Singapore reveals international talks on protection for retail crypto investors

Again warns investors that alterna-cash is a very risk proposition


The Monetary Authority of Singapore (MAS) has hinted the city-state may soon impose more regulations on cryptocurrency.

The senior minister and minister in charge of MAS, Tharman Shanmugaratnam, responded affirmatively to a parliamentary question that asked whether the governing body intends to implement further restrictions on cryptocurrency trading platforms to prevent "unsophisticated persons" from participating in the "highly risky" trade.

Shanmugaratnam said MAS was "carefully considering" the introduction of additional consumer protection measures. Among the actions under consideration are limiting retail participation and governing the use of leverage on transactions – a practice where investors borrow capital to make trades, thus amplifying their purchasing power in exchange for greater risk.

"Given the borderless nature of cryptocurrency markets, however, there is a need for regulatory coordination and cooperation globally," the minister stipulated in his written response to a question posed in Parliament, adding that the issues were already under discussion at "various international standard setting bodies where MAS actively participates."

Since 2017, the MAS has repeatedly warned retail investors to steer clear of cryptocurrency. Deputy prime minister Heng Swee Keat reiterated this point in May, citing individuals who recently lost large sums of money and even their life's savings after the meltdown of so-called "stablecoin" Luna.

Singapore has already increased regulation on operators through measures like requiring licenses and limiting where crypto players can advertise.

And since using leverage can allow rookies to get in over their heads with hefty bets while skipping pesky requirements like collateral assets, it is no surprise the city-state that banned chewing gum would want to regulate crypto, too.

Shanmugaratnam ended his reply with the following reminder:

MAS reiterates its warning: cryptocurrencies are highly risky and are not suitable for the retail public. People can lose most of the money they have invested, or more if they borrow to purchase cryptocurrencies.

As if to prove MAS's warning was apposite, on the same day the minister's reply was published, Singapore-based crypto lending company Vauld released a statement saying it was suspending both trade and withdrawals while seeking new investors after facing "financial challenges" cause by "volatile market conditions."

Between June 12, 2022 and July 4, 2022, the company claimed to have experienced customer withdrawals in excess of $197.8 million. Vauld said the crash was "triggered by the collapse of Terraform Lab's UST stablecoin, Celsius network pausing withdrawals, and [Singapore-based crypto hedge fund] Three Arrows Capital defaulting on their loans." ®

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