The Monetary Authority of Singapore (MAS) has introduced measures aimed at discouraging speculative cryptocurrency trading and protecting retail investors. Responding to feedback on proposed Digital Payment Token (DPT) regulations, MAS outlined five key steps for DPT service providers to mitigate the risks associated with crypto investments.
Firstly, DPT service providers are required to assess their customers’ risk awareness before offering crypto services. Additionally, they are advised against providing any incentives to trade in cryptocurrencies. The prohibition of financing, margin, or leveraged transactions in the crypto space is another significant measure to curb speculation.
To further discourage speculation, MAS recommends DPT service providers to refuse locally issued credit card payments for cryptocurrency transactions. Moreover, crypto holdings will not be considered when determining a customer’s net worth.
Ho Hern Shin, Deputy Managing Director (Financial Supervision) of MAS, emphasized that while these measures aim to protect consumers, they cannot completely shield them from the inherent speculative and risky nature of cryptocurrency trading.
MAS highlighted the significant risks and consumer harms associated with speculative cryptocurrency trading, fueled in part by unverified success stories, celebrity endorsements, and the fear of missing out on potential returns.
In a broader context, MAS is actively exploring and promoting the institutional adoption of digital assets through initiatives like Project Guardian. This project includes five additional industry pilots involving institutions such as Citi, T. Rowe Price, Fidelity International, Ant Group, BNY Mellon, OCBC, JPMorgan Apollo, and Franklin Templeton. These pilots aim to test various use cases related to asset tokenization, with the overarching goal of enhancing liquidity, unlocking investment opportunities, and improving the efficiency of financial markets.
As part of these developments, MAS also launched Global Layer One to explore the design of an open digital infrastructure that can host tokenized financial assets and applications. These initiatives reflect MAS’s commitment to fostering innovation in the digital asset space while simultaneously addressing the risks associated with speculative cryptocurrency trading.
