The Monetary Authority of Singapore (MAS) has proposed revised guidelines to curb the growing rate of digital asset speculation in retail markets.
In a recent publication, the Central Bank released amended regulations for digital payment token providers and related cryptocurrency institutions on market activities particularly in reducing price speculation.
According to the document, firms will not be permitted to offer trading incentives to customers as authorities have argued for months that some users are being lured to speculate and make huge gains which may likely result in losses.
Flagged incentives under the proposed guidelines include providing leverages and margins and to an extent some financial support is now at risk of being outlawed.
These regulations come as the government plans to tighten the prevalence of fraud and reduce risks in the retail market. In recent times, global authorities have been pushing to make local markets safer for investors following the implosions of cryptocurrency firms that wiped billions off the markets.
Financial limitations and wider retail regulations
The financial regulator also proposes cutting off credit lines for the purchase of certain assets as firms will be prohibited from accepting any purchases from locally issued credit cards.
Furthermore, referrals that offer rewards to onboard new clients and learn-to-earn programs are also limited in the new guidelines. The new laws expand the application to all retail investors; both accredited and unaccredited users.
Geographically, the guidelines extend to retail traders slightly outside the city-state. Coming into effect in mid-2024 the rules have been proposed after a year-long public consultations to properly regulate digital asset payment token providers.
Aside from the global crisis Terra and FTX left last year, Singapore’s investors were also exposed to Three Arrows Capital and its collapse led to renewed regulatory scrutiny on the market.
Ho Hern Shin, the Deputy Managing Director for Financial Supervision at MAS pointed out that even with the proposed rules, it would be difficult to prevent users from falling prey to the highly speculative and risky nature of digital assets.
“We urge consumers to remain vigilant and exercise utmost caution when dealing in DPT services, and to not deal with unregulated entities, including those based overseas.”
Singapore shape-up wider regulations
Singapore has been described as a major crypto hub in Asia with several firms flocking into the country and many others seeking licenses to offer digital asset-related services.
The country released stablecoin regulations alongside other jurisdictions viewing them as important instruments in playing the role of digital money alongside Central Bank Digital Currencies (CBDC) saying that private cryptocurrencies are below par.
“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.”
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