IMPLEMENTATION OF FURTHER RESTRICTIONS ON CRYPTOCURRENCY TRADING PLATFORMS TO PROTECT MEMBERS OF PUBLIC

I was concerned to note that many retail investors got their hands burned in investing in cryptocurrency. Although MAS has consistently cautioned such investors from making such investments, I noted that a number of these platforms are freely accessible by them. I therefore asked the Prime Minister what steps MAS intends to take protect such investors. In his reply on behalf of the Prime Minister, SM Tharman stated that MAS is actively considering introduction of additional consumer protection safeguards. I welcome this move and look forward to hearing details of this. My parliamentary question and SM Tharman’s reply may be accessed through this link.

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Mr Murali Pillai asked the Prime Minister whether MAS intends to implement further restrictions on cryptocurrency trading platforms with a view to protect unsophisticated persons from entering into such trades which are considered highly risky.

Mr Tharman Shanmugaratnam (for the Prime Minister): Since 2017, the Monetary Authority of Singapore (MAS) has consistently warned that cryptocurrencies are not suitable investments for the retail public. Most cryptocurrencies are subject to sharp speculative price swings. Recent events have vividly demonstrated the risks, with prices of several cryptocurrencies falling drastically.

In January this year, MAS went further than most other regulators, to restrict the marketing and advertising of cryptocurrency services in public areas, and disallow cryptocurrency trading being portrayed in a manner that trivialises its risks. All entities dealing in cryptocurrencies (termed digital payment token or DPT service providers) in Singapore are expected to comply with the MAS guidelines. Since then, DPT service providers have taken actions to meet these rules, such as removing cryptocurrency ATMs from public areas and taking down advertisements from public transport venues.

DPT service providers are currently regulated under the Payment Services Act (PS Act) primarily for money laundering and terrorism financing risks. But the PS Act also empowers MAS to impose additional measures on DPT service providers to ensure better consumer protection, and to maintain financial stability and safeguard the efficacy of monetary policy.

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.

MAS reiterates its warning: cryptocurrencies are highly risky and are not suitable for the retail public. People can lose most of the money they have invested, or more if they borrow to purchase cryptocurrencies.