Monetary Authority of Singapore mulls restricting retail access to crypto

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The Monetary Authority of Singapore (MAS) is mulling adding restrictions on retail access to cryptocurrencies, MD Ravi Menon said earlier this week. This comes as MAS said it is considering further measures to reduce consumer harm after consumers are still enticed by the prospect of sharp price increases in cryptocurrencies, which Menon said are "actively traded and heavily speculated upon".

He explained that consumers seem to be "irrationally oblivious about the risks of cryptocurrency trading" and that consumer-related risks have also gained the attention of regulators globally. "MAS regards cryptocurrencies as unsuitable for use as money and as highly hazardous for retail investors," he said. Among the list of further measures include customer suitability tests and restricting the use of leverage and credit facilities for cryptocurrency trading.

Singapore has attempted to become a hub for innovative and responsible digital asset activities. According to a KPMG report, Singapore saw record levels of investment in crypto and blockchain with US$1.48 billion transacted across 82 deals in 2021, as compared to US$109.75 million over 26 deals in 2020.

The country has also handed out crypto payment licences. According to Reuters, only approximately 24 licences were handed out although about 180 crypto firms applied for it in 2020. Reuters added the MAS is still undergoing an "elaborate due diligence process".

In recent times, however, the city-state's reputation has taken a hit after renowned names in the crypto industry folded. In May this year, TerraUSD, owned by Singapore-based Terraform Labs, collapsed and its creator, Do Kwon, is currently facing prosecution in South Korea. Binance also dropped its application for a Singapore licence and ceased local operations this year. At the same time, the Financial Times reported that Singapore-based Hodlnaut fired most of its workforce, halted withdrawals and admitted to an investigation by the Singapore Police Force in August.

Nonetheless, MAS has taken steps to mitigate consumer harm including restricting digital asset players from promoting cryptocurrency services at public spaces. This has resulted in the dismantling of Bitcoin ATMs and the removal of ads at MRT stations.

MAS has also been sharing its concerns with the industry and inviting views on possible measures to minimise harm to consumers. It will also publicly consult on the proposals by October 2022. Meanwhile, Menon also said that consumers must take responsibility and exercise judgement and caution. "No amount of MAS regulation, global co-operation, or industry safeguards will protect consumers from losses if their cryptocurrency holdings lose value," he added.

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