Singapore is exploring restricting retail access to cryptocurrencies: MAS chief Ravi Menon

SINGAPORE – The city’s regulators are looking at making it harder for the public to buy cryptocurrencies, but will not ban such trading activities.

The Monetary Authority of Singapore (MAS) is contemplating having customer suitability tests and restricting the use of leverage and credit facilities for crypto trading, its chief Ravi Menon said at a seminar on Monday (Aug 29).

MAS regards cryptocurrencies as unsuitable for use as money and as “highly hazardous” for retail investors to dabble in as they are extremely volatile, he said.

The market is fraught with risks of market manipulation and speculation in crypto “is what MAS strongly discourages and seeks to restrict”.

But many consumers “seem to be irrationally oblivious” and are still enticed by the prospect of sharp crypto price increases.

Given that the digital asset space is borderless, banning retail access to crypto is not likely to work, Mr Menon added. “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.”

Since January this year, MAS has restricted digital asset players from promoting cryptocurrency services in public spaces. 

A few months later, Singapore-based virtual asset service providers doing business overseas were required to be licensed in the city.

Now, the regulator is under pressure as investors cry foul following the crash of stablecoin TerraUSD and sister token Luna in May. That sparked a domino effect that has landed key players including hedge fund Three Arrows Capital, exchanges Zipmex and Vauld, as well as lender Hodlnaut, in insolvency woes.

Withdrawals were suspended as the firms sought legal protection from creditors, leaving investors high and dry.

The crash coincided with and worsened a crypto rout that sent prices of crypto darling Bitcoin to under US$20,000, which is a far cry from its peak of US$60,000 in November last year. 

Speaking to a crowd of about 100 in a session also streamed online to nearly 3,000, Mr Menon said the industry will hear about MAS’ proposals on how to regulate stablecoins by October. 

MAS sees good potential in stablecoins but they have to be securely backed by high-quality reserves and are well regulated, Mr Menon said.

Globally, regulators are looking to impose stablecoin requirements such as secure reserve backing and timely redemption at par by then too, he added.