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The Monetary Authority of Singapore (MAS) is introducing new regulations that include a ban on retail customers from purchasing crypto with local credit cards.
Credit cards could allow retail customers “easy access to debt financing,” and thus should not be used to purchase crypto, MAS said in an announcement on Thursday.
The ban applies to Singapore credit cards but not foreign-issued credit cards or charge cards.
MAS also said crypto businesses offering sign-up incentives such as free tokens may “may unduly impair the judgment of retail customers” to use crypto services.
More Curbs for Retail Investors
Among the news rules Digital Payment Token service providers will be required to assess whether their retail customers have enough knowledge of digital asset risk before providing access to their services. They will also be banned from offering financing, margin or leverage transactions.
Accredited investors are required to have net assets of over S$2 million ($1.49 million) but under the new regulations, the value of crypto will be capped at 50%, or up to S$200,000, to determine a customer's net worth.
“Retail customers often do not have a full picture of the associated risks and may lack the financial resources to withstand the large losses that are typical in cryptocurrency markets,” MAS said.
These curbs to protect retail investors also apply to foreigners.
Measures to Take Effect Next Year
Its latest announcement marks the final set of responses to feedback on its proposed regulation, which is expected to be phased in from mid-2024.
Service providers must also identify, mitigate and clearly disclose potential and actual conflicts of interest, and publicly disclose their listing and government policies for listed payment tokens.
“DPT service providers have the obligation to safeguard the interests of consumers who interact with their platforms and use their services,” said Ms Ho Hern Shin, MAS’ Deputy Managing Director (Financial Supervision).
“While these business conduct and consumer access measures can help meet this objective, they cannot insulate customers from losses associated with the inherently speculative and highly risky nature of cryptocurrency trading.
“We urge consumers to remain vigilant and exercise utmost caution when dealing in DPT services, and to not deal with unregulated entities, including those based overseas.”
Last week, MAS Managing Director Ravi Menon lambasted cryptocurrencies. Speaking at the Singapore Fintech Festival 2023, Menon said "Cryptocurrencies have failed the test of digital money."
"They have performed poorly as a medium of exchange or store of value, their prices are subject to sharp speculative swings, and many investors in cryptocurrencies have suffered significant losses," he added.