS indicated, adding it was not feasible to ban them entirely.
Consumer Access
Under the planned measures digital payment token providers will have to provide risk disclosures that allow retail consumers to make informed decisions, but they can no longer provide credit or leverage to such clients for cryptocurrency trading.
When it comes to business conduct, token providers will have to fully segregate client assets and mitigate potential conflicts of interest from their activities while establishing processes for complaint handling.
When it comes to their technology, they will need to maintain high rates of system availability and critical system recoverability, as banks regulated in the city-state currently do.
Utmost Caution
«Notwithstanding these regulatory measures, consumers must continue to exercise utmost caution when trading in DPTs and must take responsibility for such trading. Regulations cannot protect consumers from losses arising from the inherently speculative and highly risky nature of DPT trading,» the MAS said in the statement.
As part of the planned package of measures, the MAS will regulate the issuance of stablecoins pegged to single currencies if they exceed S$5 million in value.
The issuers will have to meet basic capital and liquidity requirements and hold reserves equivalent to the par value of stablecoins outstanding while only pegging them to the Singapore dollar or G10 currencies.
Banks Exempt
Banks will also be allowed to issue stablecoins with no additional reserve and prudential requirements given the already rigorous ones they are subject to and if the issuance is in tokenized form against their liabilities. Unregulated stablecoins will need to be clearly distinguished and labeled accordingly.
«The two sets of proposed measures mark the next milestone in enhancing Singapore’s regulatory approach to foster an innovative and responsible digital asset ecosystem,» indicated Ho Hern Shin, MAS deputy managing director of financial supervision.
