Monetary Authority of Singapore (MAS) Proposes Strict Measures On Crypto Trading

Monetary Authority of Singapore (MAS) Proposes Strict Measures On Crypto Trading.

In an effort to lessen the potential of consumer harm from the industry’s volatility, Singapore’s central bank (MAS) has proposed additional regulatory measures on cryptocurrency trading and stablecoins.

The Monetary Authority of Singapore (MAS) has suggested additional regulations for retail cryptocurrency investors, including a prohibition on borrowing money for trading.

Not Allowing Businesses To Lend Out Crypto Owned By Retail Customers

Measures to prevent firms from lending out cryptocurrency owned by retail customers and to ensure that client assets are kept separate from their own assets were presented in two consultation papers on Wednesday.

Additionally, cryptocurrency trading companies would not be permitted to take credit card payments, offer incentives to draw in retail customers, or finance those customers.

The Monetary Authority of Singapore (MAS) has stated that it forbids the general public from engaging in speculative cryptocurrency trading and has already imposed limitations on the advertising of cryptocurrency services in public spaces.

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The recommendations are a part of a consultation paper that MAS published in an effort to further tighten the nation’s regulatory framework for cryptocurrencies. After several prominent cryptocurrency companies, including Three Arrows Capital and Celsius, failed this year, the rules have been introduced. Vauld, Zipmex, and Hodlnaut are among the others undergoing legal reorganization procedures in Singapore.

“MAS will adopt a risk-focused approach to regulating the digital asset ecosystem,” the consultation paper stated. “To facilitate innovation in digital assets, regulations need to be clear and proportionate to the risks posed. These regulations should be periodically reviewed to ensure that they remain relevant, given the pace of innovation.”

The regulator has also suggested rules that would prohibit cryptocurrency service providers from giving free trading credits or tokens or other rewards to retail customers. Airdrops, in which a company gives free tokens to a select group of users, may fall under this category.

MAS On Single-currency Pegged Stablecoins (SCS)

A second consultation paper on stabilizing stablecoins was also released by MAS today, focussing on “single-currency pegged stablecoins (SCS).”

MAS also stated that it sought to guarantee that regulated stablecoins had a high degree of value stability in addition to tackling money laundering, terrorism funding, technology, and cyber threats.

Issuers of stablecoins pegged to a single currency (SCS) are required to hold reserve assets in cash, cash equivalents, or short-dated sovereign debt securities at least equal to 100% of the par value of the outstanding SCS in circulation if the value in circulation exceeds S$5 million ($3.53 million). Additionally, the assets must have the same currency value as the pegged currency.

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It stated that only the Singapore dollar or any other Group of Ten (G10) currency may be used to peg any SCS issued in Singapore. According to the announcement, banks in Singapore will be able to issue SCS with no additional reserve backing or prudential requirements.

Only one stablecoin has so far been released in Singapore.

Major cryptocurrency companies like Binance had initially been drawn to the Asian financial center, but several of them went to the United Arab Emirates earlier this year, citing Singapore’s tight regulatory restrictions.

The public has been asked to provide feedback by December 21, however it is unclear when the suggested measures would be implemented.

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