As individual investors appear to be “irrationally ignorant” of the risks, the head of Singapore’s central bank said the city-state is mulling additional regulations that will make it harder for them to trade cryptocurrencies.
Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), stated at a conference on Monday that “adding frictions on retail access to cryptocurrencies is an area we are examining.”
The recommendations, which lay out guidelines for crypto trading by retail investors in order to protect them, were published in two consultation papers on Wednesday. The new regulations make a substantial change in how consumer access is controlled by prohibiting credit facilities from offering services to retail customers for bitcoin trading.
The two sets of proposed regulations, according to Ms. Ho Hern Shin, Deputy Managing Director (Financial Supervision), “represent the next milestone in strengthening Singapore’s regulatory strategy to support a creative and responsible digital asset ecosystem.” Regulations and innovation in the financial services industry go hand in hand.
This year, digital token prices have plummeted as investors and traders fled riskier investments due to increasing 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.” Among those with a significant presence in Singapore are the American cryptocurrency exchange Gemini and the initially China-focused cryptocurrency exchange Huobi.
In 2020, under a new system, approximately 180 crypto businesses sought a crypto payments license to the MAS, but Singapore has only issued roughly two dozen licenses so far following a thorough due diligence process that is currently ongoing.
Singapore has become a key center 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.
