The Blockchain Association of Singapore has criticized the Monetary Authority of Singapore's (MAS) proposals to restrict retail access to cryptocurrencies, calling them "overly restrictive."
The MAS recently proposed measures that to curb investor activity in the crypto space. 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.
In a 11-page feedback sent to the MAS in December, viewed by Bloomberg, BAS argued that these measures would force people to seek out unregulated offshore alternatives and said that the prohibition on lending tokens to earn interest was one of the main incentives for investing in digital payment tokens.
However, the association agreed that customers should be prevented from borrowing to invest in crypto and that crypto companies should discriminate between their own assets and their customers' assets.
“We are proposing a more measured and targeted approach, including doubling on educating consumers on the risks of dealing with unregulated entities and increasing enforcement activities on those engaging in regulated activities without the requisite regulatory approvals,” BAS chairman Chia Hock Lai, told Bloomberg.
Despite its reputation for financial openness, Singapore has seen several major crypto companies collapse in recent years and its state investment fund recently wrote off a US$275 million investment in FTX. However, the city is still exploring blockchain-based financial innovations, with the MAS partnering with JP Morgan to experiment with international decentralized finance settlements.