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MAS (Monetary Authority of Singapore) chairman Ravi Menon has announced that the central bank is contemplating “adding friction” on retail access to cryptocurrencies, in a bid to protect retail investors from the speculative nature of crypto market.
At a seminar titled “Yes to digital asset innovation, No to cryptocurrency speculation,” on Monday, Menon predictably reiterated the MAS’s cautious stance on cryptocurrencies, while adding that the MAS will explore “customer suitability tests” and the restriction of leverage and credit facilities for cryptocurrency trading.
“They seem to be irrationally oblivious about the risks of cryptocurrency trading”, Menon said, referring to the retail crowd.
However, Menon also noted that the cryptocurrency space is borderless in nature, which means that it would be impossible to completely ban retail access.
“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 said, adding that the MAS is “actively involved” in international regulatory reviews to “enhance market integrity and customer protection” in the digital asset industry.
The increased scrutiny on crypto will likely cause a “widening gap” between the types of people and companies that will utilise crypto as a mainstream form of payment, DTC chief strategy officer Desmond Yong told Blockhead.
Too much regulation?
Singapore, once touted as among the most crypto-friendly nations, has seen its lustre fade amid the rise of rival crypto hubs like the UAE, where Singapore crypto exchange Bybit recently said it will open its global headquarters, whilst Crypto.com also announced it would build a regional hub there. Market leaders FTX and Binance have also set up shop in the gulf nation.
While multiple cryptocurrency exchanges have relocated to Singapore in recent years, few have succeeded in obtaining a digital payment token (DPT) license from the MAS. One of those is Singapore-based payment solutions company Digital Treasures Center (DTC), which launchd in 2019.
“Crypto native industries like luxury automobiles, watches, and medical clinics will likely see a continued growth. However, for new industries (that have had no exposure to crypto yet) where the target market is the retailer, they will likely see a slow to no growth because they won’t see their end consumer coming to ask them about crypto payments,” Yong explained.
Yong also noted that it is unlikely for crypto to become mainstream in Singapore, at least for the next 3 to 5 years. However, he believes that regulation is a process, and the MAS will review their regulation regularly to protect retail investors.
“They [the MAS] did make tweaks on whether to tighten or loosen their regulation. But I think fundamentally the answer they have is that they will do their best to safeguard retail investors,” he said.