Use of credit cards for cryptocurrencies trading will not be allowed under measures proposed by MAS to reduce risk
The proposed measures will cover consumer access, business conduct and technology risks.
Consumers will have to take risk awareness assessments before being allowed to trade cryptocurrencies, under measures proposed by the Monetary Authority of Singapore (MAS).
Credit cards as well as any form of borrowing to trade cryptocurrencies will also not be allowed.
The proposed measures, published in two consultation papers on Wednesday (Oct 26) by the MAS, are aimed to reduce risks of consumer harm from cryptocurrency trading and to enhance standards of stablecoin-related activities. It will be part of the Payment Services Act.
MAS said that trading in cryptocurrencies is “highly risky and not suitable for the general public”. But the authority stopped short of banning it, as it plays “a supporting role in the broader digital asset ecosystem”.
“It will not be feasible to ban them,” said MAS.
Calling cryptocurrencies “highly volatile”, MAS reiterated the risk by highlighting the market turmoil that saw market capitalisation of cryptocurrencies falling by more than US$2 trillion from November 2021 to July this year.
To reduce the risk to consumers from speculative trading in cryptocurrencies, MAS has proposed measures that cover three broad areas: Consumer Access, Business Conduct and Technology Risks.
Digital payment tokens service providers, under the proposed measures, will have to ensure proper business conduct and adequate risk disclosure. Relevant risk disclosures will have to be provided to enable consumers to make informed decisions about cryptocurrency trading.
Providers will also be expected to maintain high availability and recoverability of their critical systems.
They will also not be allowed to offer gifts or incentives to unduly influence decisions of consumers in trading cryptocurrencies.
MAS also expects providers to establish processes for complaints handling and implement proper segregation of customers’ assets.
Consumers must continue to exercise utmost caution when trading in DPTs and must be responsible for such trading as regulations will not be able to protect them from losses.
Additionally, MAS stated that it will regulate the issuance of stablecoins which are pegged to a single currency (SCS), where the value of SCS in circulation exceeds $5 million.
Members of the public who are interested can submit their comments on the proposal to MAS by Dec 21.