Singapore may soon require retail investors to take a test and not use credit card payments and other forms of lending for cryptocurrency trading, the central bank proposed Wednesday in a series of strict measures as the island nation seeks make citizens aware of the risks surrounding volatile assets.
The Monetary Authority of Singapore said in a series of consultation documents that it is concerned that many retail customers are “not sufficiently aware of the risks of trading” in digital payment tokens, which may lead them to “take greater risks than they otherwise would.” otherwise they would have.” they have wanted or can bear.
The central bank also proposed that crypto firms licensed under the nation’s Payment Services Act should not be allowed to lend to retail investors in a move that could bring down the businesses of many firms.
While “this latter option is stricter than the regulatory treatment of retail customer securities under SFA38,” the central bank acknowledged, “MAS is of the opinion that the increased risk of consumer harm in this unregulated space may require more stringent for retail customers. .”
Several popular crypto exchanges already require their clients to periodically review questionnaires before they are allowed to trade crypto and engage in derivatives trading. the central bank admitted [PDF] that several industry players support some form of retail customer risk awareness assessment, but said they should also disclose whenever they have a financial interest in the tokens they offer to customers.
The new guidelines, which are open for public consultation until Dec. 21, also propose that crypto service providers not use incentives like giving away tokens or other gifts to woo retail customers. He also proposed banning celebrity endorsements.
The central bank has also proposed that stablecoin issuers make proper disclosures about their tokens and hold reserve assets in cash, cash equivalents or debt securities that are “at least equal to 100% of the nominal value of the” tokens in circulation “at all times”. times.”
Debt securities, the proposal says, must be issued by the central bank of the pegged currency or organizations that are both governmental and international in nature with a credit rating of at least AA.
“SCS [single-currency pegged stablecoins] Issuers must obtain independent certification, for example from external auditing firms, that reserve assets meet the above requirements on a monthly basis. This certification, including the percentage value of the reserve assets in excess of the nominal value of the SCS in circulation, must be published on the issuer’s website and presented to the MAS at the end of the following month (for the month that is certified). the proposal He says [PDF]adding that issuers must also appoint an external auditor to conduct an annual audit of their reserve assets and submit the report to MAS.
The proposal marks a major shift in Singapore’s stance on cryptocurrencies. Once a preferred global crypto hub for its policies, authorities in Singapore have hardened their views on digital assets following the collapse of a number of companies including Terraform Labs stablecoin, UST and the native token LUNA, and hedge fund Three Arrows Capital.
“The collapse of a number of cryptocurrency trading platforms, where some had engaged in gambling or lending activities, had caused significant consumer harm,” the central bank said.