Will young investors heed the Singapore central bank’s cryptocurrency warnings?
- High-profile cryptocurrency controversies such as the recent collapse of FTX exchange have the Monetary Authority of Singapore urging caution
- But for younger investors with a greater appetite for risk, digital assets are still the future – and they’re not willing to give up on them just yet
Hazardous. Highly risky. Not suitable for the public.
In its latest statement, the central bank said “the most important lesson from the FTX debacle is that dealing in any cryptocurrency, on any platform, is hazardous.”
Successive crises were a reminder of the “huge risks” involved with this kind of investing, it said, adding that the central bank “has repeatedly stated there is no protection for customers who deal in cryptocurrencies. They can lose all their money.”
But who are these warnings aimed at? And will they ever reach the ears of Singaporean youths, whose enthusiasm for taking risks in the hopes of making a quick buck seems undimmed?
An organiser of an NFT exhibition in the city state earlier this year told me that the average age of attendees was around 25.
Bitcoin, NFTs attract family offices, super-rich in Hong Kong, Singapore
And a poll by market research and data analytics firm YouGov in October revealed that almost half of respondents aged 25 to 41 – millennials and members of Gen Z, in other words – had “personally bought” some form of cryptocurrency such as bitcoin or Ethereum.
Certainly this has been the case for my circle of friends and acquaintances in Singapore, most of whom can be classified as millennials.
One of them, a 29-year-old who started investing in cryptocurrencies at the start of last year, said he understood the authorities’ position on crypto but wasn’t ready to give up on the space just yet.
Higher risks, higher returns!
Yet for many younger investors like my 29-year-old friend, neither the crash nor the MAS’ warnings are reason enough to stop investing. In fact, he said he is considering expanding his portfolio into other, newer digital assets.
“Higher risks, higher returns,” he said. “It’s like if you started investing when the internet first began – you’d be a billionaire by now!”
It was much the same story for another young Singaporean I spoke with this week, who said he simply thought the cryptocurrency market, like other sectors, was in a down cycle.
“If you believe in the application of blockchain technologies, we shouldn’t be [pulling our money out],” the 32-year-old said.
Singapore’s tighter crypto rules open sector to Hong Kong, Asian rivals
But it seems unlikely that this will do much to suppress young Singaporeans’ appetite for cryptocurrencies they see as more attractive and fashionable than traditional assets.
It may have an effect on older investors, however, whom National University of Singapore business professor Lawrence Wong said the central bank was likely more concerned about.
“The last thing [the government] wants is for them to transfer their CPF funds into crypto,” said Wong, referring to Singapore’s employment-based savings scheme known as the Central Provident Fund, from which people can withdraw money when they hit 55.
“If the funds are gone, it will create social problems for the government to bear.”
