Singapore plans tighter cryptocurrency rules to limit risks for retail investors
- Proposed new rules from the central bank include banning incentives such as referral bonuses and introducing a test for would-be investors
- The measures are set to be discussed with industry players before being first introduced as guidelines then eventually written into law
The proposed new rules, which would include banning monetary and non-monetary incentives such as referral bonuses for consumers, were highlighted in a set of consultation papers published by the Monetary Authority of Singapore (MAS), which also acts as the city state’s financial regulator.
Among other measures, the MAS has proposed that firms should not accept credit card payments or offer credit facilities to retail investors as this could result in a “magnification of losses”.
Providers of cryptocurrency services would also have to ensure that their customers have “sufficient knowledge” of the risks involved in trading, such as sharp price fluctuations and fraud or cyberattacks potentially leading to a loss of assets. The MAS suggested that would-be investors be made to take a test before they are allowed to trade.
“Many retail customers may not have sufficient knowledge of the risks of trading [cryptocurrencies], leading them to take on higher risks than they would otherwise have been willing, or are able, to bear,” the bank said in its 35-page consultation paper.
Cryptocurrency companies, it added, have “a responsibility to guard against consumers participating in a market that they do not fully understand”.
According to the MAS, the measures are set to be discussed with industry players before being first introduced as guidelines then eventually written into law.