The Monetary Authority of Singapore (MAS) is considering stricter regulations for cryptocurrency trading platforms following recent disruptions in the space, Senior Minister Tharman Shanmugaratnam said in a written answer to a parliamentary question on Tuesday (July 5).
The central bank’s considerations “may include placing limits on retail participation and rules of leverage when transacting in cryptocurrencies,” added Shamugaratnam, who is also the chairperson of the MAS.
Since 2017, the regulatory authority has cautioned retail investors that cryptocurrencies are not a suitable investment asset due to their sharp price swings. The recent issues in the cryptocurrency scene are an example of the risks involved, Shanmugaratnam noted.
“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,” he stressed.
The latest announcement comes after the regulator restricted the marketing and advertising of cryptocurrency services by platforms in public areas in January. This included the removal of cryptocurrency ATMs from public places.
At present, cryptocurrency platforms in Singapore are licensed under the digital payment token (DPT) services under the Payment Services Act. The Act allows the regulator to impose additional measures to ensure better consumer protection and financial stability while safeguarding the efficacy of monetary policy.
Fourteen licences have been issued so far, including the three issued to Crypto.com, Genesis and Sparrow Exchange on June 22.
MAS is now looking at further consumer protection safeguards on cryptocurrency platforms.
This comes after the implosion of crypto hedge fund Three Arrows Capital (3AC) which was accused of exceeding its assets threshold and providing false information.
The central bank said it had “reprimanded” 3AC and accused it of providing misleading information concerning its relocation to the British Virgin Islands in 2021. It also said that 3AC had exceeded its S$250 million assets-under-management cap during two periods in 2020 and 2021.
3AC has since filed for bankruptcy and is in the process of being liquidated.
In another instance, crypto lending and trading platform Vauld, on July 5, announced that it would suspend withdrawals and trading and seek new investors due to the “financial challenges” it was facing.
“The volatile market conditions, the financial difficulties of our key business partners inevitably affecting us, and the current market climate, which has led to a significant amount of customer withdrawals in excess of $197.7 million since June 12,” Vauld CEO Darshan Bathija wrote in a blog post.
DealStreetAsia understands from a direct source that at least one other crypto company in Singapore will be winding up its operations.
“We have been waiting for our licence to be approved since last year. There have been so many delays coupled with the latest announcement, it is better for us to close shop now,” said the source.