In the latest sign that Singapore is looking to shake off its reputation as a regulatory haven for the crypto industry, Ravi Menon, managing director of the Monetary Authority of Singapore (MAS) said he was more interested in protecting investors than attracting crypto firms with lax rules.
“We have to do what is right for us, what is necessary to contain the risks. And the risks are primarily harm to retail investors,” he said in an interview published on Bloomberg TV Friday (Oct. 28).
He said that although Singapore still has ambitions to be a crypto hub, the focus was on fostering innovation in the tokenization of real assets and other applicational use cases. He has little interest in it becoming a center for the trading of cryptocurrencies, which he said “is not part of the vision.”
Earlier this week, the MAS published two consultation papers setting out proposals for the regulation of stablecoins and businesses that provide digital token-based payment services.
Among the proposals, the MAS suggests defining a new regulated activity of “Stablecoin Issuance Service.” If imposed, the rule would mean new issuers will need to be granted a license. Banks would also be able to issue stablecoins under this regime which sets out the conditions on which they may do so.
The regulator also proposed strict restrictions on using credit to pay for cryptocurrency.
Noting that Digital Payment Token (DPT) prices are highly volatile and subject to sharp price swings, the MAS said that “the use of any form of credit or leverage in the trading of DPTs would result in the magnification of losses and could cause the customer to lose more than the whole amount put in and more.”
The MAS, therefore, suggests that cryptocurrency exchanges should not be able to offer credit lines, accept payment with credit cards, or enter into leveraged transactions. Should these rules be imposed, they would represent one of the most hardline positions on crypto trading of any regulator.
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