Putting the Brakes on Crypto Speculation in Singapore

In response to feedback on proposed Digital Payment Token (DPT) regulations, the Monetary Authority of Singapore (MAS) has introduced measures aimed at discouraging speculation in cryptocurrency investments.

MAS, serving as the central bank of Singapore, has outlined five strategies for Digital Payment Token (DPT) service providers.

The goal is to assist retail clients in avoiding price speculation when engaging in cryptocurrency investments.

Measures to Mitigate Risks

These measures include the assessment of customer risk awareness before offering crypto services.

MAS said:

“Retail customers often do not have a full picture of the associated risks and may lack the financial resources to withstand the large losses that are typical in cryptocurrency markets,”

Additionally, DPT service providers are advised against providing incentives for crypto trading, and they are prohibited from offering financing, margin, or leverage transactions.

Another measure involves refusing locally issued credit card payments, as a step to deter speculation in crypto investments.

Furthermore, crypto holdings will not be factored into determining a customer’s net worth.

Ho Hern Shin, the deputy managing director (financial supervision) of MAS, highlighted:

“While these business conduct and consumer access measures can help meet this objective, they cannot insulate customers from losses associated with the inherently speculative and highly risky nature of cryptocurrency trading.”

According to MAS, speculative cryptocurrency trading poses significant risks and consumer harms, partly driven by unverified success stories, celebrity endorsements, and the fear of missing out (FOMO) on potential returns.

Project Guardian

In a separate development, MAS has expanded its Project Guardian with five additional industry pilots.

These pilots aim to test various use cases around asset tokenisation, with the goal of catalysing institutional adoption of digital assets.

The initiative seeks to enhance liquidity, unlock investment opportunities, and increase the efficiency of financial markets.

Among the 17 financial institutions involved in Project Guardian, the five pilot projects are distributed among Citi, T. Rowe Price, Fidelity International, Ant Group, BNY Mellon, OCBC, JPMorgan Apollo, and Franklin Templeton.

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