According to a speech given by the managing director of the Monetary Authority of Singapore (MAS), Ravi Menon, on August 29, Singapore intends to raise the entry hurdle into crypto exchanges for individual investors because they are “oblivious” to the associated dangers.
Menon claims that despite industry risk warnings, consumer demand for cryptocurrency is still quite high. He said that most of these interests were sparked by the allure of making quick riches due to rapid price increases in the industry.
Menon stated that because of the “borderless” nature of the space, outlawing the cryptocurrency industry “is not likely to work.”
The authorities may enact new regulations to safeguard retail investors, including customer suitability tests and restrictions on using credit and leverage facilities in cryptocurrency trading.
Menon noted that cryptocurrencies could not be used as money due to their volatility. He is aware. Nevertheless, that distributed ledgers and tokenization have economic potential.
Singapore’s stance on cryptocurrency is “not incongruous.”
The regulator's chief executive spoke briefly on how the organization views the cryptocurrency sector. Menon stated
“MAS’s accommodating position toward digital asset activities and restrictive posture for speculating in cryptocurrencies are not in conflict.”
Menon asserts that there is a risk of market manipulation in cryptocurrency. MAS and other international authorities are working to improve regulations in this area.
Singapore has come out as one of the world’s most progressive nations when it comes to cryptocurrency rules. However, the most recent market collapse demonstrated to authorities that their rules are insufficiently detailed.
The market slump necessitated reevaluating its tactics, with a stronger focus now being placed on shielding individual investors from the hazards of the sector.
The MAS restricted public cryptocurrency advertisements in January. The regulator has also added various requirements since the historic market catastrophe.
According to Bloomberg, all cryptocurrency companies authorized by MAS received questionnaires from Singapore’s Central Bank asking about their business practices and asset holdings.
According to the report, the regulator would use the questionnaire to assess the firms’ financial viability, commercial operations, and interconnectedness.
According to Ravi Menon, the regulator is developing a stablecoin regulation strategy to make it public by October.
According to Menon, users need to be sure that stablecoins would keep a stable value.
However, because their reserves, like those in commercial papers, “are susceptible to credit, market, and liquidity issues,” many stablecoins cannot maintain their value.
Menon also pointed out that because of financial institutions’ exposure to digital assets, the overall financial market is “at risk of contagion.”
Nevertheless, regulators are developing a framework to make it clear how much exposure to cryptocurrencies established banks are permitted to have. The framework will “lower risks of spillovers into the traditional financial sector,” according to Menon.