The Monetary Authority of Singapore is considering additional measures to protect consumers from the harm of cryptocurrencies. However, the regulator will not ban such trading activities, said MAS Managing Director Ravi Menon.
“We are considering adding frictions to retail access to cryptocurrencies. Customer suitability tests and restrictions on the use of leverage and credit facilities for cryptocurrency trading may be among them,” Menon said at a seminar on Monday.
MAS regards cryptocurrencies as unsuitable for use as money and as highly hazardous for retail investors. Cryptocurrencies lack the three fundamental qualities of money: medium of exchange, store of value, and unit of account. Cryptocurrencies serve a useful function within a blockchain network – to reward the participants who help to validate and maintain the record of transactions on the distributed ledger. But outside a blockchain network, cryptocurrencies serve no useful function except as a vehicle for speculation, Menon added.
He said that since 2017, MAS has been issuing warnings about the substantial risks of investing in cryptocurrencies.
However, because the crypto space is borderless, prohibiting retail access to crypto is unlikely to work, the MAS Chief said. “With just a mobile phone, Singaporeans have access to any number of crypto exchanges in the world and can buy or sell any number of cryptocurrencies,” he noted.
He added that MAS sees good potential in stablecoins, provided these are securely backed by high-quality reserves and are well regulated.
Regarding crypto players’ dissatisfaction with the licencing process, Menon stated that the MAS cannot compromise its due diligence process just to make it easier for digital asset players to obtain a licence.
“Given the large number of applicants for licences, we have been prioritising those who demonstrate strong risk management capabilities and the ability to contribute to the growth of Singapore‘s fintech and digital asset ecosystem,” he said.
