Singapore may soon require retail investors to pass an assessment and refrain from using leverage or credit while trading in cryptocurrencies. This was proposed as part of a series of strict measures from the Monetary Authority of Singapore (MAS) to raise citizens' awareness of the risks associated with volatile assets.
In a set of consultation papers, the MAS expressed concerns that many retail customers may “not have sufficient knowledge of the risks of trading" digital payment tokens, which could cause them to "take on higher risks than they would otherwise have been willing, or are able to bear."
The measures also called for providers to be compelled to determine, before offering any service to a retail customer, whether they are sufficiently aware of the dangers of crypto-related services, including aspects such as unstable market conditions, cybersecurity threats and technological failure.
“Many retail customers may not have sufficient knowledge of the risks of trading Digital Payment Tokens (DPTs), leading them to take on higher risks than they would otherwise have been willing, or are able, to bear,” MAS stated.
Pass A Test Or Study Further
Constomers may be required to receive instructional materials from providers to better understand the hazards associated with crypto services if customers do not demonstrate sufficient awareness when evaluated.
MAS stated in its proposal that providers shall not mortgage, charge, pledge or hypothecate the retail customer's crypto.
The process of utilizing a valuable as collateral to secure a loan is known as hypothecation.
Before offering staking services to institutional or professional clients, service providers might be required to “provide a clear risk disclosure document and obtain the customer’s explicit consent."
The watchdog suggested banning the distribution of token incentives such as free cryptocurrency or trade credits because they can tempt retail users to use DPT services without fully understanding the dangers involved.
These guidelines would apply to anyone recommending a service provider to retail customers, such as a celebrity or a current customer.
The proposal is open for public comment through Dec. 21.
Singapore’s Tryst With Cryptos
Singapore regulators have taken a number of actions this year to reduce the hazards cryptocurrency can provide to consumers.
Beginning in 2022, MAS published guidelines prohibiting cryptocurrency platforms from advertising their services to the general public, such as on buses or in TV commercials. They can still run advertisements on their websites and social media pages, though.
Despite the MAS's repeated warnings, digital assets continue to be a preferred investment option for affluent individuals in Singapore.
According to a KPMG survey, nine out of 10 family offices and wealthy individuals in the area have already made investments in digital assets or want to do so in the near future.
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