Singapore Pushing For Stronger Crypto Laws
Ravi Menon, the managing director of the Monetary Authority of Singapore (MAS), stated on August 29 that Singapore intends to raise the entry hurdle into cryptocurrency trading for retail investors since these investors are “oblivious” to the risks that are connected with the activity.
Menon claims that retail interest in cryptocurrencies is still quite high despite the warnings issued by the industry regarding the hazards involved. He went on to say that the majority of these ventures were started because of the allure of fast profits that could be realized through significant price hikes in the area.
Menon pointed out that the “borderless” nature of the cryptocurrency market makes it unlikely that a ban on the cryptocurrency industry will be successful.
However, in order to protect regular investors, the authorities may implement new safeguards, such as client suitability tests, and place restrictions on the use of credit and leverage facilities for cryptocurrency trading.
Menon continued by stating that cryptocurrencies could not serve the purpose of money due to the volatile nature of digital assets. Nevertheless, he is aware that tokenization and distributed ledgers have the potential to bring about economic gains.
Singapore Position on Crypto “not inconsistent.”
The chief executive of the regulatory body discussed the stance that the agency takes with regard to the cryptocurrency industry. Menon said:
There is no inconsistency between the MAS’s restrictive position on cryptocurrency speculation and its facilitative posture toward operations using digital assets.
According to Menon, there is a potential for manipulative practices within the cryptocurrency market. Despite this, the Malta Financial Services Authority (MAS) and other worldwide authorities are actively striving to improve laws in this field.
Regarding crypto legislation on a worldwide scale, Singapore is widely regarded as one of the most forward-thinking governments. However, the recent meltdown of the market demonstrated to the authorities that their rules are not sufficiently all-encompassing.
The collapse in the market has forced a rethinking of its methods, with a greater emphasis now placed on protecting individual investors from the risks that are associated with the business.
In January, MAS placed restrictions on the public advertising of cryptocurrencies. Since the previous record market meltdown, the regulatory body has also implemented a variety of new regulations.
Bloomberg also stated that Singapore’s Central Bank had distributed questionnaires to all cryptocurrency firms that the MAS had licensed in order to enquire about the firms’ operations and assets.
According to the study, the questionnaire’s primary purpose is to provide the regulator with information regarding these companies’ levels of financial stability, business activity, and interconnectivity.
According to Ravi Menon, the regulator is now working on a regulatory strategy toward stablecoins, and it is expected that this approach will be revealed in October.
According to Menon, the only way for stablecoins to realize their full potential is for consumers to have faith that their value will remain constant.
The reserves of many stablecoins, such as commercial papers, “are vulnerable to credit, market, and liquidity issues,” which means that they cannot maintain their value.
In the meantime, Menon pointed out that the “risk of contagion” facing the global financial sector is a result of the exposure that financial institutions have to digital assets.
However, regulators are currently working on a framework to clarify the level of exposure to cryptocurrencies that traditional banks are permitted to have. The framework will, according to Menon, “lower risks of spillovers into the traditional banking system.”