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- The instability of prices can cause consumers to incur massive losses
- Stablecoins must be pegged to the Singapore dollar
The government of Singapore has proposed a new set of regulations to protect consumers and keep an eye on how digital assets are used in the country.
The Monetary Authority of Singapore (MAS), the country’s central bank and financial regulator, recently published two consultation papers with recommendations to tighten the country’s regulatory stance on digital assets.
One of the suggestions made in the consultation paper is to make it illegal for retail investors to use credit cards or other credit facilities to borrow money to buy or trade cryptocurrencies.
MAS Proposes Ban on Crypto Credit
The MAS also suggested that crypto investors undergo a test in which they are asked to fill out a questionnaire to see if they are aware of the risks associated with investing in cryptocurrencies.
However, high-net-worth investors who are eligible for a wider range of investments are exempt from these restrictions. Accredited investors could only invest S$200,000 (approximately $142,000) in digital assets, according to the paper.
The MAS has taken the decision to prohibit cryptocurrency businesses from providing leveraged transactions, loans, stakes, and other similar services due to the volatile nature of cryptocurrencies. The central bank claims that consumers could suffer significant losses as a result of price volatility.
The financial regulator also said that crypto service providers should keep customers’ assets separate and use strong risk disclosures to stop complaints from customers.
According to the paper, the recent failure of several firms in the DPT industry underscores the importance of DPTSPs having effective and robust arrangements for the identification and segregation of customers’ assets.
Regulation of Stablecoins in Singapore In a separate consultation paper, the MAS announced its plans to regulate the issuance of stablecoins pegged to a single currency (SCS) whose value exceeds S$5 million (3.6 million USD).
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Stablecoins Regulation in Singapore
According to the paper, stablecoins must be fully backed by reserve assets of the same denomination and pegged to the Singapore dollar or a Group of 10 currency.
Additionally, stablecoin issuers are required to publish a white paper outlining all essential information, including holders’ redemption rights.
However, the country’s central bank made it clear that it does not intend to ban cryptocurrency services for retail customers at this time to prevent them from using unlicensed platforms for such services.
The regulatory body wants to hear from stakeholders about the guidelines during the consultation period, which begins today and ends on December 21.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
