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More Curbs Coming for Crypto Investors

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The Monetary Authority of Singapore (MAS) is proposing a new set of rules that will further curtail the activities of retail investors in the cryptocurrency markets.

According to a consultation paper published on 26 October, the proposed measures include testing a customer’s understanding of the possible risks of crypto trading, and preventing DPT (digital payment token) providers or crypto exchanges from allowing retail investors to borrow money or using a credit card to purchase crypto.

Against the backdrop of the recent collapses of crypto hedge fund Three Arrows Capital (3AC) and Singapore-based lending platform Hodlnaut, MAS is also proposing that companies licensed under the Payment Services Act will be banned from lending retail investors’ DPTs, whether for staking purposes in a DeFi protocol or to another crypto company.

Crypto Isn’t Going Mainstream Anytime Soon, Ensures MAS
MAS wants to protect retail investors from the speculative nature of crypto market, and more “friction” is on the cards.

Service providers would also be banned from using incentives such as free token airdrops and celebrity endorsements to entice retail investors. Other suggestions include defining an accredited investor to be someone with over S$2 million in net personal assets, with at least S$1.8 million in other types of assets including property, equities, or bonds – the MAS will only recognise up to 10%, or approximately S$200,000 in this example, of an accredited investor’s net personal assets in crypto.

“Retail customers are generally regarded as less able to access professional advice and have fewer resources to protect their interests, as compared to institutional investors or more well-resourced customer,” said the MAS.

What is Singapore’s Vision in the Global Crypto Economy?
Singapore’s approach to regulation is a multi-layered one, with its efforts to bridge the traditional and decentralised finance worlds potentially creating a safer and more accountable crypto landscape.

The MAS also laid out suggestions for the regulation of stablecoins, specifically those that are pegged to a single currency where their value in circulation exceeds S$5 million.

Under the new set of rules, issuers of such stablecoins would be required to hold reserve assets such as cash or short-dated sovereign debt securities that are at least equivalent to the full par value or nominal value of the outstanding single-currency stablecoin in circulation.

These assets must be denominated in the same currency as the pegged currency, and if issued in Singapore, can be pegged only to the Singapore dollar or any Group of Ten currencies.

MAS has invited interested parties to provide their comments and feedback by 21 December.